They, and others, could now be forgiven for wishing they had never heard of the systems they purchased. In particular, they have grown to dread the sound of the word 'interactivity'. Carriers such as Virgin Atlantic, Northwest Airlines and United are now all engaged in long-running struggles to make the systems that they have bought and installed actually work.
Nor is it immediately clear how rapidly matters are going to improve. An unfortunate spiral effect is emerging in which vendors desperately need more in-service systems to help work out their technical bugs while operators are understandably reluctant to be the guinea pigs. Scarcely any airlines are currently contemplating major IFE purchases in the near future and there are virtually no vendors of large scale interactive systems or services with more than two or three customers.
Nevertheless, interactivity - the software-driven process that enables passengers to manipulate IFE services rather than passively experience them - is unquestionably the way of the future. The airlines' woes to date, for which the vendors can certainly be blamed, are also partly self-inflicted. Their marketeers have allowed themselves to be seduced by the promises of the vendors, ignoring the warnings of their engineers.
Some degree of order is now being restored by increasingly exasperated aircraft manufacturers fed up with production delays due to poor IFE-equipment and the impact on aircraft despatch rates. In a rare show of unanimity Airbus, Boeing and McDonnell Douglas are telling the IFE industry - and the airlines - that the current situation is unsustainable. Boeing has created an 'offerability board' which assesses which specific IFE systems are, in its view, fit for service and is telling airlines that it will not be held responsible for production glitches caused by the incorporation of any other systems. Airbus is flatly warning that it will impose higher charges for fitting non-approved IFE kit and has even been considering whether to continue to allow airlines an unrestricted choice of IFE suppliers. The alternative would be to make the IFE element 'supplier-furnished' rather than 'buyer-furnished' and give airlines a choice of perhaps just two vendors.
Behind all this is the staggering increase in complexity of IFE systems over the past five years which has left vendors and airlines floundering in their attempts to build and maintain robust IFE products. The two fundamental issues are the explosion in the complexity of interactive software and the almost complete lack of technical standardisation in the industry. Boeing chief mechanic Jack Hessburg notes that, on the fly by wire 777 for example, the aircraft design incorporates 4 million lines of software code, of which 2.5 million are attributable to IFE. The main victims to date have been those carriers that bought their systems before the existence of bugs was widely known. Virgin and Northwest both have fleets of aircraft with interactive IFE hardware on board, but have been forced by software glitches to 'switch off' the interactivity, leaving them with only seatback audio/video systems.
The interactive services of the future will be led by the much-vaunted video-on-demand (VOD) - the interactive feature which allows passengers to watch any movie that they wish at any given moment and provides normal home VCR functions such as freeze, restart, and rewind. Research still puts high quality movie provision at the top of passenger wishlists and airlines pushing for interactivity see it as their highest priority.
Singapore Airlines (SIA), seen by many as a role model due to its success in cautiously introducing limited interactivity using Matsushita hardware and BT's ALIS software, wants to have VOD by the middle of next year. British Airways, due to start an ALIS trial on a single BE Aerospace-equipped Boeing 747-400 at about the end of March, says that 'from the first day we will have full VOD'. Marketing manager Mark Hassell says that 'there will be a lot of slack in the system' to ensure that passengers will rarely be denied the movie they want. Hassell is clear that BA will first add a choice of free movies throughout the aircraft, but indicates that, certainly in economy, others will be charged for.
The current dark horse of the industry, Interactive Flight Technologies (IFT) of Las Vegas, also has its In-Flight Entertainment Network running on a single MD-11 belonging to launch customer Alitalia with VOD as part of the output. Company president Steve Fieldman says: 'No-one believed we could do it - they all thought we were just a little company out of nowhere and that we would not be able to make it work. But now we are here with a true, fully working, digitised, VOD system.' For all such systems, audio on demand comes hand-in-hand with VOD.
After VOD, the picture is less clear. Games, from Nintendo or elsewhere, are very popular and bring the added advantage of providing entertainment for children. The IFT system for Alitalia includes a childrens' computer-game and an 'interactive book'. Fieldman says: 'Although it is in a premium cabin only at the moment, Alitalia believed that if there was just one child running around the cabin and there was something available to encourage him to sit still, it was worth it. So they requested these two programmes.'
But as any child-passenger will confirm, inflight games are so far greatly inferior to currently available home computer games. Although there are tough technical constraints, it is becoming an article of faith in IFE circles that the inflight experience will increasingly have to mirror consumers' home entertainment expectations. And airlines are making it clear that they will certainly be looking to charge for games - probably on an hourly basis rather than per game.
The quest to squeeze revenue directly from IFE remains a tortuous one. Full interactivity with the associated hardware now costs something approaching $3.5 million per Boeing 747-400. Software providers speak of the possibility of recovering that cost in around three years but that claim remains unsubstantiated. Furthermore, it is widely doubted by those airlines which have been quickest into the IFE business.
