Competition heats up for inflight mobile telephony

Mobile satellite communication providers are looking at airlines to grow revenue after consolidating land and sea operations.

Middle Eastern carriers are expected to drive sales for inflight mobile telephony after three regional airlines signed on for the service this year and several others are in advanced negotiations to implement the service.

The aviation industry is still deliberating possible passenger issues but the service will nevertheless become a permanent fixture on flights, analysts said.

"Aviation is going to grow. More airlines are going to be using satellite service. Ever since we started offering good products for aviation, it has grown by a couple of percentage points. Today, about seven per cent of our total revenue comes from the aviation sector and there's more and more companies out there adopting our services," Samer Halawi, Vice-President – Strategic Corporate Development, Inmarsat told Emirates Business.

The potential of inflight mobile telephony business is still an uncertainty and current revenues stemming from it are being treated as bonuses for mobile satellite operators. However, after Royal Jordanian, Oman Air and Jazeera Airways jumped on board this year, it is now an emerging segment with great potential, said Halawi.

"If you look at the traditional users, you have the maritime industry. They use satellite communication along the main shipping routes, which are quite consistent year after year. Land operations for armed forces and remote areas also remain consistent. But the new adopters are in the aviation sector.

"Emirates has been adopting GSM in the air and that creates growth for us in the aeronautical sector from the region. Because the traffic from GSM over the air goes through us when it goes from the airplane to the ground," said Halawi.

Inflight telephony service provider AeroMobile said it logged 25,000 calls in the Middle East in 2009. While Emirates remains its only regional customer, interest has been very high from the region this year and talks are underway, said company spokesperson Steve Double.

"Passengers are expecting the service and demanding it in the Middle East. We have just had our one millionth customer make use of the AeroMobile service with Emirates, and over 35 per cent of these users are from the Middle East," he said.

The service allows passengers to use their own mobile phones to make and receive calls and text messages. An average call costs about $2 a minute, which is usually half the cost of seat-back phones available on board which are payable by credit card. Prices of these calls are expected to go down in line with the current trend of roaming charges being reduced.

After signing Lufthansa as its latest client in October, AeroMobile Chief Executive Officer Bjorn-Taale Sandberg said major airlines are recognising the need to keep their passengers connected with broadband and mobile connectivity, covering mobile phones and Blackberries. "We clearly recognise the demands of the long-haul business traveller. We are providing airlines with flexibility and a future-proofed connectivity vision. We have customer commitments from airlines operating Inmarsat Classic Aero, Swift64, SwiftBroadband and now Ku band. Lufthansa's commitment to Panasonic's solution, will allow AeroMobile to deliver a much richer user experience, provide more comprehensive value-added cellular services and a growth path to 3G," said Sandberg.

The company is seeing growing demand for both voice and SMS facilities, particularly in the Middle East and Asia and is confident there's more to come. "As awareness grows, we have seen as many as 200 phones attached to our network in-flight," he said.

AeroMobile, which was the first company to offer in-flight mobile phone services in full commercial service when it launched with Emirates in March 2008, is currently installed on more than 50 wide-bodied aircraft across six aircraft types with Emirates and Malaysian Airlines.

The company expects this figure to rise into three digits in 2010. The Lufthansa announcement means AeroMobile now has commitments spanning all wide-bodied aircraft variants including the Boeing747 and Airbus380. Earlier this year, etisalat announced that more than 56,000 of its customers have experienced the in-flight mobile service, by using their mobiles phones in the air, since its launch last year through the AeroMobile system. According to Aeromobile, this represents 27 per cent of the total users across the world on its network. A company spokesperson said the trend continues to be upward.

The service was first operated by etisalat in the UAE on an Emirates flight between Dubai and Casablanca in April 2008. The system has since been installed on 32 of the Emirates airline's fleet, and is available on about 25 per cent of its aircraft. Emirates operates more than 60 Aeromobile equipped flights in a day to various global destinations.

Commenting on the service, Essa Al Haddad, etisalat's Chief Marketing Officer said: "Inflight mobile services target a niche audience who prefer to be virtually connected all the time. Since its launch last year, etisalat's in-flight mobile services have been a huge success and have received tremendous positive appreciation from its customers."

"We can relate to the necessity of the customer to remain connected with their business, family, and colleagues whilst they're travelling, and we're delighted to make this possible for them through our association with Emirates airline and Aeromobile, while they are in the air," said Al Haddad.

"GPRS data services are also available for our customers in air, enabling them to surf the internet, download their emails, or enjoy multimedia services, while flying," he said. Etisalat customers can benefit from in-flight mobile services while traveling on Emirates airline to selected routes including London, Casablanca, Cairo, Sydney, Damascus, Khartoum, Karachi, Johannesburg, Hong Kong, Bangkok, Perth, Melbourne, Paris, Rome, Milan, Munich, Nice, Bombay and Kuala Lumpur. Passengers using the service are learning "inflight etiquette" and keeping their phones on silent to prevent disturbance to others. However, airlines such as Oman Air will switch off the service on night flights, said Oman Air's Chief Executive Peter Hill.

"The guidelines for passengers are to put their phones on silent for incoming calls, so it's not an issue for us or the airlines who are free to turn the service off during night flights if they so choose. We have worked closely with Emirates to promote a social etiquette and it's proved to be a non-issue," said Aeromobile's Double.

Looking ahead, Halawi said, enterprise solutions could drive growth in this emerging sector.

"Tomorrow you might be able to use your Blackberry and start emailing in the plane. That might be the killer application. Maybe SMS will be the killer application. We don't know exactly which it will be and what will drive growth. There are questions about this. Do people want to do emailing in the plane or do they want to sleep? Do they want to watch a movie or do they want to talk on the phone? Will they let people have phones going off all the time or not? There are a lot of questions surrounding the service and these are early days," he said.

Airlines are also divided on the service. Carriers such as Etihad Airways are yet to deploy the service.

"This is not the feedback we're getting from our passengers at this time. If future passenger research asks for it we may look at it. But not at the moment," said Leo Seaton, Head of Media Relations, Etihad Airways.

 

Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.