By John Croft

Air Transport World, October 2005, p.26 Buy this issue

Consumer electronics advances and airline expansion, particularly overseas, have rekindled an inflight entertainment industry that faded considerably following 9/11.

A new study by the UK`s Inflight Management Development Center predicts 50% growth in the market in the next five years, while analysts at Ireland-based Research and Markets say IFE is in ``the shape of its life and looking to go from strength to strength in 2005.`` The market ``took off at the end of last year,`` agrees Brad Foreman, VP and GM of Thales Avionics` IFE business.

London-based market analysis firm Frost & Sullivan estimates that IFE and connectivity spending plunged 25% in 2001 compared to 2000 and a further 11.4% in 2002 but has shown double-digit growth since then. The firm forecasts that IFE&C spending will reach $2.19 billion this year, slightly surpassing the peak year of 2000, and increase a further 21.7% next year to reach $2.67 billion (see table, p. 28).

Hard times, it would seem, have produced a better product. Whereas legacy IFE systems on an aircraft like the 747 weigh as much as 6,000 lb., new offerings from companies like Thales have dropped the total weight of IFE installations as much as a factor of two, saving fuel or making room for other payload. Along with an increase in reliability gained by replacing analog equipment with the modularized digital equivalent, the weight reductions have paved the way for high-end IFE to migrate to single-aisle and larger regional aircraft as well. As an example, Thales is marketing a 75/90-passenger regional jet-sized embedded IFE that weighs in at just 400 lb. Called TopSeries i4500, the system is being installed in Air Canada Jazz`s 15 CRJ705s. By year end it will provide passengers with 9-in. touchscreen displays with access to 350 hr. of video, music, games and Web applications stored on a 600GB onboard digital server.

Along with product improvements, IFE industry gains are tied to an increased demand for new aircraft and passengers who want a ``high-quality onboard experience`` akin to what can be accessed at home, says IMDC. The company says IFE penetration in the global aircraft fleet is about 45% but that 70% of all new aircraft are being delivered with IFE. Advanced features increasingly are including screens as large as 23 in. in first class, audio/video on-demand, inflight satellite TV and radio, SMS messaging and Internet/e-mail access. In terms of regional demand, experts say Asia, China, India and Latin America are the booming markets while the US remains depressed.

Most of the installed systems, either forward-fit or retrofit, are being provided by one of three major players: Rockwell Collins, Panasonic Avionics Systems (formerly Matsushita) and Thales Avionics, which became active when its predecessor Sextant Inflight Systems acquired B/E Aerospace`s IFE business. Each has about a third of the market and each has a relatively new offering. Niche players also are making progress, as highlighted by the portable systems gaining popularity among some airlines. Binny Prabhakar, program manager for commercial aerospace at Frost & Sullivan, says Thales` offerings appear to be a change agent in the industry, noting they are cost-effective, futuristic-oriented and compatible with new technologies like broadband and cellular. ``They have the most robust and best adapted systems on the market,`` she claims.

Not surprisingly, Thales is making the greatest strides in the resurgent market. Foreman says his company`s IFE share is now 35% overall but that 45%-50% of this year`s airliner deliveries will have Thales IFE and 70% of its installations are forward-fit. Some recent wins include Air France`s selection of TopSeries for 10 A380s, Etihad`s choice of TopSeries for about three dozen Boeing and Airbus aircraft including four A380s and Air Canada`s decision to outfit its entire fleet of 241 double-aisle, single-aisle and regional jets with the system. Thales also equipped the business-class section of a 777-200LR Worldliner marketing aircraft that toured Europe in July to demonstrate capabilities to airline executives.

Retrofit Market

Thales says TopSeries` large capacity75 movies, 100 CDs and a library of gamesis critical in an aircraft that can fly 20-hr. legs. Foreman says he is beginning to see ``a lot of interest`` in the retrofit market from carriers preparing to refurbish interiors that are 8-10 years old. The going logic, he says, is to get embedded IFE with more functionality and interactivity, including 19-/23-in. displays in first class, 15-/17-in. screens in business class and 8.4-/10.4-in. displays in economy.

