In-Flight Innovation is a commentary article written by Brulte & Company Co-Founder Grayson Brulte that was originally published on The MIT Sloan Executive Education innovation@work™ Blog.
Would you like in-flight Wi-Fi on your next flight? It will cost you a premium in addition to any movies or food that you might purchase on board. If you are traveling on a plane that offers Gogo, and you would like to connect to the internet, it will cost you $14 for a daily pass, and a monthly pass for a airline you frequent will cost you $39.95, according to Gogo’s “Buy Before You Fly” service pricing chart. Forget to buy access before you fly? That will cost you extra. Should it? I don’t think so.
Airlines are not innovating and enhancing the in-flight entertainment experience. Instead, they are falling back on their existing model of adding new fees and raising existing fees for services. Fees do not create value—they create customer service headaches.
It is time for an airline to become an industry leader and to cannibalize their existing in-flight entertainment offerings. The first step should be an all-encompassing in-flight entertainment package that creates value for their paying passengers by offering a great experience. Whether traveling on business or for pleasure, passengers will gravitate toward an airline that is offering them value.
Perhaps Harry Sloan and Jeff Sagansk of Global Eagle Entertainment will be the innovators who will change in-flight entertainment. They are already starting to innovate by providing the technology that powers DISH’s free live TV programming on Southwest Airlines. Passengers can watch live TV using their smartphones, tablets or laptops for free as long as the promotion is active. But why stop there when it could be complimentary all the time?
Imagine a complimentary in-flight Wi-Fi service that would allow you to stream HBO GO and Netflix on your next flight? Or starting a movie on your iPad and continuing to watch from where you last left off on the screen behind the seat? What about an in-flight entertainment system that would allow you to load your favorite movies, games, and music before you even stepped foot on the plane?
Now imagine if all of this were complimentary.
In-flight experiences like this will happen when an airline steps up and says we want to be a leader and an innovator. We want to create value for our passengers and change the way you fly. This is the future of commercial in-flight entertainment. The only question is which airlines are willing to fundamentally rethink their existing in-flight business model to create value for passengers?
According to Gogo, only about 6% of fliers used their in-flight Wi-Fi service in the first quarter of 2013. With only a 6% adoption rate, the market is demonstrating that there is little to no demand for paid in-flight Wi-Fi at their current prices and restrictions in tandem with a substandard internet connection.
Will Richard Branson be the innovator who looks at the numbers and notices that less than 16% of passengers aboard Virgin America flights pay for in-flight Wi-Fi, according to The Wall Street Journal? Will he build on Virgin’s heritage of risk-taking by cannibalizing an existing revenue stream to create value for Virgin America passengers?
The innovations suggested above would allow airlines to slightly increase the average fare, as consumers would be more focused on value-added services rather than strictly upon the price. Alternatively, the airlines could sell non-invasive in-flight advertising to make up for the lost revenue. At the current prices, in-flight Wi-Fi is primarily appealing to the frequent business traveler; that would change if an airline offered complimentary in-flight Wi-Fi.
“I would be more inclined to fly an airline which offered complimentary Wi-Fi and a bespoke in-flight experience,” said Jeanne Caputo, VP of Sales and Industry Relations for MTC Limousine & Corporate Coach, a global transportation company based in Bedford Hills, NY.
Airline executives: it is time to start innovating and creating value for your passengers. Frequent Flier programs and updated airport lounges are no longer innovative. Innovating is disrupting and sometimes cannibalizing an existing business model in order to grow the business and create value. Passengers are full of great ideas—sometimes you just have to listen.
Would you fly a particular airline if they offered complimentary in-flight Wi-Fi and offered an in-flight entertainment experience tailored to you? Please share your thoughts.