Do you remember the story of the olive? Nearly 40 years ago, American Airlines decided it needed to find some cost savings. The drive behind the endeavour was the belief that small changes could lead to big cost savings. Following some internal research, the airline discovered that it was experiencing some wastage in its in-flight food and beverage service. Specifically, many passengers were not finishing their packet of olives.
The airline then decided to work out what would happen if they removed one olive from every salad plate offered to passengers on their flights. Surely, such a small change would be of little significance? Perhaps not. The airline calculated that the removal of a single olive from each salad would save it over $40,000 USD (that’s around $125,000 in today’s money). Best of all, the change would have essentially no detrimental impact on the passenger experience, aside perhaps from the odd passenger that was particularly keen on airline olives.
The story of American Airlines and the olive serves as a parable in business. Small changes can have a big impact on margins; when considered in scale. The lesson is as true as it ever was. While there is a lot of excitement in the industry around the potential of new digital services to create a myriad of ancillary revenue streams, the pursuit of cost savings remains equally as important to airlines. IFE vendors that understand this and can tailor their products to help facilitate this will be able to assemble a stronger business case as a result. Thankfully, we are already seeing innovations of the market now which are doing exactly that (readers can learn more about the plethora of trends shaping the IFE market here).
Advancements in Hardware and Modularisation
IFE can be a costly investment for airlines – in both CAPEX and OPEX. There are obvious expenditures – such as the cost of the systems, the installation, content fees, and any ongoing service and maintenance fees. However, there are also other associated costs which are less visible in a top-level breakdown of expenditure. One key consideration for any airlines looking to deploy seatback IFE systems across its fleet, it the additional fuel cost of carrying the extra weight of the hardware.
Around 20 years ago, it was typical for the installation of seatback IFE systems onboard a widebody aircraft to result in an additional weight of 2,000-3,000 pounds – a pretty hefty extra load to be carrying around. For context, another useful rule of thumb is that it takes approximately 1 pound of fuel to carry 5 pounds of weight. It’s not difficult to see how the costs associated with heavy IFE systems can stack up very quickly across a fleet of equipped aircraft.
As a result, all the major seatback IFE system manufacturers have worked hard to reduce the weight of their systems. New generation models such as Astrova (Panasonic Avionics), AVANT Up (Thales Group), and RAVE Ultra (Safran Passenger Innovations) have all made significant weight reductions of around 20-30% compared to previous models available five years ago or so.
Figure 2 – Astrova, the new generation IFE system from Panasonic Avionics
Source: Panasonic Avionics
New systems have also been designed to make repairs and replacements easier to manage. Previously, the breakdown of a seatback system would most likely have required the entire seat to be disassembled to allow the engineer to fix or replace the system; whereas now many systems are fitted with a quick release bracket which allows for easier and quicker maintenance work to be carried out.
IFE vendors have moved to develop increasingly modular systems where parts can be more easily replaced on an ad-hoc basis. Panasonic, for instance, has removed the graphics processing unit (GPU) and central processing unit (CPU) out of the monitor on its new Astrova system, and instead put them in the seat box. It has also moved its Bluetooth and ISP hardware to a peripheral bar. PAC confirmed that airlines would be able to upgrade the systems easily to keep pace with future generations of Bluetooth and ISP technology.
What about Wireless IFE?
W-IFE offers obvious cost savings when compared to seatback systems and the technology has opened the IFE market up to thousands of narrowbodies and regional jets that would otherwise not have been fitted with any solution. The systems are light and easy to install, requiring minimal aircraft downtime. The fundamental nature of W-IFE is that it is a cost-effective way into the market, but beyond that, how can the technology help airlines achieve further cost savings?
By integrating a W-IFE platform with crew devices that manage onboard operations, airlines can make it easier than ever before to keep on top of managing passenger needs and logging issues such as technical faults or complaints. Passengers too can see when certain products are out of stock and can offer direct feedback. The tracking of orders via a W-IFE platform can also help airlines build up a better picture of what their customers want, and in turn, what they need to stock (potentially enabling cost savings by reducing or removing unpopular products). The direct cost savings to this might be limited, but this integration work can help contribute to the overall streamlining and operational efficiency of the cabin service.
Figure 3 – Bluebox Aviation Systems’ Digital Platform on Icelandic airlines, PLAY
Source: Bluebox Aviation Systems
The true key to cost savings in this area, however, comes with the recent introduction of lightweight connectivity to a number of W-IFE services. By facilitating communication with ground teams, the crew can effectively provide information ahead of landing – such as stock levels, technical faults, passenger requirements (such as assistance needs) – to the relevant teams on the ground. This can help prevent and/or deal with issues prior to the next flight and can also serve to reduce turnaround times – leading to direct cost savings.
Portable W-IFE vendors such as AirFi and Bluebox Aviation Systems have added, or are in the process of adding, lightweight connectivity to their respective W-IFE services. AirFi LEO is already up and running and has more than 50 aircraft committed to using the service in the future. Bluebox announced it had successfully tested its solution with fflya’s lightweight connectivity service in the May 2024, and progress is expected to continue in this space over the coming months.
Are Airlines Beginning to see the Full Potential of IFE?
It’s clear airlines of all types are increasingly aware of the cost-saving benefits that IFE platforms can bring to their service, and this is partly thanks to vendors in the market getting better at highlighting these benefits to their customers. While a truly self-sustainable IFEC business model may remain elusively out of reach, there’s a lot that can be done to support the business case, improve net promoter score (NPS), and build loyalty with passengers.
To learn more about the trends shaping the IFE market, please enquire about Valour Consultancy’s new report, “The Future of IFE – 2024”.
