Well, well, another year has passed and IFExpress is now in it’s our 25th year and we still love the craziness of this entertainment and connectivity based aircraft business; albeit, it is getting harder to stay current with all the ups (and downs) of technology, personal preference, and airline profit-making. According to IATA, in 2015 U.S. airlines raked in a profit of $25.6 billion, a 241% increase from 2014. The drop in oil prices meant big savings for the industry. Airlines spent nearly $27 billion on fuel in 2015, 38% less than in 2014. The results from 2016 are yet to be compiled and it will be interesting to see how they have fluctuated.

This year (2017) looks interesting and potentially problematic for the following reasons: fuel price increases, growth of airline fees, and a large increase in delivered aircraft. In fact, IATA predicts a reduced profitability ($29 Billion) based on slower GDP and rising costs. The folks at Aviation Week are predicting a downturn as well: “After years of high profitability, the airline industry appears to be entering its next potential downturn. The International Air Transport Association is predicting much reduced profits for 2017 in most markets as airlines are no longer benefiting from lower oil prices and overcapacity increasingly becomes a problem in many segments.”

From the other side of the equation, the IATA predictions include a 5.1% increase in tourism (we have a hard time with this one because of all the political madness in the world) and the airlines will take delivery of approximately 1,700 new jetliners. New planes means new IFEC and this is good for our team. Furthermore, this obviously does not include IFEC retrofits which will increase as a result of data hungry passengers and crew. Although, focus shifts from entertainment to data connectivity demand may be in the offing. As noted almost everywhere, passengers carry-on devices, whether it is for entertainment and/or communication, is resulting in another competing growth area for IFEC, which may negatively effect some seatback entertainment growth as passenger device purchases technically outpace anything that an airline can provide. However, we do note that upper class big screens win out in the front of the plane since no one carries anything onboard with a screen over 15 inches, or so.We should also note that in-seat power is probably a related growth item and folks in this arena have seen, and will continue to see, a lot of action.

Now, lets look at what we predicted last year in the IFEC related world for 2016. We don’t want to blow our horn because a lot of our observations came from a ton of research time on the Internet –  we just did a good job of compiling the information:

A) Messaging

Last year we wrote: “While 2016 may have a few techno-changes from 2015 and summary numbers differ, we are are riding the same messaging train! Since technology and media have grown so much (at least in the US) folks are spending more time on it than sleep or work (Business Insider), there appears to be plenty of opportunity time for messaging (Facebook, Twitter, and the like) but messaging will be even bigger. If you don’t believe it, just watch the ‘head down time’ at a public function where time is spent on devices – it’s less invasive and non interruptive. Why is this a boom time for messaging, you might ask? The answer must lie in new, portable communication technology for one. If, as some writers predict, we spend over half of our waking day with media and technology, and because the devices and connectivity mediums are there, plain and simple, we will text. From a broader perspective, time on major digital activities will increase and has done so for each year for the last 5 years. To a greater extent, these behaviors are clearly a dominating trend and will continue to grow for the foreseeable future. Further, as folks ‘cut’ their cable TV, products are rising up in the wireless world to support streaming TV via the Internet for portable devices. Check out this FierceCable article for more information on this subject.

On aircraft, we also expect to see this increase, after all some 97% of passengers (notes SITA) have devices with Facebook Messenger, What’s App, and WeChat. These devices (and apps) and limited connectivity channels are there, all we need are more lower price solutions (free or flat fee)… and yes, there are a few on the horizon and we will discuss them this year, but we digress for now. If anything will be a big deal in inflight lifestyle changes, it will be more messaging!”

We saw this one coming! Messaging just keeps growing and as the messaging options grow, so do the users. One of the best newer ones is SMS. Sending email to SMS is free for the sender, but the recipient is subject to the standard delivery charges. Only the first 160 characters of an email message can be delivered to a phone, and only 160 characters can be sent from a phone. Text-enabled fixed-line handsets are required to receive messages in text format.

Facebook Messenger is an instant messaging service and software application which provides text and voice communication. Integrated with Facebook’s web-based Chat feature and built on the open MQTT protocol, Messenger lets Facebook users chat with friends both on mobile and on the main website. In Asia WeChat is the big one while Android has HelloSMS, TextraSMS, and on and on. Further, the phone companies have a batch of their own connectivity applications. Face it, we are text message junkies and there seems to be no end because of our devices and lifestyle.

B) Audio

We noted in January of 2016, “From an audio perspective, our daily life is a good predictor of what we want, and will do, on airplanes. Streaming audio is not new on the ground, with some predictors noting 4 hours of each day in that pursuit. On planes it is usually a ‘canned’ experience because connectivity to the ground is not cheap. However, with the demand of services like google Play, Amazon, MP3, NPR, Apple Music, Spotify and many more, there may be a future for advertised, real-time, (audio) streaming… if for no other reason than news. Today it’s the ‘under 17’ crowd that spend the most streaming time but they do get older and will replace the ‘over 55’ who rely mostly on AM/FM – something to think about for your next IFE system.” 

For sure, this audio solution has been replaced by video streaming requirements on our personal devices. While we have no data but our own usage, we find that if we want audio (music) on a flight, we use our portable devices. A good example is taking place on phones – the latest iPhone we obtained with 128 Gigabytes, streamed, stored audio and video are no problem. Live information like news is another story. However, we should note that with the increase of Wi-Fi, and potentially Bluetooth (and possibly optical), things in 2017 will certainly get better. With more bandwidth for storage, and increased ground connectivity, programming will expand so that even with portable stored content, more video entertainment and news will be appealing. We should note that we have heard that some low cost airlines plan no seatback entertainment but rather are relying on customers to use their personal devices for airline streamed audio and video.

C) Bags/Baggage

Last January we wrote: “Perhaps the past year has been better (data not out yet), but in the previous year (2014), the passenger count that lost a bag reached 24.1 million and, we note, the trend has been dropping (2007 – 18.9 lost bags per thousand pax, down 61.3% to 2014 – 7.3 lost bags per thousand pax). However with increasing load factors, increased seating and increasing traffic, it will be a real challenge for airlines to keep up.” 

As it turns out, the airlines have been doing much better. SITA states: “2015 saw total airline passengers rise 7% from 3.3 to 3.5 billion and mishandled bags drop from 24.1 to 23.1 million, a 10% improvement with the extra passengers taken into account, costing airlines a total of US$2.3 billion. Numbers for the last decade show a steady downward trend in mishandled bags after lost bags peaked in 2007 at 46.9 million, dropping by 50% over the last nine years and saving the airline industry close to $23 billion in the process.” While the data has not been available for 2016 it looks like the airlines are on a downward trend for lost bags. SITA says: “Numbers for the last decade show a steady downward trend in mishandled bags after lost bags peaked in 2007 at 46.9 million, dropping by 50% over the last nine years and saving the airline industry close to $23 billion in the process.” With the advent of electronic and passive tagging, things should only improve.

To be continued next week.

Publishers’ Note: We plan to publish your predictions on Jan. 17 so feel free to send us your IFEC predictions as well. Just tell us if you want IFExpress to attribute your words to you or not. PLW/TJW