Economy

No more in airplane mode

Ashwini Phadnis |TANYA THOMAS | Updated on: Feb 06, 2018
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The TRAI recommendation to allow in-flight Wi-Fi services is a positive step, and if structured properly, will be a boon for the passenger as well as domestic and international carriers, write Ashwini Phadnis and Tanya Thomas

It was an idea that was being nurtured by many carriers – and when the government decided to liberalise the rules and allow airlines to offer Wi-Fi services in the Indian airspace – both domestic and international carriers welcomed the move.

Days after the Telecom Regulatory Authority of India (TRAI) recommended that both telephony and internet services be permitted on domestic flights, Ajay Singh, Chairman and Managing Director, SpiceJet, set the ball rolling when he told a television channel that SpiceJet would “absolutely and most definitely” look at having Wi-Fi on board its aircraft, and that it would try and put it on board “as soon as possible”.

The response was equally enthusiastic from other domestic carriers such as Vistara, which said: “We continually review our product offerings, and this will be reviewed as part of that process as well.”

International airlines such as Emirates, Singapore and Lufthansa, too, welcomed the move – these airlines offer Wi-Fi services on their other international networks.

Patrick Brannelly, Divisional Vice-President Customer Experience (IFEC), Emirates, said: “The TRAI recommendation to allow in-flight Wi-Fi and mobile services on flights within the Indian airspace is good news for our customers.”

The reasons for such a response are not difficult to find. A study by the consultancy Roland Berger on internet connectivity on airlines globally points out that internet access is one of the top three criteria people look for when choosing a flight, adding that 2-3 passengers are prepared to pay more to have internet access in the air.

Emirates’ data on Wi-Fi usage on board its flights indicates that laptop usage is at about 4 per cent and tablets at 4 per cent, but most of its passengers prefer to get connected through their smartphones . “Over 90 per cent of the connections are now through smartphones,” said Brannelley.

According to Emirates, last year, 10 million customers used Wi-Fi, which works out to about 1 in 5 customers. “The numbers are increasing month-on-month. In December 2017 alone, we had an unprecedented 950,000 connections from our customers, and we expect this number to exceed 1 million in January 2018,” said Brannelley.

A Lufthansa spokesperson adds: “Lufthansa FlyNet® offers high-speed on-board internet service that allows passengers to check e-mails, download documents, shop online, chat with friends via Facebook and even send their exact arrival time via SMS.”

Thanks to the government’s decision, international airlines are hoping to cash in on the latent demand for Wi-Fi connectivity that they have been seeing in India. All foreign airlines said that Indian passengers are increasingly looking to stay connected during their flights.

“Yes, Indian travellers are increasingly looking to stay connected during their travel – for work or leisure,” said a spokesperson for Singapore Airlines.

“Our Wi-Fi systems do not capture the nationality details of users, but as India is a technology-leading country with many Indians travelling through to the US, we expect they are heavy users of connectivity,” added Brannelly.

Business sense

One of the main reasons for airlines being so gung-ho about Wi-Fi in the Indian airspace is because it makes business sense for them to offer this service. Providing Wi-Fi on board is a good source of ancillary revenue for the airline industry, and this is one segment that airlines are increasingly looking at to add to their profits. For example, IndiGo saw a 20.9 per cent jump in its ancillary revenues at ₹762 crore in 2017 Q3 when compared to the same period the previous year. Similarly, Jet Airways in its 2017 annual report, said that its ancillary revenues had increased by 4.2 per cent in FY17 when compared to FY16.

According to Ajay Singh, Wi-Fi should add significantly to ancillary revenues for SpiceJet (which are a little over 16 per cent currently). The airline hopes to increase this to about 20 per cent in the next year.

Experts agree with this thinking. Says Amber Dubey, Partner and India head, Aerospace and Defence, KPMG: “Say, for a two-hour flight, an airline can charge a passenger an additional ₹200-400.” The Roland Berger study adds that revenues for airlines could increase by up to €4 per passenger for airlines offering on-board internet.

International airlines such as Lufthansa are already charging for providing Wi-Fi services on its network elsewhere. Its FlyNet® services are available on board for€9 or 3,000 miles for 1 hour, €14 or 4,500 miles for 4 hours, and €17 or 5,500 miles for a full flight or up to 24 hours.

Questions remain

Though airlines such as Singapore and Lufthansa maintain that their Wi-Fi services have been very well received by both business and leisure flyers in India, questions still remain about the pricing of the service . There is no clarity on this just as there is no clarity on when this service will be available.

According to a senior airline officer, who declined to be identified, “it is too early to say anything definitive; there is no policy in place from TRAI. What TRAI has come out with is just a recommendation. There is no clarity and [we] cannot close a contract with suppliers unless you have a policy on how this should be structured”.

Published on February 06, 2018

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