Impact of electronics ban on airline IFEC considered

Seeking to mitigate what could be a profoundly negative impact to business as a result of the electronics ban involving nine airlines and 10 airports in majority-Muslim nations, Emirates today put on a strong face. The carrier revived its Jennifer Aniston campaign, which shows the actress enjoying the inflight entertainment (IFE) system so much in economy class that she doesn’t need to return to her first class suite. That positive attitude is important, of course, but it belies the reality of what this policy means to passengers and the impact it will have on the affected carriers, and businesses in the IFE and connectivity space.

Some 18,000 passengers each day travel to the United States from one of the 10 airports on the US Department of Homeland Security’s laptop/tablet ban, revealed yesterday evening. The UK markets affected by that country’s own ban today will add dozens more flights and thousands more passengers to the numbers.

Some portion of those passengers are traveling only with a smartphone or similar device, but the number who also fly with a tablet or laptop (if not both, plus a Kindle) is massive. Moreover, premium customers – those who often pay big money to fly up front – are disproportionately business travelers. They expect to be able to access inflight connectivity when needed, and to work while traveling. The new rules completely derail those expectations.

There is no doubt that inflight connectivity plays better on smaller devices. With the exception of ill-timed app updates and cloud sync processes, the consumption on mobile devices is generally lower. That means apps and content load faster using less bandwidth. But that is a small silver lining on an otherwise dark cloud now hanging over the industry.

Removing larger devices from the cabin quite simply reduces demand for connectivity. For the carriers and providers that price connectivity on a consumption basis, it also reduces potential revenue. In a business where most of the costs are fixed, this is a significant concern. Panasonic Avionics and SITAONAIR are among the connectivity service providers exposed to this risk as they provide the bulk of connectivity to the affected airlines in the region.

The new rules also bring embedded IFE systems back to the fore for many passengers. Those who previously became self-sufficient in carrying their own devices on board for entertainment will be more dependent on the airlines to provide for their needs. Emirates passengers can avail themselves of a vast content library. But for carriers with more limited IFE content selections, the impact on passengers will be even more pronounced.

Airlines may want to consider offering more content to appease their passengers. Unfortunately, bolstering IFE content quickly is not cheap as licensing costs must be considered. Content service providers, such as Global Eagle Entertainment, Inflight Dublin and Spafax, are doubtlessly considering what the #ElectronicsBan will mean to their airline customers if they have to ride out this delay over an extended period of time.

Of course, if the delay does stretch longer than a couple of weeks or months then the larger impact to the global aviation market and the viability of some routes and airlines will come into question. Restoring demand after even a few months of interrupted service would be challenging. The negative impact on profits and associated investments in passenger amenities – which are inextricably linked – should not be underestimated.

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12 Comments

  1. I watched the Jennifer Aniston spot. Even if their in flight entertainment is so good that you won’t need your laptop, if I’m a business traveler, I don’t have time to be watching movies. I have to work, on my laptop.

    • Of course, and I make that point quite clearly in the story.

      And there are a dozen other airlines impacted where the IFE system is not nearly as good nor the selection as broad. Passengers on those flights will really suffer.

    • On most business trip flights, I don’t work. I also don’t watch movies on my laptop. But I need my laptop with me for my job, of course. Entertainment wise, I’m more likely to watch something on the seatback system than not. But, the point isn’t entertainment. It’s security and safe transit of some very valuable stuff. In fact, the camera gear I travel with on non-work trips has MUCH higher replacement value than either of the laptops on my desk.

    • At least with a camera you can remove the memory cards and only lose the hardware if they are damaged, stolen or otherwise misappropriated. Losing my laptop is about may more than just the cash replacement costs.

  2. Kerry

    There will be a portion of the 18K pax who might decide to take alternative routes /carriers that are exempt from the ban and hence that could also offset some of the exposure to the IFC suppliers

    • Seth Miller

      I absolutely expect that some travelers will reroute around the ban. That will have a significant impact on both the airlines and their service providers.

  3. On those flights, IFE is the least of my worries. Whether my laptop would make it to me when I picked up my checked luggage would be the first.