Key features of TopSeries include modular design (an airline can mix and match five modules that range from broadband connectivity with a laptop and USB connector to in-seat AVOD with Gigabit Ethernet backbone) and ruggedized features like power connectors inherited from Thales` military work. In terms of connectivity, the system is designed to work with whatever broadband link an airline provides, including OnAira partnership between Airbus and SITAand Connexion by Boeing.

At Rockwell Collins, whose lineage in IFE dates to the April 2000 acquisition of Sony TransCom, officials are marketing an enhanced version of the circa-2001 Total Entertainment System called eTES, as well as a digital media server retrofit that boosts the reliability of legacy tape- and CD-driven IFEs. The latest package adds high-speed Internet and e-mail to the AVOD capabilities at each seat. Randy Lincoln, VP-sales and marketing for eTES, says the company has some 200 orders for the system, including contracts from Air New Zealand for eight new 777s and from Air France for seven retrofits of 747-400s and a number of 777s.

Along with TES, which Lincoln says is installed in the seatbacks of roughly 500 aircraft belonging to 20 airlines, Rockwell Collins has an entry-level overhead Programmable Audio/Video Entertainment System that can run up to 48 monitors with as many as seven video sources flying with more than 100 airlines.

Like Foreman, Lincoln is seeing a growing level of interest in retrofit options. He says carriers often want to refurbish but save the backbone; ``There`s a lot of interest in trying to expand the value of systems they purchased five or six years ago.`` That can mean new larger screens and replacement of oft-troublesome tape or CD drives with the new digital media server.

Rival Panasonic first deployed its new-generation, Ethernet-based eFX Series IFE on 199-seat 757s for Delta Air Lines low-fare arm Song in 2003. The impetus was the need to respond to JetBlue`s at-the-time revolutionary innovation of free live television at every seat (see box, p. 30). JetBlue since has sold versions of its system to Frontier Airlines and Canada`s WestJet.

Song upgraded the Panasonic system earlier this year on its 36 aircraft. Its IFE repertoire, available in each seatback, includes 10 pay-per-view movies, free Dish Network TV (24 channels), a choice of 1,600 songs with the ability for each passenger to make a customized ``audio jukebox`` with 32 songs, and an expanded selection of interactive games.

Panasonic spokesperson David Bruner says about 25 carriers in addition to Song have purchased eFX so far, including First Choice Airlines in the UK. First Choice, formerly Air 2000, is installing the system on six 767s. It has been using a portable IFE built by French company Archos as an intermediate solution until the retrofits are completed by the end of next year. Bruner says there is a ``tremendous`` backlog of the company`s earlier System 3000 and System 3000i IFEs as well.

A widebody version, eX2, was selected by Emirates last year for its 45 A380s, the first of which will be delivered next year, and for 20 A340-600s starting deliveries mid-2007. By 2012, the carrier plans to have its entire fleet of 169 aircraft outfitted with eX2, an order worth about $1 billion for Panasonic. The system recently was approved by Boeing for installation on 777s on a case-by-case basis with deliveries starting next September. Panasonic is competing with Thales to get on Boeing`s list of providers for 787 Dreamliner IFE, a rivalry that is boosting the state of the art. Bruner says Boeing wants a wireless IFEwith power coming through the seat mountthat provides AVOD for all passengers using hardware that is one-third the volume of state-of-the-art systems. Panasonic is developing a wireless version of eX2 for the job, which Bruner says is ``quite complex and very challenging.`` One issue to be resolved, he says, is engineering a method to ensure that movies can`t be intercepted over the wireless connection and then convincing movie studios that it works. On the positive side, he says a wireless system, though more expensive, will give companies that lease aircraft greater flexibility in customizing IFE between lessees.

While not vying for 787 work, Rockwell Collins has been developing wireless technologies and testing wireless streaming video in the lab for several years. However, it is not yet convinced of the value of wireless IFE for its customers. ``We`re not ready to say we`re ready to be in the wireless business,`` Lincoln agrees.

