Inflight broadband stands to become a $5.2 billion market in the Middle East by 2035—and a $130 billion globally, according to findings from a new study entitled Sky High Economics. It was conducted by the London School of Economics and Political Science along with British mobile satellite communications provider Inmarsat.
The study also forecast that airlines in the region will take a $1.3 billion share of the boost in additional revenues.
The findings underpin activity already underway among airlines in the Middle East. In November 2017, Dubai carrier Emirates signed an agreement with France’s Thales Group to equip the airline’s new Boeing 777X aircraft with broadband inflight connectivity technology. Emirates’ Boeing 777X aircraft are due to enter service starting in 2020.
Over the years, Emirates says it has invested over $200 million to equip its aircraft with connectivity technology and, as of late last year, that more than 800,000 of its passengers per month connect while inflight.
Based on current IATA data and industry sources, the Sky High Economics report says globally airlines will benefit from four new revenue streams: broadband access charges for providing connectivity to passengers inflight; e-commerce and destination shopping while aboard aircraft; advertising and sponsorship deals; and premium content such as on-demand video.
The report revealed that airlines stand to take in an extra $3.21 per passenger due to these new, Wi-Fi enabled revenue streams. At present, airlines around the world average an additional $17 per passenger from traditional ancillary services such as duty free purchases and inflight retail, food and drink sales.
“The airline industry is rapidly evolving across the world, including the Middle East. This research shows that airlines have a clear strategic opportunity to become distinctly more retail-focused and reap the benefits of this,” said Alexander Grous, from the London School of Economics’ Department of Media and Communications, and author of Sky High Economics.