After our somewhat musical roundup of IFE content developments over the past 12 months, it’s David Whelan’s turn to address recent and upcoming trends impacting in-flight entertainment systems. Or should that be in-flight engagement?
A century ago, the “roaring twenties” were characterised as a period of economic prosperity and cultural revolution, famously captured in F. Scott Fitzgerald’s “The Great Gatsby”. While the golden age didn’t last, the optimism felt by many at the beginning of the decade is in stark contrast to the current 20’s. So far, this decade has been extremely challenging for everyone across the world, and particularly so for the aviation industry; although there are reasons to be optimistic that the worst is behind us.
As we approach the end of 2021, it’s certainly true to say we are in a better position than we were a year ago. 2020 was devastating for the industry, with losses of around $138 billion, and just 1.8 billion passengers flying throughout the year (down from 4.5 billion in 2019). Despite a difficult start to 2021, this year has been significantly better for airlines. IATA has estimated around 2.3 billion passengers will have flown by the end of the year and total annual losses will decrease to $51 billion.
Although some countries have reintroduced restrictions following the emergence of the Omicron variant, 2022 still looks like being a much more positive year for the industry as the recovery continues. IATA has forecast that passenger numbers will increase to 3.4 billion, similar to 2014 levels.
So, what does all this mean for the in-flight entertainment (IFE) market? What will demand look like in 2022 and how are vendors adapting to the gradual post-COVID recovery? This article lays out five predictions for next year.
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In-Flight “Engagement”
Traditional AVOD will remain a vital part of a comprehensive IFE solution, but companies are gradually diversifying their solutions and going further than ever before with what is expected of IFE. Vendors and airlines are increasingly looking at IFE as a means of managing the whole in-flight experience of the passenger. The COVID-19 pandemic has only accelerated this trend and the industry is now beginning to transition into a more holistic in-flight engagement strategy. In much the same way as telephone calls now being just a minor feature of what a smartphone can do, traditional IFE (i.e. a video player) is becoming just one aspect of what IFE systems are expected to deliver.
Digital transformation of the aircraft was inevitable and had already begun pre-COVID. There were two main purposes to this. First, to enhance the in-flight passenger experience by providing more choice and less friction. Then, related to this, help the crew manage the cabin in increasingly efficient ways.
Readers can expect to see an expansion in the number of IFEC solutions offering:
- Digital seat pockets
- In-flight catering
- Destination content
- Ecommerce platforms
- In-flight advertising
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Greater Prominence of Linefit W-IFE
Unlike the seatback IFE market, most W-IFE installations are retrofits – mainly because there remains a huge, untapped pool of candidate narrow-body aircraft to be equipped with the technology. Typically, only around 10-15% of annual W-IFE installations are linefit. Due to many aircraft deliveries being delayed in 2020, activity was weighted even more heavily towards retrofits than usual, resulting in a 96:4 split. For that reason, ensuring the installation process is as smooth as possible and that downtime is minimised has been a major point of competition among W-IFE providers; particularly for portable vendors where speed of installation is a major USP.
Retrofit installations may have typically been the main route for W-IFE providers to get their respective solutions onboard aircraft. While this will remain the case, Valour Consultancy expects there to be substantial growth in W-IFE solutions being fitted at the factory. With an increasing number of airlines seeing W-IFE as a major component in the urgent digitalisation of the cabin, the technology is increasingly likely to be part of the initial delivery.
Recent forays into the W-IFE market by Boeing and Airbus serve as an early indicator of this trend. As a result, Valour Consultancy expects annual linefit and retrofit installations to virtually even out by the end of the decade with the former forecast to make up around 48% of annual installations in 2030.
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Slow Recovery of Seatback IFE Market
The seatback IFE market has been hit harder than W-IFE for a number of reasons including the higher cost, more complicated installation process, and a reliance on widebody deliveries. Virtually all widebody aircraft come with seatback IFE installed at the factory and this has always been a major source of business for seatback IFE vendors, outweighing the retrofit market – which has also dropped off significantly.
As a result, the reduction in widebody deliveries since the beginning of the pandemic continues to hit the seatback IFE market. In fact, 2021 has so far seen less deliveries than at the same stage in 2020. The good news is – we do expect widebody deliveries to increase in 2022 – up 34% on 2021. Consequently, we can also expect to see the number of annual installations of seatback IFE rise too.
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Portable W-IFE remains a strong option in 2022
The portable W-IFE market was the only IFE type to grow its installed base in 2020, rising 32% to over 1,300 equipped aircraft. While part of the growth can be attributed to rollouts that began pre-COVID, several airlines opted for a portable solution post-COVID as the most cost-effective means of rapidly digitalising part of their cabin service.
Valour Consultancy expects portable W-IFE solutions to be particularly popular over the next few years as airlines seek to adapt to the new climate. For airlines seeking a simple digital platform which can take over services such as the inflight magazine and the food/beverage ordering, portable W-IFE represents the easiest and least expensive way to do so.
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Greater Personalisation
Personalising the digital experience is at the forefront of the consumer technology market, and the aviation industry is beginning to follow this trend. In 2022, expect to see more discussion around personalising the IFE experience for passengers. Vendors and airlines are becoming increasingly proficient at offering travellers a more tailored in-flight experience. With every year that goes by, Millennials and Gen Z travellers make up an increasingly higher proportion of all air passengers and their experience of growing up in a digital environment means the number of flyers who see the trade-off between providing information about themselves and getting a more personalised experience is increasing.
Connected IFE allows airlines to create more bespoke passenger experiences. This involves leveraging big data in flight and having it supplement data stored in customer relationship management (CRM) systems. This wealth of information is then crunched in such a way that passengers are presented with personalised content while on board the aircraft. IFEC systems are therefore being designed to be tightly integrated into an airline’s CRM system containing not just viewing history but information on things like past purchases, routes travelled, food preferences, allergies and so on.
Summary
While next year will still present challenges for the IFE market, there is plenty to be optimistic about. W-IFE was resistant to the immediate impact of COVID and will begin to thrive in the recovery stage as airlines look for cost-effective means to digitalise the cabin. Seatback IFE will take longer to recover, but we will begin to see green shoots in 2022 as linefit production increases.
For more information on the trends to look out for, download a copy of our latest report brochure on The Future of IFE.
