In-flight entertainment systems have come a long way in the last ten years, so much so that airlines are now shelling out tons of cash for high-tech gear in an effort to attract and keep more passengers.
A new generation of in-flight entertainment, or IFE, systems, such as audio/video-on-demand and satellite TV, allows passengers to choose from new Hollywood films or television shows. They can start, stop, and fast-forward them on individual screens, adding choice and control.
However, this battle has a double-edged sword: it can offer airlines the potential for more income, but the costs are often huge. And for airlines that are currently struggling with the high cost of fuel and fierce price wars, that can spell disaster in today's market.
But the state-of-the-art gear does not come cheap or without other hidden costs. The systems are heavy and thereby increase a flights fuel consumption. Some of them have weighed as much as 2,268 kilograms, although newer systems are lighter and smaller.
"Next to the engines, it's the second most expensive item on an aircraft," said Lori Krans, spokeswoman for Thales, one of the world's largest IFE makers.
Industry analysts say that the cost to retrofit an aircraft run from US $2 million to US $5 million.
IFE also have monthly expenses like maintenance and royalties/licensing, and those costs have to be added on to the airlines' initial investment. "It's not an inexpensive effort by any means
", said Terry Wiseman, president of consulting service Aviation Industry Representatives.
The consulting firm Inflight Management Development Center expects around 76 per cent of 100+ seat aircraft will have some type of IFE by the year 2011. That would be up from 46 per cent last year.
About one third of Air Canada's 199 planes are equipped with high-end entertainment systems. Right now, it is in the middle of a C$300 million overhaul it has dubbed "Project XM: Extreme Makeover". Their plans include installing a screen in every seat in its mainline fleet by the end of 2008.
Virgin America is planning to start flying later this year and it is taking IFE to a new level. In January, it announced a new entertainment system called Red. Red lets passengers order meals and drinks through their touch-screens, whenever they want. Leading-edge systems like this can cut costs on a flight and can boost a flight crew's efficiency. An airline can also use these interactive systems to conduct market research and find out about a customer's satisfaction with the airline's service.
Industry executives do not see these systems as being revenue generators, even though they are investing millions of dollars into them. "In the long run, they'll see that value that they may not see in the short term: money making. But they are developing passenger loyalty
", said Brenda Kuhns, marketing communications manager at Panasonic Avionics Corp., another IFE manufacturer.
Some airlines are trying to recoup entertainment-system costs through on-board advertising or charging for services. Air Canada is looking to get back some of their entertainment-systems costs by running advertising on its video-on-demand. Spokesman Peter Fitzpatrick reported that in a recent IPO, the airline predicted that it could generate additional revenue from its IFE content.
Air Canada's main rival, Calgary-based WestJet Airlines, offers live seat-back TV and pay-per-view movies. Spokeswoman Gillian Bentley said they are not planning on charging a passenger additional fees for this service.
Analysts warn that if airlines start piling on charges, passengers will just turn back to their own iPods and laptops.
That leads us to the next step in IFE systems ... to create a commonality by integrating a passengers' electronics with the airlines on-board systems.
For instance, Panasonic Avionics has been working with Apple in an effort to integrate the 4th generation iPod into its IFE system to allow charging and video-audio playback.