Northern Sky Research Study Predicts Internet Growth to Airline Service.

24th Oct 2001

Despite current financial difficulties facing the airline and travel industries, long-term growth prospects for Internet to airline service remain viable, according to a market research report released by Northern Sky Research entitled “Internet Service to Airlines: Will the Service Take Off?”
The report forecasts Internet to airline usage and subscriber revenues via an in-depth bottom-up/top down methodology, assesses chances of success for the industry as a whole and for individual Internet to airline service providers, and examines service providers and technologies.

“The current macro-economic and airline-specific downturns will certainly delay the growth of Internet to airline service,” states Karekin Jelalian, analyst and author of the report. “However prior to the terrorist attacks of September 11th, 12 airlines committed to equipping over 2,100 of their aircraft with Internet service. Airlines see the service as a way to attract passengers and as an additional revenue stream. Nonetheless in the short term, the service has understandably fallen as a priority as airline security and solvency have taken center stage.”

The report analyzes growth prospects from a number of angles, resulting in three core forecast scenarios. The weighted average of those scenarios places Internet to airline service revenues at $1.4 billion in 2007 and at $4.0 billion in cumulative 2001-2007 revenues. The report utilizes a `build-up` approach to determine the addressable market, using airlines` commitments made thus far as a starting point. It then assesses the number and timing of additional airlines that will commit to equipping their aircraft with the service.

Other factors considered in forecasting usage and service revenues include passenger loads, penetration rates, service features, average amount of use and pricing.

The report also provides a complete business model analysis of aircraft retrofit costs versus service revenues to arrive at an indicator of the service`s financial prospects. “For the model to be successful, business travelers must adopt it initially, then prices will have to come down for the service to be adopted by leisure travelers,” states Jelalian. “Revenue generation will be especially important given the fairly high fixed cost of retrofitting aircraft.”


Companies Profiled or Mentioned include:

Air Canada, Air TV Ltd., AIRIA, Alcatel Space, Alenia, Alitalia, American Airlines, Arianespace, ARINC, BAE Systems, Ball Aerospace, BBC World, Cathay Pacific, CMC Electronics, COMSAT Mobile Communications, Connexion by Boeing, Datron, Delta Airlines, EMS Technologies, Eurosport, GE Americom, General Dynamics, Hollingsead International, Hughes Global Services, iAnywhere Solutions, Infowave, Finnair, inflightonline, Inmarsat, Loral Skynet, Lufthansa, MELCO, Miltope Corporation, News International, Passenger Networks, Pentar, Rockwell Collins, Satcom Direct, SAS Scandinavian, Saudi Arabian Airlines, Screaming Media, Singapore Airlines, SITA, Skyways Alliance, Swissair, Telia, Tenzing, Trans World International, United Airlines, Varig, ViaSat, Virgin Atlantic.

Northern Sky Research is an international market research and consulting firm specializing in broadband technology and Internet applications. Northern Sky Research primary areas of expertise include satellite technology, cable and wireless networks, and content/new media markets. With extensive expertise in all geographic regions and a number of broadband sectors, Northern Sky Research is a leading provider of in-depth market insight and analyses.

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