IFE Implementation ClearSky Airways Report | Wi Fi | Airlines

IFE Implementation- XXXXX Airways

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Table of Contents
Introduction...........................................................................................3 Overview of the problem:.......................................................................3 Demand for IFE Access...........................................................................4 Airline Challenges..................................................................................4 Aggregating wireless services at the airport:...........................................5 Airport-wide communication:..................................................................................5 Ground and flight crews:.........................................................................................6 Airline and airport Challenges:................................................................................6 Alternate Solution #1: ............................................................................................7 Alternate Solution #2..............................................................................................8 Business opportunity...............................................................................................8 Transport market................................................................................................. 8 State of the art.....................................................................................................8 System overview..................................................................................................9 Partnership............................................................................................9 Advantages of partnership:...................................................................10 Availability of large resources:..............................................................................10 Sharing Risks:........................................................................................................10 Protection of interest of each partner: ..................................................................10 Benefits of Specialization:.....................................................................................11 Disadvantages:....................................................................................11 Lack of Harmony:.................................................................................................. 11 No transferability of share: ...................................................................................11 Selection of Bruce lee Surfers ltd:.........................................................11 Developing a cost effective strategy:....................................................................13 Advantages over Wildwifi:.....................................................................................14 Aircraft with Wifi enabled Service:.........................................................................15 In-flight Wifi increase aircraft purchases:..............................................................15 References...........................................................................................17 2

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Introduction
The recent survey released by the Wi-Fi alliance of 480 frequent business filters states that 76% of the passengers would choose an airline based upon the availability of in-flight internet. Approximately, 71 % of the respondents said that they would choose Wi-Fi over an in-flight meal. Passengers on airliners and business jets may vary in terms of what they pay for their flights, but thanks to the development and initiation of airborne broadband technology, Internet is accessible all the time. Be it e-mail or text messages while enroute irrespective of whether they fly commercially or privately. Looking at the changing times, Ed-Davidson, the SVP of ON-Board services of clearsky airways decided to equip the aircraft with the latest internet connectivity via wifi to its body fleet. He has negotiated a recent contract with the Surfshop, LLC to provide the internet product via the Panasonic IFE system

Overview of the problem:
Clearsky is a “certified passenger airline”. It has 125 aircrafts and operates out of Singapore The airline 10 years old in the industry and operates a wide body B777 200LR aircraft carrying a total of 300 passengers. Several wealthy families have a stake (60%) in the airlines including the government (40%). The airline operates all three classes (First , business and Economy). 80% of its profits are from the premium class.

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A recent survey conducted shows an increased enthusiasm and preference from the passengers for accessing internet onboard. As a result the vice president of the Flight operations of Emirates Airline, Captain Davidson felt the need for Wi-Fi to be installed in the aircraft fleet in order to improve the business and enhance customer satisfaction. The company approached Panasonic to discuss about the IFE system. The discussions revealed that Panasonic does not supply internet products and hence Clearsky identified other firms that supply and provide internet products. It zeroed on Surf shop. But at the time of signing the deal, it had been announced that clearsky’s competitor Darksword has acquired controlling power over surf shop. The deal also states that the Surf shop product sales will be limited only to Darksword. Clearsky has to now decide upon how to tackle the issue and what alternative approach should be undertaken.

Demand for IFE Access
The recent survey conducted reveals that there is increased demand for the IFE .In order to meet this demand Clear sky decided to negotiate a deal. According to the SVP onboard, this would turn out to be “Bonanza deal” because it offered all the facilities of internet onboard right from checking emails to getting stock information and make travel a delighting experience. It was estimated that the cost for setting up this facility was estimated to around 5 million euros a year. The expenses calculated approximated to a total 45% of the aircraft’s annual overboard revenue.

Airline Challenges
The challenges of Clearsky airlines is to provide IFE solutions for the passengers to send and receive text messages, browse the internet and make cell phone calls during flight.
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But, the in-flight connectivity has dominated the headlines, business aviation represents a viable growth sector for airborne communications providers as technological advancements have expanded options for operators.

Aggregating wireless services at the airport:
In a pioneering initiative, SITA has created a new community service that will radically transform wireless communications for airports and airport stakeholders around the world. The SITA Wireless Aggregator will bring wireless on board coverage footprints. The new service will allow wireless operators at airports to expand their client base, while airports themselves will be better able to promote usage of their wireless investment across the global air transport community. On top of that, airlines and support service providers will gain access to any airport's wireless on board, whatever the choice or evolution of technology. The end results will be increased interoperability between sites, increased wireless footprint usage and reliability, reduced costs and the elimination of service gaps.

