Thinking outside the (flight) box - how airline wifi is evolvingNews / TechnologyBy Viewpoints | September 25, 2013Share This article was originally published on While much attention in travel technology has focused on mobile, social, NDC, meta-search mergers & acquisitions and growing business travel co-opetition, one of travel’s other 'bigger-than-you-think' sub-industries - airline wifi - has been dynamic, too.With Gogo (Aircell) having gone public and executed a great penetration strategy by convincing most US airlines to choose lower, defrayed installation costs and one less night of plane downtime over Row44’s satellite model (some would say at the expense of connectivity performance), it now looks set to expand globally and create a sustainable profitability model, even while having to invest heavily again to upgrade its original ground network to hybrid ground/satellite.At the same time, Row44, acquired by Global Eagle Entertainment, fights on with Southwest as its key customer and entrenched inflight entertainment vendors such as Panasonic and Thales try to preserve their cash cows.As wifi installations picked up four years ago, airlines primarily focused on the huge ancillary market for bag fees, assuming travelers would happily pay for basic email capability and web access. At the same time, on-board retail vendors such as GuestLogix were pitching planes as 'flying malls' for flight attendants to sell stuff in the aisles.As a result, the passenger experience was less than ideal and wifi adoption still sits around five to six percent, despite clear demand for a better product.According to Honeywell’s recent survey, about 90% of 3,000 surveyed would give up extra legroom, ability to recline their seat, or other amenities for a faster, more reliable wireless connection. Almost 66% would rather have access to fast wifi to stream video and music than sit in their preferred seat. And 15% would actually give up going to the bathroom to have better wifi.Now, it’s great to see airlines introducing variants of Part I of a model introduced in 2009, after identifying the potential convergence of six fast-developing industries: mobile technology, airline wifi, and digital video/movie, books, games, and music: Deliver a more compelling online experience focusing on brands travelers engage everyday rather than a 'flying mall' with 'walled gardens' of Skymall, HSN, and 'Skytown Center'Use mobile technology to disrupt the traditional cost-center IFE value chain and drive ancillary revenue by capitalizing on explosive digital markets for what passengers have always wanted to do: watch movies, read, listen to music, and play gamesRather than trying to sell digital content directly, position passenger markets as a customer acquisition channel to drive referral revenue from digital entertainment brands fighting a fierce battle for 'living room share'“Think outside the flight” using the itinerary to drive mobile engagement and relevant entertainment and location merchandising through the traveler’s “60-hour cycle” instead of ceding revenue to airport bookstores and travelers’ own digital media marketplacesSo how is this gradually unfolding?For #1, in a December 2010 paper titled "Part II: Can Airlines Power Ancillary Revenue with Digital Media and Wifi?" we encouraged airlines to push Gogo and Row44 for a better experience, using Starbucks’ partnership with Yahoo to demonstrate both a good, branded experience and how anxious digital media companies were to capture audience.What prompted that paper? I was on a United flight, when at 1 AM the overhead monitors started blaring “Shopping while you fly, it’s the Fun Way to Buy!” in a commercial for Skymall online.Now, the content experience offered by Gogo, Row44, and their airline partners has definitely improved, as Skymall, HSN, and 'Skytown Center' have been upgraded to Amazon (Delta) and other more attractive experiences.For #2, this concept is clear now, but before the launch of the iPad and the mainstreaming of Netflix, it was more difficult to envision.At the time, I shared the approach with Alaska Airlines, Amazon’s video business, and other airlines, and as the industry has evolved, we’re seeing various iterations - new technology from traditional seat-back vendors, Gogo Vision and Row44’s portals using the movie industry’s Ultraviolet cloud service (formerly DECE, or Digital Entertainment Content Ecosystem), and iPad rentals (like modern Dig-E players).However, it remains to be seen how often passengers will pay for content directly, and if it drives ancillary income when the traditional Hollywood licensing model takes most of the margin.I hope it works, though even Wall St. analysts are skeptical. Seeking Alpha writes, "…the prospects for Gogo Vision are not that great either, as users do not expect to pay for movies and television shows within a plane."Therefore, #3 could offer more upside and best accomplish #2, exemplified in Southwest’s new service with the Dish Network offering free live TV in exchange for viewing a short advertisement.Customer acquisition is critical for Dish, Amazon, Netflix, Apple, Microsoft, Comcast, and studios themselves (via Ultraviolet) to capture digital entertainment “living room share,” and the opportunity to feed customers from huge passenger markets to earn referral revenue could be greater than direct selling.For #4, Virgin Australia’s new approach of “thinking outside the flight” is a great example of marketing its mobile flight app through the “60 hour cycle,” engaging passengers to capture wifi and digital entertainment revenue before passengers download it from their own services, a risk I’ve written about before…Merchandising in the booking path isn’t new, of course, but multiple mobile touch-points create opportunity to deliver what customers want, when they want it, at their intent-to-buy peak instead of ceding revenue to travelers’ everyday services, especially if it’s an exclusive deal or content.A tried-and-true enticement, early-window movie content, still seems to be held up as studios fear digital security on travelers’ own devices, but how about other examples?An airline-exclusive Lonely Island video? Exclusive eBook deals? Buy one Fifty Shades of Grey eBook, get an exclusive preview of the sequel (at risk of interesting inflight behavior). Exclusive content like Costco is doing with hardcover books? In co-opetition with Amazon, publishers want to reach consumers in new ways.Delta’s Amazon partnership and gate experience with OTG at various airports are other great examples of “think outside the flight.”Faster service via Gogo’s new GTO (Ground-to-Orbit) service, Ku, Ka, L, H+ or whatever technology, is great, and it’s clear there will be a market for paid wifi in corporate travel, but an integrated approach to technology, passenger experience, alternative revenue models, and "think outside the flight" could drive a good ancillary revenue model and brand advantage.But the challenge of overcoming an industry mentality still persists, shown in a recent interview of US Airways by APEX, “…connectivity has become a strategic competitive tool…even if most airlines still don’t see any financial benefits from offering Wi-Fi.”Maybe you can ask as well - why not?NB: This is a viewpoint from Jonathan Alford, author of the Maketravelbetter blog.NB2: Aircraft emerging from screen image via Shutterstock.