Frost & Sullivan: In-Flight Entertainment and Connectivity Market Grows

FRSU | Quote | Chart | News | PowerRating -- The world in-flight entertainment and connectivity (IFE&C) market continues to grow as airlines install new equipment or upgrade their systems, report Frost & Sullivam.

Current fleet upgrades and increasing orders for commercial aircraft and business jets indicate a strong market potential for IFE&C systems. For instance, the commercial aircraft orders of Airbus and Boeing reached an all time high of 2,754 in 2007, with the Asia Pacific and Middle East regions generating the majority of new orders.

New analysis from the consulting firm, World In-flight Entertainment and Connectivity Market - Investment Analysis, reveals that this market earned revenues (top 20 participants) of $1.68 billion in 2007 and estimates this to reach $2.72 billion in 2012.

An increasing number of airlines are now looking at IFE&C as a source of non-seat revenue, says Frost & Sullivan Industry Analyst Rani Cleetez. Numerous pilot programs are underway, with JetBlue Airways testing free e-mail and instant messaging services on one of its planes which started in December 2007. Once successful, JetBlue is likely to charge a fee for the utilization of its Internet services.

In a release Frost & Sullivan notes that additionally, American Airlines, Virgin America, and Alaska Airlines plan to offer broader Web access in 2008. Besides sharing the revenues from these fees, airlines could potentially earn money from advertising or use the cabin's Wi-Fi network to enhance their operations.

The easing of regulatory restrictions on voice and data solutions for aircraft will drive the IFE&C market. In 2007, the European Aviation Safety Association (EASA), the European equivalent of the Federal Communications Commission (FCC), ruled that mobile phone technology had no discernable impact on commercial jet navigation and communications equipment. In early 2008, EASA and the UAE-based General Civil Aviation Authority (GCAA) granted full approval for voice connectivity aboard the AeroMobile, which enabled the company's systems to be installed successfully on Emirates.

However, rising fuel prices and the U.S. economic slowdown are overshadowing the global aerospace markets and could hamper the growth of the IFE&C markets worldwide, says Cleetez. High operational costs and the financial crisis among the U.S. airlines are major restraints when it comes to the growth of the IFE&C market in the United States.

Economic or social changes outside of India and China s region will not greatly affect their booming economies, thereby minimizing the risk level related to investing in these markets. After the impending bankruptcy filings and consolidation of U.S. airlines, the market situation is likely to change and the IFE&C market will grow steadily over the next five years. The economic downturn in the U.S. has been taken into consideration while preparing revenue forecasts for this research.

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