The lack of inflight connectivity at Cathay Pacific has been surprising to some given the carrier’s well-established premium position. But five years after signing a memorandum of understanding with Panasonic Avionics for Ku service fleet-wide, Cathay is poised to finally break into the connectivity space in 2016 with its Airbus A350s.
Yet the Hong Kong-headquartered carrier remains conservative; it questions whether a consistent experience can be offered, whether passengers will pay for it, and whether connectivity will even be profitable (at this juncture it expects it to be unprofitable).
“The feedback we’re getting is that the experience is often disappointing,” Cathay GM product (and now GM sales & distribution) Toby Smith remarked earlier in the summer. “We want to make sure when we launch it that we don’t raise expectations and people go ‘It’s too slow and it keeps dropping off.’”
Cathay included connectivity on its specification for the A350-900 (along with Panasonic’s eX3 embedded IFE and eXW wireless IFE); the first -900 is due to be delivered to Cathay in February 2016. Smith expects the carrier’s Panasonic Ku connectivity trial to commence once Cathay has a few A350s; 12 are expected by the end of 2016.
The carrier has a longstanding relationship with Panasonic (it’s also aware of the wireless IFE experience via its Dragonair A320s, which have eXW in lieu of embedded IFE).
Besides passenger use of Ku-powered Internet and cabin crew functionality (such as real-time processing of duty free transactions), a separate channel will be allocated for avionics, he says, without providing details.
It is not uncommon for airlines to commit to offering connectivity without a full business plans. But Cathay wants first-hand experience before making a deeper commitment. “Let’s get a clearer picture on our own passengers on our own fleet rather than listen to industry speak,” Smith says.
The trial will give Cathay insights on take rates and what exactly passengers use inflight connectivity for. Interestingly, the feedback Cathay has received from passengers about the prospect of bringing connectivity aboard has been mixed, with over half saying they see flights as a rare chance to switch off. “It’s a bit like when the first Blackberries came out and you see the little red flashing light. It’s quite hard to ignore,” Smith says. “If you know there’s wifi onboard, you know you’re in a different mental space – I need to do some work.”
Other passengers want the choice, he adds.
With concerns about connectivity’s reliability, passenger demand and costs, Cathay expects its Ku trial to guide the carrier about further deployment and what the business model should look like. It is not a passing decision: “We need to understand the value because we could choose to make significant investments in other aspects of the customer experience,” Smith says.
Ultimately, Cathay expects to equip its fleet with connectivity, meaning retrofits at both the flagship carrier brand and Dragonair. This is partially for pragmatic reasons. Some airlines offer connectivity only on long-haul aircraft, but Cathay does not see a clear way to segment deployment. “If you have a nine-hour flight to Sydney overnight, the connectivity rate is going to be a lot less than a three-hour flight to Singapore during the day,” Smith says.
Consistency – a hallmark of the airline – is also a factor. “We’re always trying to deliver a consistent customer experience. We need to take that into consideration,” Smith says. “If we have five flights a day to London, two of which might in the future be operated by the A350 and three by the 777, we don’t want passengers to go ‘Oh which flight should I take because this one has it and this one doesn’t?’”
This year Panasonic won a key license to offer connectivity in Chinese airspace. Prior to that, airlines had to turn off connectivity in Chinese airspace. For Cathay, that would have been a long duration on many flights, but it wasn’t necessarily a deal-breaker. “It was always a major consideration,” Smith says, but without Chinese approval “I wouldn’t say we wouldn’t have launched it.” Indeed, Cathay’s MOU with Panasonic was brokered long before China showed signs it would change track.
Even so, the carrier expects the service to be unprofitable. “It’s an investment in the customer experience,” Smith says. His five-year outlook is no stronger. “It will be an investment in the customer experience,” he reiterates.
Other airlines have engaged partners – ranging from T-Mobile to Amazon – to share connectivity costs in exchange for brand promotions, but Smith does not see this approach necessarily working for Cathay. “We’d like to think we could find commercial models that can help to defray those costs but we’re also very mindful of our brand and brand values. We’re very considered about the brand partnerships we have.”