Airport-wide communication:
Today, the challenge for most airlines is to identify a cost effective solution to deliver mission critical data to their back office system for both Gatelink equipped aircraft and field workers located around the world. To be effective, the communication solution must be simple to use and interoperable in many locations. Most importantly, network access must be transparent to the end user and priced in line with market alternatives. With the arrival of new Airbus and Boeing aircraft, there is a need for Gatelink facilities at airports to off-load and up-load information between the aircraft and airline back-office systems.

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Ground and flight crews:
In addition, ground and flight crews have a need to roam and connect to back office systems seamlessly on multiple Wi-Fi networks around the world using a limited number of devices. These devices need to handle both information and revenue generating activities throughout the entire end-toend passenger experience. The SITA Wireless Aggregator was conceived to promote the need for a consistent measurable end-user experience across multiple networks. This is regardless of the fact that they have been designed to work independently and lack a common set of consistent guiding principles. The operation of these footprints may be managed by airport authorities, government controlled telephone companies, hub airlines - as well as third party providers. SITA recognizes that different deployment practices, delivery methods and regulator environments may exist from site to site. These items can hamper the development of global interoperatbility, without a community based approach.

Airline and airport Challenges:
The SITA Wireless Aggregator will help facilitate the global adoption of airside and professional wireless solutions at airports. Common airline challenges include the followingA desire to use:
• •

Wi-Fi services at non-hub locations for Gatelink functionality Local wireless networks to support centralized as well as decentralized common workforce mobility solutions

Wireless solutions that can aid in the reduction of turnaround times

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The challenge for the airport Wi-Fi network operator is to find a way of achieving a high value return on investment and recover any up front costs within a reduced period of time with an acceptable margin. Common airport network operator challenges include the following.
• • • • Ability to validate the type and nature of coverage needed Need for an acceptable return on investment Need to tap into a growth market with a concentrated user base Ability to tap into a reliable consistent revenue stream

Desire to:
• •

Reduce costs by outsourcing non-core services Find a low cost and trusted migration path to new technologies in fast changing market

Leverage a low cost sales & marketing channel that will allow operators regulatory). to maintain control over local operations (security,

Alternate Solution #1:
Approaching Brucelee Surfers ltd. Among the leading service providers in IFE solutions, ClearSky can choose the best alternative which is cost-effective in comparison to their previous deal with SurfShop. Hence, as per the previous biddings, BruceLeeSurfers would be the best alternative. Below mentioned are their credentials/tariffs. Bid: SD $165,000 per aircraft Features: WiFi internet access at SD $.05 per minute with a package up to 120 minutes for SD $ 2.40.

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Advantage: This is because of the cost benefits it offers to clear sky. The total biding cost of Bruce lee Surfers ltd is $165,000 with wifi expenses of ($ 60 * Number of passengers) for 120 minutes and an additional cost of ($2.40 *number of hours over and above 120 * number of passengers). Disadvantage: There is an additional cost involved when Wifi is used over and above 120 minutes. There is possibility of the total cost analysis budget being disturbed.

Alternate Solution #2
Approaching SurfShop with a revised proposal. Advantage: There is a possibility of the contract being reconsidered due to old contractual relations. Disadvantages: The offer may not be considered due to the Darksword being involved because it has acquired the rights over SurfSoft.

Business opportunity

Transport market

Aircraft market The primary target for the aircraft market is long-haul flights, i.e. intercontinental flights using wide-bodied aircraft with 250-450 passengers. This market is worldwide, and requires almost global coverage. A secondary target is short-haul flights with durations of over 1.5 hours, carrying about 150 passengers. These flights usually stay within the coverage of one or two transponders.
State of the art

The key challenge is to solve the economic equation, by limiting operational costs like the fuel-burn penalty for the airlines, and the required satellite transponder bandwidth.
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The satellite technology is used to backhaul a wireless (WiFi or GSM) local loop; it allows the end user to connect his own device (laptop, PDA or mobile phone) to the Internet while traveling the world. Giving IP connectivity to trains, aircraft

Partnership
Partnership is a voluntarily initiated cooperative agreement formed between two or more independent companies in order to carry out a project or specific activity. This cooperation may involve sharing of resources, capabilities or activities. In initiating a partnership with an organization, the company should set challenges in terms of cost, quality and technology in regard with its partner. The company should not compromise on any aspect and should select a dealer who can meet the company standards. Partnership: Clearsky with Darksword:

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The main reasons for choosing cooperation with the Darksword are: 1. Utilize existing distribution channels. 2. Minimize costs for installation and maintenance. Clearsky need to cooperate with the Darksword, to in-corporate the order of Wi-Fi to aircrafts into the existing leasing and selling orders. It is much less costly for the organization to add Wi-Fi as an option to the products already sold, than establishing new distribution channels.

