How Much Money Has Your IFE Made?

“The airline industry is a great industry, but it is also a terrible business.” – anonymous

This Hot Topic began as a simple phone call to Thompson Aerospace as a result of the CEO’s request for a return call. Planning a standard set of questions about new hardware, airline take-up, weight (Oh, it does weigh 3.2 pounds per seat) our interview began as most. Mark Thompson (President & CEO) began the data run down and if you have met him, you just hang on because a LOT of data is coming your way. And it did, a lot. Somewhere in the middle of the second question about advertising on the system he said: “… and we are generating somewhere between $20,000 and $30,000 per month per plane with the IFE.” “Wait,” I yelled, “How do you do that?” That’s where our IFE story took a recalibrating turn and our total discussion launched off on pay-per-click adverts, Google pay model, QR codes, and after-flight airline revenues. If I have your attention, read on.

To begin at the beginning, Thompson Aerospace is the brainchild of Mark Thompson (and his inspired team) who had a better idea. Actually, they have had a lot of them. Their one goal was to build an airline IFE system that actuality paid the airline for it’s costly purchase, installation, fuel burn costs and content fees. That was 5 years ago. The 1NET system hardware has gone through a number of iterations. According to the company the narrowbody IFE market has matured… but the advertising concept has blossomed. No doubt, he was inspired by Silicon Valley’s Page & Brin, the co-founders of Google. Simply put, if you see advertising (text or images), advertisers will pay for click-thru’s because that is how the world works – you see it, you might buy it. The advertiser is betting on the power of the screen – it happened when TV was invented and it happened when Mark Thompson first put his system on a plane. Our image this week is the result of many hours of hard work by the Thompson team and represents a pretty simple design: fliers choose the menu choice, press one (or more) of the capacitive touch screen numbers on the right side of the screen and at least 2 things happen: (1) the flier gets the selected menu screen selection and (2) the computer registers a click-thru. This goes on for the duration of the flight. Advert selection, destination choices, entertainment viewings… it all gets stored. You might guess the next step – every 2 weeks the airline and the advertising service bureau receives a summary of the requests/viewings and the airline gets a check. At 1 to 5 cents per click, the tally adds up as daily flights, sometimes short as an hour, record revenue and usage every passenger, every flight, every day, and every month. This is a proven model and we think Thompson Aerospace has broken the IFE pay-per-click barrier!

There is a lot riding on a statement from Mark, “We can guarantee that each airplane will generate $20,000 per month.” In fact, the Thompson folks note that a plane with the 1NET system can generate twice the passenger profit with it. You be the judge of that statement. From an advertising perspective, Thompson notes that there is $6.8 Billion in out-of-home advertising and that he plans to garner some of those expenditures. Further, Mark notes, “Seventy percent of that money is spent by a person who takes at least one airplane flight each year.”

Another feature we really like is the smartphone QR code passenger interface. You will notice that the “Athens Cab” banner advert has a QR code on it. Mark Thompson saw the passenger UI value in this optical technology. With a QR code, the passenger downloads data from the advertiser that, when activated on the ground, gets location information, coupon deals, and a future “connection” with the airline and the advertiser. Oh yes, the onboard click-thru counter registers a hit. Get it? Thompson has found a paperless way to connect to passengers, register a viewing, get the passenger more information, provide later mapping for the viewer, and deliver deals thru the QR system. More importantly, they have found a way to service the passenger, provide a service for the advertiser, develop revenue for the airline and get the system hardware paid off. And, as Mark notes, “Our per seat prices for hardware are around $3000 per seat… the system pay’s for itself and makes revenue after the fact.”

Airlines, to garner more revenue, are adopting some bus-like promotions. If you think pay per view advertising is not consistent with airlines, check out this link from one of Thompson’s teammates, Global.Onboard.Partners. There are a lot of mutual future benefits of a connection between the two companies. The message here is promotion means money to airlines and your flying future will no doubt interact with advertising messages and techniques pioneered by Thompson. Our only question was one of wonderment that it has not shown up in the US yet. This story just gets more interesting as Mark cautiously mentioned a new post-flight revenue system, “…that I can’t say much about just yet!” Stay tuned!!

If you work for an airline – you may want to show this story to your boss and check out the Thompson Aerospace website and their advertising site.