KUALA LUMPUR: Asia Pacific region is projected to have a market size of US$10.3 billion by 2035 for airlines to grow their ancillary revenue through inflight services connectivity enhancement.
Inmarsat Aviation vice president Dominic Walters said the airline industry was experiencing a period of demographic shift as passengers would want to get connected onboard.
“In Asia Pacific, the opportunity is exciting as the population is digitally advanced native in the world. In 10 years’ time, the region will have about 40 per cent more Generation Z (born between 1997 and 2012) than the Millennials, as the latter is the largest proportion of flyers.
“Globally, there are about 450 million passengers, described as unengaged or ‘floating voters’ who are available to be converted,” he told the New Straits Times in an interview recently.
Walters said these passengers are individuals who are not loyal to any airlines, citing that their loyalties are up for grab with market size of US$33 billion globally.
“These individuals (passengers) are primarily Millennials but also started moving into Generation Z. Their expectation is to have a greater digital experience, particularly inflight services.
“This has prompted airlines to adapt to passengers’ need for inflight Wi-Fi connectivity, while banking on digital ecosystem to have a greater chance to attract these individuals and building long-term loyalties,” he said.
Commenting on Malaysia, he said the country has an exciting and dynamic future with the fast growth of air passengers and aircraft orders from local carriers.
“We see a fast evolution and passengers will demand innovative in-flight services and connectivity and airlines need to fulfill the demand,” he said.
Walters said the first-mover (airlines) who offer improved inflight connectivity would win the “floating voters” group as a a large proportion of the individuals will be in Asia.
“We are seeing the growth to reach 3.1 billion passengers a year by 2035 from 1.3 billion passengers in Asia today,” he said.
Walters said full-service carriers (FSCs) and low-cost carriers (LCCs) were on the lookout to find ways growing their ancillary revenue but reckoned that both carriers would have different business models.
“The future of traveling passengers will predominantly from Generation Z in the next five to 10 years. Regardless of what carriers they are on, their expectation is to have a digital experience.
“Therefore, it is a starting point for all airlines to switch on or unlock the digital potential via inflight services and carriers will need to adapt in-flight connectivity,” he said, adding that this in turn, allows airlines to leverage on digital retail mindset to exploit the real benefit of digital ecosystem.
Of the total US$33 billion, Walters said half of the global market size accounts for the airlines to adapt to a retail mindset, helping carriers to leverage the digital ecosystem through e-commerce, advertising, online streaming and sponsorship.
Walters said the growing tech-savvy population in the region provides airlines the opportunity to partner Alibaba, Amazon or Apple to create a whole new digital ecosystem at 30,000 ft in the sky.
Asked on whether Wi-Fi onboard should be free or paid, Walters viewed that every airline has different strategy and rationale as it knows its passengers better than anyone else.
“However, the airline industry is still debating what should be the best model and this is part of the learning curve over the next three to four years.
“Airlines probably would test different models to see what works best for them. They may find mixed-models like free texting and message for all passengers but if passengers want to go to video-streaming – they may have to pay additionally for it,” he said.
Walters said airlines strategies in adopting inflight connectivity vary, quoting an example; AirAsia had installed Inmarsat GX solutions on their aircraft in conjunction with their digital partner ROKKI.
“They are constantly looking at improving their passengers’ experience. This helps to build customer’s loyalty.
“This is a key aspect for any airlines to offer what passengers need. The current market demand requires inflight connectivity. It is the future and the passenger’s expectation,” he said, noting that airlines who have not to offer inflight connectivity would be left behind.
Inmarsat is satellite communications solutions provider for airlines, mainly inflight connectivity experience for the entire aircraft, from voice and safety communications in the cockpit to high-speed, reliable broadband in the cabin.