The only truly captive audience in the world are aircraft passengers. Each airline knows exactly who is sitting in every seat and, thanks to modern technology, can track who is accessing certain services on its in-flight entertainment system.
That sort of information is invaluable for advertisers and airlines are sitting on a curently-untapped source of additional revenue, reports Airline Economics.
Over 50% of the worldwide population with disposable income will fly atleast once a year, which represents an estimated $10 trillion of potential spending power currently untapped by airlines.
"Advertising is nebulous - it is only important if it leads to a sale," says Mark Thompson, president and CEO of Thompson Aerospace.
"Advertising is only important if it connects a consumer to a merchant - you need interactivity to leverage that connection. We have had advertising on billboards for years but there is no way to prove you can make that consumer-merchant conection. If advertisers could advertise in-flight the same way they do on the ground, they would be happy to spend upto $12 billion a year." The airlines need to start thinking that they are not in the travel experience, they are in the market place business. they need to recognise that they have wealthy consumers, which represent 50% of the disposable income.
Aviation News: What a wonderful market - The future is here and the market continues to develop at speed
One way in which Norwegian Air Shuttle(NAS) can cut weight and increase margins is in the use of Thompson Aerospace products. This is a company to keep an eye on. They have been developing a number of cabin products with a focus on
breaking the cycle of ever increasing IFE costs. One offering is an on-board wi-fi without the cost of satellites or ground based cost. The concept is to install a server on the plane,
store data in advance of the flight while the plane is on the ground, have your passengers download an "app", which is of course a revenue stream, and then allow passengers to use their own devices, which avoids costly and heavy seat back or overhead mounted screens and maintaining the same.
The app will also have content that can be a digital in-flight magazine, which cuts the massive print costs of the same out of the business model.
Noting that airlines are the "poor people" of the industry, Thompson Aerospace CEO, Mark Thompson wants to re-engineer the IFE model and have it become a profit - not cost - center for airlines.
His approach mimics that of television, in which his company is the network and airlines are the local affiliates, receiving free content and equipment in exchange for letting the network sell ads. Thompson's technology includes a mobile phone modem that, on the ground, downloads ads for display on the next flight.
Thompson sees his model working best on short-haul flights when, he says passengers are "more interested in destination content than first-run movies".
"The airline industry is a great industry, but it is also a terrible business." - anonymous.
This Hot Topic began as a simple phone call to Thompson Aerospace as a result of the CEO's request for a return call.
Planning a standard set of questions about new hardware, airline take-up, weight (Oh, it does weigh 3.2 pounds per seat) our interview began as most.
Mark Thompson (President & CEO) began the data run down and if you have met him, you just hang on because a LOT of data is coming your way.
And it did, a lot. Somewhere in the middle of the second question about advertising on the system he said: "...and we are generating somewhere between $20,000 and $30,000 per month per plane with the IFE." "Wait," I yelled, "How do you do that?"
Buried in the back of building 5 at AIX, we found Thompson Aerospace, headed by machine-gun speaking Mark Thompson,
we were greeted with a fusillade of facts and IFE prognostication: "We are not an IFE manufacturer," he said, "We are a
'focused solution' company, founded and funded by aerospace professionals." And yes, their business card says it all -
"Specializing in Improving Airline Economics." This is a great value proposition for airlines because his focus is airline
profit. IFE, according to Thompson, is just another road to profitability and that credo seems to have leaked into every technical
decision in the development of their system.
For starters, the Thompson system is based on an Ethernet 100 Base-T backbone. Each IFE installed seat (including cabling) is only
a 3.3 pound addition to the aircraft weight and uses some 10 watts. That is quite respectable! Initially targeted for single-aisle
aircraft, the Ethernet seat boxes are designed for sidewall installation and can serve up to 10 passengers (sounds like twin-aisle
capability to us). The design of the box has been optimized by Thompson and, noted Mark," ...the cabling has been reduced by 2/3, as well
as, the cost of the cabling." It looks to us like Thompson has taken an optimization razor to the whole system and what results is a very
airline/aircraft friendly design. We made the mistake of calling the system an Ethernet but we were quickly corrected by Mark. "We have developed a
Local Area Network on an aircraft." It seems that the focus is on the aircraft and Thompson is aiming for an optimization of the electronics functions
in an effort to deliver a lower cost solution for airlines that has great money making potential. For a better understanding of their value proposition,
check out the comparison tool on their website.