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Captain PaxEx. UP Q&A: APEX CEO Reveals IFEC Trends

Jun

7

2017

by Panasonic Avionics / in Industry

CAPTAIN PAXEX

UP Q&A: APEX CEO REVEALS INFLIGHT ENTERTAINMENT AND CONNECTIVITY TRENDS

With changes coming rapidly and regularly when it comes to inflight entertainment, who better than Joe Leader, CEO of the Airline Passenger Experience Association (APEX) to discuss trends and innovations coming down the pike? His association represents companies working to create a better passenger inflight experience in areas including IFEC, catering, aircraft interiors, retail, online booking and check-in technology.

Leader spoke with UP about the changing face of inflight entertainment, passengers’ demand for more robust connectivity products, connecting a passenger’s IFEC experience with an airline’s brand and how APEX is helping its members navigate the new technology world order.

UP: With inflight entertainment options changing rapidly, how are APEX members adapting?

Joe Leader (Joe): APEX members are thriving with the rapid evolution of inflight entertainment and connectivity options. We are seeing airlines install and refresh systems more rapidly than envisioned. We are also seeing low-cost carriers and ultra low-cost carriers more widely embrace IFEC solutions as they identify the right offering mix for their low-cost value propositions.

UP: What is APEX doing to help them adapt?

Joe: This spring APEX embarked on an educational campaign to help airlines understand how to make IFEC more of a profit center rather than simply a cost center. Newer airlines that lead with passenger experience, and the value perception it brings, are the ones who are most successfully challenging legacy carriers and gaining market share. We are seeing this in nearly every region of the world. Providing a flight with a better price alone no longer works — but providing an incredible passenger experience creates inroads when combined with value.

UP: Some airlines are going big on embedded solutions with huge content libraries and applications, while others are considering Wi-Fi-only options. How can the media buzz that surrounds creating Wi-Fi solution and embedded systems coexist?

Joe: The embedded and Wi-Fi-based solutions are complementary to one another. Typically airlines see their content watched at a 10-times-greater rate from an embedded IFE system. These systems are critical for long-haul flights on top-notch airlines. But on shorter flights, the bring-your-own-device option works absolutely fine unless competing air carriers have full-service embedded solutions. Carriers recognize that even for low-cost carriers, Wi-Fi-connected systems are becoming the norm for air travel. In many instances, we are seeing airlines use both systems alongside one another on the same aircraft.

“The embedded and Wi-Fi-based solutions are complementary to one another. Typically airlines see their content watched at a 10-times-greater rate from an embedded IFE system. These systems are critical for long-haul flights on top-notch airlines. But on shorter flights, the bring-your-own-device option works absolutely fine unless competing air carriers have full-service embedded solutions. ” — Joe Leader, APEX CEO.

UP: Who should own the IFEC experience, and what role will the integration and airline apps play in that context?

Joe: Airlines should tightly integrate their IFEC experience to their individual brand of passenger experience. With that clearly defined, they can delegate it to trusted partners. Airlines need to remember that passengers give much more net promoter score weight to the worst aircraft in the fleet rather than the best. That means that airlines need to make certain that their fleet universally reflects their brand values from an IFEC passenger experience perspective.

UP: Airlines are looking to inflight e-commerce to help them with the bottom line. What are the longer-term prospects for this revenue stream?

Joe: Inflight ancillary revenue in different forms will be a leading area of growth for airlines worldwide. The experience for passengers should be centered around ease of use and seamlessness. If you force a passenger to break out a credit card again, then you have a significant chance of losing the sale. Apple Pay, Google Pay and remembering passenger payment method at the airline level are solutions. If airlines remain focused on making additional purchases easy, then they will see revenue soar.

UP: You moderated a panel on connectivity revenue-generation models at the recent Aircraft Interiors Expo in Hamburg. The big question was, “Who will pay the cost for the enhanced inflight connectivity that passengers are demanding?” How is APEX helping members answer that question?

Joe: Amazingly, passengers will happily pay for connectivity one way or another. First, we are seeing airlines with connectivity receive a price premium over non-connected airlines of up to 18 percent. This is not from connectivity alone, but the connectivity is a top driver of brand perception. That means that some airlines are seeing connectivity paid for in their higher valued ticket price.

Second, connectivity costs continue to plummet compared to historical levels. This makes the higher-speed connectivity more affordable. For airlines, the best way to save on bandwidth is to have a robust selection of content on the aircraft. Otherwise, airlines will see their connectivity costs match streaming rates on the ground easily surpassing 50 percent of used bandwidth.

UP: Routehappy came out with a report in January saying that passengers around the world now have a 39 percent chance of boarding a Wi-Fi-equipped flight, but travelers are demanding more. How is APEX working with its members to boost this number?

Joe: We have reached a tipping point. Airlines now recognize that the embrace of connectivity in America will spread globally much more rapidly than originally envisioned. That means that airlines only have about 18 months before they are in the second half of the connectivity game. Airlines without Wi-Fi in a few years will be looked at as oddly as airlines without bathrooms today. Yes, you can fly from A to B, but passengers will have a short hop tolerance before they are quite eager to get off the aircraft.

UP: You and the APEX board recently identified strategic initiatives for the association. What are some of the key initiatives you will be focusing on?

Joe: APEX has tremendous depth with the inflight passenger experience, but we need to be a leading force for all of airline passenger experience. That requires an expansion of the breadth of the association’s work. We are developing programs with our industry leaders for next-generation ancillary revenue via targeted advertising, focusing on aircraft interiors as a critical passenger experience competitive advantage and integrating inflight services with advanced technology to maximize retail in our partnership with the International Flight Services Association (IFSA). In addition, we have taken some incredible strides since our March board strategic meeting to place APEX in mainstream news as the voice of airline passenger experience.

UP: How will your initiatives align with challenges and opportunities faced by the IFEC industry?

Joe: APEX’s initiatives will help carriers break down legacy silos and view the airline passenger experience as a turnkey journey. Offering better services to passengers translates into more revenue for our airlines and their vendors. We see tremendous opportunities for our industry, rather than challenges. Change and disruption to the status quo will both occur, but APEX is the association that embraces change as advances for our industry.

Sometimes people think back to the golden age of air travel, but in reality, those were smoke-filled cabins with movie projectors. Now everything is personalized, individualized, high-tech and connected. We are only at the beginning of a new golden age of air travel. Our efforts will help the airline and passenger experience industry reach new heights.