Advantages of partnership:
Availability of large resources:
Since two or more organizations combine together to execute the project, it is possible for the companies to pool their resources and also to develop long lasting relationships with the clients of the other company. As clearsky has signed a contract with the Surfshop, it can invest more time, effort for the project completion along with its partner.

Sharing Risks:
The partnership reduces the burden as the two organizations share the loss or profit based upon their investment in the project. As the risking factor is minimum, they can be encouraged to implement new practices and hence expand their business.

Protection of interest of each partner:
In Partnership, every partner has an equal right in taking decisions and the management of the business. If any practice goes wrong against the interest of the partner, he can prevent the decision from being taken. In the case of any extreme consequences, the unsatisfied partner can withdraw from the implementation of the project.

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Benefits of Specialization:
Since the investor companies are the owners in partnership, they can actively participate in every aspect as per their specialization, knowledge and experience.

Disadvantages:
Lack of Harmony:
In partnership, every partner has an equal right to participate in the manaing activities. So, every partner can comment or place his opinion before the management regarding any isue at any time.Due to ths, there may be difference in the opinions which can lead to friction and discontent among the partners. Ultimately, this factor can affect the quality of the project on hold.

No transferability of share:
In partnership, every partner will not have the right to transfer the share of the company to any outsiders, without the consent of the partner. Sometimes, this can create inconvenience for the partner who wants to withdraw when the project is under process.

Delay in policy Decisions:

In single proprietorship, the policy decisions are taken by the board of Directors of that company. But in the case of partnership, for any simple decision to be taken, the company has to fulfill a series of procedural formalities. These procedures are time .

Selection of Bruce lee Surfers ltd:
In 2003, the online Wifi service was tested by Lufthansa. The planes are equipped with wireless routers in order to make them Wifi hotspots. The airborne wireless networks are linked to an internet service provider via

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satellite connection. An aircraft delivers news, weather, and stock market reports to its passengers via onboard portal However, while looking at the above possibilities it is essential for airlines to consider their cost estimate. Thus in case of Clear sky airways it is essential to consider the cost involved so as to make good profits and give reasonable benefits for its customers The reason behind the selection of Bruce lee surfers is based upon the following analysis Competitor analysis: Competitor analysis is an important requirement in any business plan because it: 1• Reveals the firm’s competitive advantage or disadvantage relative to its competitors 2• Provides insight into competitors’ strategies – past, present and future 3• Assists in developing future competitive strategies to establish

advantages over your competitors. The main rationale for competitor analysis is to give key company decision makers a broader understanding of the competition. This understanding should assist management in assessing the firm’s strengths and weaknesses. It should also help to ascertain threats and opportunities to the firm from its industry environment. Application: Targeted intelligence is one of the most commonly used methods in undertaking competitor analysis. It focuses on what a business needs to know about its competitors. According to EMP Intelligence Service, targeted intelligence can help an organization to:
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1• Increase sales 2• Reduce competitors’ sales 3• Obtain higher prices 4• Decrease own costs 5• Reduce competitors’ profitability 6• Increase the costs of competitors 7• Improve defensive strategies 8• Identify joint venture or takeover opportunities

Developing a cost effective strategy:
A cost comparison of the different wireless payment access alternatives shows that Brucelee Surfers ltd is currently the cheapest alternative. Wild wifi is the second cheapest alternatives for low estimates. Based on this comparison, a competitive and attractive price for the installation and maintenance of the IFE system has been determined and used to calculate revenues in the business model proposal. These results suggest that the Wi-Fi connection provided by Wildwifi is not cost-effective compared to Brucelee Surfers. The research conducted in this regard revealed that the business model of the company does not have a commercial potential with the current customer estimates. Brucelee Surfers ltd is recommended as its biding cost is about SD $165,000 per aircraft and the internet wifi an SD of $.05 per minute for 120 minutes and an additional cost of 2.40 $ per minute if the usage of internet is over and above 120 minutes.

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However, if the Wi-Fi coverage increases and the number of potential customer is enhanced substantially, it could be interesting to pursue this business model proposal further.

