Airline competition drives IFE demand – report
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Rising costs and competition in the passenger aviation sector are driving demand for new in-flight entertainment (IFE) and connectivity solutions, a new report has suggested.
In its latest ‘Global In-flight Entertainment Market Assessment’, Frost & Sullivan revealed that the IFE market earned revenues of US$2.08 billion in 2012, and estimates that this will more than double to US$5.27bn by 2020, at an annual growth rate of 12.8%. The study covers all IFE elements, including hardware, content and connectivity. Within this, the connectivity segment is expected to see the fastest growth, rising 28% per year until 2020.
And Frost & Sullivan’s aerospace & defence consultant, Lida Mantzavinou, suggested that this growth is being driven by the need for airlines to keep up with the competition and differentiate themselves in an increasingly crowded marketplace.
“As operating margins remain low and competition intensifies, airlines are identifying factors other than price to attract customers,” said Ms Mantzavinou. “In-flight entertainment and connectivity will be key for airlines to achieve differentiation and boost brand loyalty.”
The report also noted however, that several airlines are postponing the roll-out of new IFE systems due to budget constraints. And with rising fuel costs, airlines are also prioritising expenditure on systems that will decrease aircraft weight while increasing ancillary revenues. As a result, IFE hardware and content providers are now designing solutions that can track and monitor passenger spending and support online advertisements.
“Market consolidation will be at its peak, as vertical integration, partnerships, and repositioning in the market will be integral for vendors to maintain their foothold in the market,” observed Ms Mantzavinou. “Partnerships that enable comprehensive, end-to-end systems for the in-flight entertainment and connectivity market will find success in the global market. New satellites launched within the next two years will facilitate seamless on-board connectivity with larger capacities at a lower price.”
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