In terms of connectivity, Panasonic is keeping an open mind. In addition to standard satcom narrowband and broadband links, the company is installing a pico cell into an aircraft coming out next year for an as-yet-unidentified non-US carrier, says Bruner. Airlines plan to employ pico cells as a distribution system for using cellphones in flight, preventing interference with aircraft systems and giving crews the ability to enable and disable cellphones.

Companies like OnAir, ARINC/Telenor`s AeroMobile and Qualcomm have proven the pico cell concept, though regulatory and certification issues remain. Experts say Europe likely will be ready to move forward with a launch on revenue flights next year but the US will take longer. Bruner says the airline installing the pico cell-equipped Panasonic system plans to turn the unit off before entering US airspace. Foreman says voice-over-IP is probably a more cost-effective solution for personal telephone calls and text messages given that carriers are moving toward broadband connectivity for cabins anyway; ``Airlines will almost be able to offer it for free.``

For carriers without IFE or with outdated IFE, other options exist. Multiple providers, including Wencor and IMS in the US, are having success selling portable units. Alaska Airlines, which has no embedded IFE in its planes, has been using Wencor`s digEplayer for nearly two years on its longer-haul routes.

Why portable? Chase Craig, Alaska`s product marketing analyst, says passengers on longer flights wanted entertainment and seatback units proved to be too heavy in terms of wasted fuel. Satellite connectivity was iffy given the high latitudes of its destinations40% of its routes can`t receive satellite TVso ``we were looking at a system that would cost a lot to install and a lot to fly around.``

The portable, developed by a former employee, offered lower cost, no onboard power connection and low weightabout 2.5 lb. per unit. Alaska had tested portable DVD players but found content management to be a problem. The digEplayers, owned by the airline and used on select long-haul flights, are stored in a beverage cart, handed out free to first-class passengers and offered for a $10 fee in coach. Ten hours of battery life mean the units can operate on both halves of a long-haul flight. They hold about 10 hr. of music, nine movies (three are first-run) and a Discover Alaska channel featuring airline-developed marketing content. Other carriers following Alaska`s lead include KLM, Aeroflot, Silkair and Pacific Blue. A similar offering by IMS, called the Personal Entertainment Appliance or Pea, is onboard with American Airlines, Varig, Jet Airways and others.

Prabhakar says the future market for rented portables is limited as consumer electronics advance and passengers increasingly buy their own portable devices. However, it is unclear whether the early success of portables despite a lack of connectivity suggests a limited appeal for cellphones, e-mail and Internet to every seat. ``We keep talking about connectivity and broader band,`` says Lincoln, ``but I believe that audio and video on demand is still the `killer` application.``

A Fresher Way to Refresh Data

Practically all high-tech IFE systems have a common low-tech problem: They use the ``sneaker net`` to update their gigs and gigs of data. In general, studios send out thousands of analog tapes, CDs, memory sticks and other devices monthly for airlines to refresh their first-run movies and features, and each time a person has to physically load the new content onto the video server, tape player or CD.

Innovator JetBlue began using a hands-off alternative two years ago. It teamed with its wholly owned subsidiary and inflight TV provider LiveTV to develop and deploy a wireless data link to beam information to and from an aircraft at the gate at several airports. In addition to the antennas and transmit/receive electronics, the system uses ground stations located on airport property within 500 ft. of the gate. Along with transferring new content to a video server on the aircraft, JetBlue uses the wireless link to retrieve maintenance information about the IFE and customer credit card information and beam it to the ground station, from where it goes via landline to LiveTV`s home base in Melbourne, Fla.

At Ft. Lauderdale, LiveTV routinely achieves rates of up to 10 Mbps over the links, allowing JetBlue to pass its housekeeping data to the ground on every stop in addition to uploading encrypted 10GB first-run movies and short subjects to the aircraft over several 30-min. turnarounds. It uses several layers of protection on the data to make sure movies can`t be eavesdropped, including double or triple encryption.

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