While it’s easy to stay connected on land, staying connected in the air is a daunting task. In-flight connectivity (IFC) is expected to be a $130 billion market by 2035, contributing $30 billion to airline revenues ($15 billion from broadband access and $15 billion from dependent services such as e-commerce and in-flight advertising). Today, 83 airlines are providing IFC services; it’s expected to reach 100% commercial airlines by 2035. There are 2,695 in-service terminals (flights equipped with Wi-Fi) and are expected to grow to 25,929 flights by 2025. Major airlines such as Emirates, JetBlue, Norwegian, Turkish, Air China and NokAir offer free in-flight Wi-fi service, but the average tariff is $5-10 per hour and $15-20 for a full day service in long-haul flights. Short-haul flights may need to consider alternate revenue mechanisms and provide the service for free.
The Indian scenario
India is the ninth-largest civil aviation market in the world with 550 aircraft, and annual passenger traffic of 265 million inclusive of 22% international passengers. This is expected to reach 420 million by 2020. Assuming the average annual flying time of 90 minutes in India, passengers stay offline for 400 million hours annually, resulting in productivity loss. Considering the average per hour productivity of $10-15 per person, and 50% travels are work-related, using IFC for one hour an additional opportunity of $2-3 billion can be created while on air travel. The telecom regulator has showed green flag to IFC.
How does IFC work?
Direct air-to-ground: These are specialised ground-based mobile base stations that relay signal to on-board access technology placed on the aircraft. The aircraft connects to the nearest terrestrial tower and a handover happens when the aircraft moves to the next base station. For efficient terrestrial communication, low frequency bands are being considered due to their high efficiency and longer coverage, whereas high frequency bands pose elevation challenges (A2G LTE uses 800MHz spectrum band with a small bandwidth of 2×1.5MHz, which is capable of providing speeds of up to 75Mbps to planes and 25Mbps from aircraft at distances of 100 km and speeds of 1,200kph.
Satellite: The aircraft connects to a constellation of satellites in the geostationary orbit to send and receive signals via antennas place on top of the aircraft. Ku (12-18GHz) and Ka (26-40GHz) spectrum bands are used to provide wide and spot beams to connected aircraft. Satellite-based communication is providing data speeds up to 50Mbps in the US. Though a combination of air-to-ground and satellite ensures seamless connectivity, there are challenges.
Network: Air-to-ground base stations are the cheapest way to provide connectivity but higher altitude and flying above waterbodies restricts communication. Satellite communication is expensive as well as comes with high latency.
Affordability: In-flight Wi-Fi requires airlines to install new equipment, sign agreements with telecom operators, satellite service providers and content providers, which, in the long run, will make airline tickets expensive and can be a challenge for low-cost carriers. Indian airlines are expected to charge 30% of the fare for the service (Rs 500-1,000). Price-sensitive consumers who spend less than Rs 500 per month on broadband may find it difficult to afford such tariffs.
Quality of service: Satellites divide geographical regions into smaller areas to provide broadband connectivity, which is efficient for fixed residents and low-speed mobility. Providing internet connectivity to high-speed aircraft requires frequent hand-offs, which increases the level of interference and hampers the quality of service. Ground-based base stations have limited transmitting capability, and interference occurs due to weather conditions, distance and noise.
Security: Considering cyberthreats and the sensitivity of aircraft network, IFC should use separate channels to provide Wi-Fi, which will not interfere aviation communication channels. Security should be given utmost priority.
IFC is great news, but to woo price-sensitive Indian customers, airlines need to provide affordable tariffs. Since cheaper tariff will be a burden for airlines, they need to find a balanced tariff or provide Wi-Fi as an add-on; they can also consider generating revenue from ads, corporate offerings, e-commerce, premium content, etc. It will be interesting to see how airlines adapt to Indian conditions.
Hemant M Joshi
(Partner & Leader, Technology, Media & Telecommunications, Deloitte India)