Pricing of IFE services, however, offers airlines a rare opportunity to value an element of their product on a 'clean sheet of paper'. Nobody has yet dared to try to charge for anything in premium classes other than telephone and fax services. As sophisticated IFE spreads backwards down the aircraft it will undoubtedly carry a cost to the passenger, and the first airlines with such facilities will set the going rate. BA's Hassell says his airline is spending some £100 million ($153 milion) on its long-haul IFE programme, of which 75 per cent is hardware. 'The additional 25 per cent is giving us the opportunity to upgrade it to interactivity and charge for it,' he says. 'From our point of view, we need to understand fully if there is a new revenue stream to be had there and we have done an awful lot of work to understand what people will pay for. It is very, very important to us to strive for the 'value for money' perception in the marketplace.' Hassell says that BA's trial next year will definitely extend the range of free entertainment in BA's World Traveller economy class, but he indicates that, at the very least, games and the more sought-after movies will be charged for.
Paradoxically the carriers which have succeeded best with IFE so far are those that do not charge for it. Emirates and Singapore Airlines - whose systems are actually running smoothly - are the classic examples and have generally seen IFE as a means of attracting or keeping customers, rather than generating revenue.
However all carriers are charging for phone and fax services. The best-detailed case history is that of Swissair which has now settled on a charge of $11.00/min for satcom phone calls on its long-haul fleet and has found demand to be fairly elastic.
Swissair is a firm believer in the necessity of providing gate-to-gate phone communications and, in October, became the world's first airline to install satcoms on its narrow-body fleet. Swissair rejected the competing intra-continental terrestrial flight telephony system (TFTS), which uses ground stations and not satellites, partly because it does not offer a service on the ground. It has launched the narrow-body service at $8.60/min, and head of inflight communications Karl Laasner says that the long-haul experience 'tells me that there are people who need to make the calls and will simply do it', regardless of cost. A 2h3min call made by one passenger at a cost of $1,208 is an industry legend, but it is believed to have been overtaken by a recent call on an SIA aircraft of 2h49min.
Despite the drawbacks of the TFTS, there is little doubt that its use will spread throughout its European home and, later, to other regions. Its development has been plagued by friction between the numerous telecommunications players involved and political and legal disputes between their 17 governments and national telephony providers. Indeed there are still no ground stations at all in Spain, Italy, Greece, Malta or Turkey. Even so, SAS was due to have equipped its entire medium/short-haul fleet by mid-December - including the turboprop Fokker 50s - for TFTS use. Product development manager Peter Viianpuu says: 'There has been a kind of Catch-22 situation between building the ground stations without the airlines, and no airline wanting to do TFTS without the ground stations. We have seen that so we made the decision. I think that what will happen is that others will follow up and decide if they want to use TFTS or a satellite service. We would appreciate more airlines joining the TFTS.'
In Scandinavia, where mobile phone penetration in the adult population is around 20 per cent, SAS perhaps had little choice but to provide the facility, but was helped by the low costs. Aircraft hardware for TFTS is typically financed by the suppliers, and the service itself is run by one-stop suppliers Jetphone or Cable & Wireless Flightlink. SAS is charging $5.67/min and is looking for '5-15 per cent of passengers per flight to use the phone' - optimistic by US airline standards which have had an equivalent terrestrial system for some time.
Other telecommunications facilities may be slower to spread. Ground-to-air paging, which alerts a passenger to call a number on the ground, is offered in the US to passengers that register as being willing to receive a page. That is a distinct minority and, admits service-provider GTE Airfone, is heavily driven by employees who are instructed to register by their bosses.
Nervous airlines outside the US fear that if they make the service available they will incur the wrath of frequent fliers who treasure the solitude of the cabin. Also making slow progress is the air to ground fax link. However that is partly because the system has been clumsy and relatively expensive until recently, resulting in its negligible use. The service is becoming comparable to conventional faxing, however, and things could change. Finally, the transmission of personal computer data has just been approved by satellite operator Inmarsat, and Swissair has indicated interest.
One sure way of gaining revenue is through onboard advertising, but it is unclear whether the interactivity trend and ever-increasing numbers of video channels will assist with this. It is early days, but an interactive advertisement inherently requires the passenger to interact with it. The only example to date is the Spafax-produced advertisement for the Welsh Development Agency which is just starting to be carried on SIA's London destination video channel. Time will tell, but Spafax and its competitors face another challenge with the multiplication of channels, each with correspondingly small audiences. James Rolls, managing director of Interactive Airline Partnerships, which sells time on United Airlines' London destination channel, remarks: 'You may see some services reverting to the basics and just six channels on the main screen. I feel that you have a finite audience in the air and research says that 70 per cent of the people spend time watching the IFE. With the more options you give them that will be whittled down. If it turns out that 6 per of the people look at the shopping and 7 per cent at the documentary then these are not great figures.' Satellite television could help the advertising situation with some US carriers aspiring to live inflight satellite TVby the end of next year.
The history of the airline industry is replete with examples of a small number of carriers, seeking short-term advantage, dragging everyone into economically unwise practices. The encouraging news is that the $3.5 million per aircraft price-tag may be just what is needed to impose a little more rationality on the hazardous rush to obtain bigger and better IFE.
Source: Airline Business
