Looking to increase revenue, airlines invest in entertainment as they cut other amenities

By Keith Reed, Globe Staff | May 29, 2005

ABOARD SONG FLIGHT 2005 -- A strong wind over Boston Harbor rocked the plane from side to side before it touched down safely at Logan International Airport, but Joyce Brearley, returning to Methuen from a Florida vacation with her husband, Russ, didn`t notice.

She was catching the tail end of ``Coach Carter,`` the movie she paid Song $5 to watch on the monitor installed on the back of a seat. ``I thought it`d make the time go by faster,`` said Brearley, explaining why she paid extra to watch a two-hour movie on a flight just over three hours long.

That kind of thinking, some airline executives say, could help them wring more cash out of passengers, who have shut down most recent attempts at fare increases. After JetBlue Airways started offering free DirecTV at every seat in 1999, other carriers followed, installing systems offering passengers free television and radio from their seats.

Now, those same systems are being upgraded with such pay-for-play options as on-demand movies, games, and digital music, as airlines try to capitalize on investments they had made installing servers and satellite dishes on planes. Some carriers are also starting to offer Internet access.

Airlines are offering more entertainment even as they scale back on everything from meals to pillows. Executives said they are not merely trading one amenity for another but getting the best bang for their buck, and getting more bucks out of their customers.

Serving meals and offering blankets require a constant flow of cash for replenishing supplies, and passengers have shown, executives say, that they would rather get a cheaper ticket than pay for the cost of an in-flight meal with their fares. But installing the monitors, servers, or other equipment required for in-flight entertainment is often a one-time cost that airlines can recoup again and again by renting popular movies, games, or music.

``Once you put the capital onboard the plane, it`s a one-time expense,`` said Tim Mapes, Song`s vice president of marketing and customer experience. ``It`s making the investment provide the absolute best return possible.``

No airline executive interviewed for this story would disclose how much revenue the company expected to draw from in-flight entertainment. Overall, the industry has been investing more in onboard entertainment since the mid-1990s.

In 1995, airlines spent an estimated $845 million on in-flight entertainment and communications, according to the World Airline Entertainment Association, a McLean, Va., trade group representing airlines and suppliers. That spending peaked at $2.1 billion in 2000 before nose-diving after the 2001 terrorist attacks. Last year it was estimated at more than $1.8 billion.

JetBlue was the first domestic airline to install in-flight entertainment systems at every seat. Passengers can watch free DirecTV with 36 channels on a screen installed on the back of each seat, and all but 10 of the airline`s 74 jets offer a pay-per-view service, Fox Inflight, on board. The rest will be upgraded next month and all of JetBlue`s new regional jets will come with the system already onboard, said spokesman Todd Burke

etBlue charges passengers $5 to watch a movie, a fee that can be paid by swiping a credit card through a slot in front of their seats.

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Even airlines that have not installed in-flight servers -- computers that hold digital copies of movies or other content -- are trying to find ways to use cheap entertainment to generate more revenue.

Independence Air, a regional airline that flies mostly to East Coast cities from Washington Dulles International Airport, is leasing small digital media players from a company called digEplayer and renting them to passengers on its six daily flights from Washington to the West Coast for $10 a pop.

To deter theft, Independence has installed batteries that can only be recharged with special equipment owned by the airline. Steal the device, and it`s worthless once the battery runs out.

The small players have bright digital screens and come preloaded with a dozen movies (the current selection includes ``Fat Albert,`` ``Harry Potter and the Prisoner of Azkaban,`` and ``Ladder 49``), episodes of such TV shows as ``The Simpsons`` and ``Friends,`` music and music videos. The airline keeps about 40 of the players on each West Coast flight, but spokesman Rick Delisi would not say how many people have used them since they were launched in March or how much the airline was spending to rent them.

Renting the players was a better option for the airline than paying roughly $1 million per plane to install servers onboard, Delisi said. Whatever their cost, the airline would not be offering the players if they didn`t think they were a lucrative option.

``We`re not sure how high the potential is for incremental revenue, but the arrangement we have is of the right economics that it can pay for itself,`` he said.

American Airlines tested a similar player late last year and this spring and is evaluating whether to deploy the technology on a wider scale, said spokesman Ned Raynolds. If the airline brings them back, it would probably offer the players on its fleet of Boeing MD-80 jets, which are mostly used for coast-to-coast flights in the United States.

The players would probably be rented at a cost of $8 to $12 per flight, Raynolds said.

Song, a Delta Air Lines subsidiary, has seatback monitors similar to JetBlue`s, and it offers satellite TV by Dish Network for free. Movies are $5 each, while some games are $5 to activate for the entire flight. Other games are free. Passengers can pay by swiping a credit card through a slot under the monitor or by paying cash to a flight attendant.

Though Song`s system is easy enough to use, there are minor inconveniences. On recent flights between Fort Lauderdale, Fla., and Boston, a reporter dialed up the movie menu, selected the recently released comedy ``Are We There Yet?`` starring Ice Cube and Nia Long.

The movie played fine, and the touch screen even allowed for pausing and fast-forwarding. But the airline`s intercom system overrode the movie`s audio, so when the pilot announced that the seatbelt sign was turned off, it blared into the headphones and interrupted the movie.

Besides TV and movies, some airlines are offering Internet access. Lufthansa, which flies from Boston to Munich, sells wireless Internet access for $29.95 on flights of six hours or longer. US Airways and Continental Airlines offer JetConnect, an e-mail and text-messaging service from Verizon, on some flights.

Whether passengers are willing to pay for entertainment remains to be seen. Some passengers are fine with what`s free.

``The only thing we paid for were the drinks,`` said Lauren Auger of New Bedford, after a recent Song flight.

She said she paid $6 for a bottle of Korbel Champagne, while her boyfriend sipped a $4 bottle of Miller Lite beer, but both were content with the free TV.

Keith Reed can be reached at reed@globe.com.