Advantages over Wildwifi:
"The time spent onboard will now become more efficient and valuable for our customers, since they will be able to work online during flights," said Terje Christoffersen, group vice president of marketing, products and service at Telia Sonera AB, a provider of telecom services in Denmark, Norway and Sweden. The total biding cost of Brucelee Surfers ltd is $165,000 with wifi expenses of ($ 60 * Number of passengers) for 120 minutes and an additional cost of ($2.40 *number of hours over and above 120 * number of passengers) In case of Wildwifi, the total biding cost is $200,000 with wifi internet access at the rate of SD $0.05 per minute. The total cost when calculated, comes to ( Biding price i.e. $200,000 + $ .05 * number of passengers) which is expensive. The total cost of Brucelee Surfers is less when compared to Wildwifi since the Biding price is less and the additional costs are recovered in the wifi costs. However Wildwifi charges a higher biding price when compared to the sum charged by the Brucelee Surfers. Thus by implementing the Wifi connection from Brucelee Surfers there will be a reduction in the total cost involved. The package of service offered by Brucelee surfers has an unlimited instant messaging and email. Offering such a package is very beneficial to the passengers in case of longer flight durations.

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Aircraft with Wifi enabled Service:
The Wi-Fi service equipped with in flight internet will be available to all its passengers during the flight duration. All Wi-Fi enabled services including laptops, smart phones and PDAs such as Blackberry Bold, iphone touch and iTouch can used in flight services. The Wi-Fi enabled aircraft will have a back seat card with detailed instructions on how to access the system. And also, live technical support is provided through live chat with the technical support specialists via 24 hour desk available through instant messaging. This service is provided to the passengers at a minimum altitude of 10,000 feet .In addition to the internet, IM and e-mail, based upon the quality and customer satisfaction, additional media enhancements can also be made available to the passengers. The Federal Communication Commission (FCC) currently prohibits the use of cell phones in flight as they rely on cellular technology, which operates at a wireless frequency that could potentially interfere with the aircraft’s electronics. By using Wi-Fi technology, which runs on a different frequency that is FAA-approved and completely safe.

In-flight Wifi increase aircraft purchases:
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According to a recent Wall Street Journal report, in-flight Wifi usage drops off significantly when consumers are asked to pay – even as little as $1. Another challenge which Airlines face is the Battery drain and a lack of power ports. The recent survey conducted on airlines stated that a major number of travelers choose an airline based on the availability of Wifi. The biggest frustration that business people on being in flights is respite from the demands of the work. Majority of the Business travellers expect connectivity and view it as a necessity, and not a luxury. The in-flight connectivity is very important to the travellers and the new widget identifies Wi-Fi equipped aircraft easy. Also by implementing Wifi within the airlines, more customers will be drawn towards travelling by clear sky. It can expect a growth in revenues by increasing the number and frequency of flights. Due to increased revenues the airline can think of alternative ways to enhance in-flight service by Improving the quality of food and beverages. By reducing the price – to enable more passengers to experience the

delight of travelling by clear sky. Also, travellers want to use Wifi in flight so they can stay connected with their offices, colleagues, friends and families on the ground. They see tremendous value in the service and are not only willing to pay for it, but are also likely to become repeat customers and champions of the service. In future, the Wifi becomes a loyalty play for the airlines, to offer its passengers. Particularly, in market where consumers have several choices of
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airlines, free service will be a way to differentiate their airline. Although it is not a significant revenue generator, it is easy for the airlines to recapture the cost of adding wifi to their planes.

References
Airport challenges, © SITA 2010. Viewed on 6 January, 2010 http://www.sita.aero/content/aggregating-wireless-services-airport Anonymous, Posted by IFExpress on Tuesday, May 12, 2009, AirTran Airways to Offer Wi-Fi on Every Flight, Viewed on 6 February, 2010 http://airfax.com/blog/index.php/2009/05/12/airtran-airways-to-offer-wi-fi-onevery-flight/ Tim Conneally, Published October 8, 2009, Aircraft with Wifi enabled service, In-flight Wi-Fi, Viewed on 21 January, 2010 http://www.betanews.com/article/Inflight-WiFi-Everybodys-doingit/1255031304 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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Mary Kirby, Inflight Connectivity, published on May 2009, Viewed on 6 February, 2010 http://www.flightglobal.com/articles/2009/05/11/325958/ebace-in-flightconnectivity-options-expand-for-business-aircraft.html

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