Connectivity Pulse: Pricing Trends in the Cabin for Connectivity Services
In our previous article, we discussed how catering for diverse expectations with various pricing points can maximize connectivity take-up and service revenues in the cabin. Getting pricing right is key to delivering a great passenger experience, while adapting to changing customer needs.
That's especially true when you consider that no two passengers are the same. Passengers have very different needs and pricing sensitivities. For business passengers, staying connected is an urgent need and their employer might be the one paying the bill, so they aren't as sensitive to cost. Younger leisure passengers might expect Wi-Fi and other connectivity services to be free like it is in public places on the ground. The pricing and services must be relevant to the various consumer segments in the aircraft.
Pricing for connectivity services in the aircraft has historically been sold by megabyte (MB). In a world where consumers with smartphones are increasingly paying their mobile providers for unlimited data, and therefore not worrying about the amount they use, it can be difficult for passengers to decide the right amount of MB to buy in-flight. This can dissuade passengers from buying altogether. Difficult to understand, perceived as expensive and lagging the trends for connectivity pricing on the ground, we are now seeing a trend in the cabin shifting away from this model.
Airlines adopting a more inclusive set of propositions
Rather than pricing for how many MBs or GBs a passenger might use, the industry is shifting toward retail models that make it easier for the passenger to quickly understand how much online access they really want. Wi-Fi passes based on duration (per hour, per flight, etc.) or by service type (messaging, streaming, browsing, etc.) make packages easier to understand.
Structuring connectivity pricing and packages in this way helps passengers achieve what they want to do in-flight. It also gives them a sense of the value they are getting for the service, which makes them less sensitive to pricing overall.
Compelling in-flight retail offers, such as Roam Like Home plans
In more and more regions around the world, mobile network operators see the value that in-flight connectivity services can provide to their subscribers and are creating ever more compelling retail offers.
That means passengers can use their existing mobile data packages, or buy specific in-flight data and cellular passes, to connect while flying. Examples include Etisalat's Roam Like Home packs, which allow passengers to use their local data and minutes abroad or in-flight. Other mobile network operators offer daily in-flight deals such as Singtel's In-flight Unlimited Data Plan or Jio's In-Flight Roaming pack, while NOS include in-flight roaming into a multi-destination bundle.
These innovations provide simple access to connectivity onboard and create an improved passenger experience, as well as delivering choice.
Offering some level of free service
The commoditization of connectivity services on the ground means some passengers may expect in-flight connectivity services to be free to some extent. To respond to this market shift, airlines are increasingly offering limited free of charge (FoC) services, typically choosing from the following approaches:
- Offering FoC services to premium customers in a voucher form.
- Giving all passengers FoC messaging services and charging for the other services.
- Mixing free and paid services depending on cabin class or loyalty status.
In addition to enhancing passenger experience, this encourages passengers to upgrade and purchase a Wi-Fi pass, driving ancillary revenues. Airlines offering free messaging or "taster" passes include Air France, Delta, KLM, Middle East Airlines, Norwegian, Philippine Airlines, and TAP. Airlines offering FoC Wi-Fi for premium passengers include Emirates, Etihad, IcelandAir, Singapore Airlines, and Turkish Airlines.
Finally, airlines such as Delta have conducted trials to offer free in-flight Wi-Fi as part of its suite of complimentary onboard entertainment options.
The ubiquity of the internet and cellular services in people's everyday lives means they expect to connect whenever, wherever and however they want. With so many diverse types of connectivity users and wide range of passenger needs and price sensitivities, offering choice in how to pay and different price points matches the experience people are used to on the ground and helps to maximize take-up.