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In-flight entertainment is taking off

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In-flight entertainment is taking off

Opinions expressed in this piece are solely those of the author and do not represent the views of SNL Kagan.

Our connectivity options keep expanding, even at 30,000 feet. Not only has the global number of commercial aircraft equipped with Wi-Fi more than doubled since 2011, but the bandwidth and speed of connections have grown exponentially and will likely continue to increase.

Global in-flight Wi-Fi is dominated by three providers: market share leader Gogo Inc., runner-up Global Eagle Entertainment Inc., and broadband services and technology company ViaSat Inc.

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Together, they connected 4,185 commercial aircraft at year-end 2016 with Wi-Fi capability to meet demands of 50 Mbps. That speed is on par with better home Wi-Fi systems and capable of handling entertainment streaming for both seat-back screens and personal devices.

All the providers have plans via next generation air-to-ground antenna and Ku- or Ka-band satellite systems to increase in-flight bandwidth to 100 Mbps by the end of this year. Five years ago, the best in-flight Wi-Fi delivered only about 12 Mbps of bandwidth, a speed suitable for emails and checking social media.

The growth of connected commercial aircraft has also been impressive, up 110% from an estimated 1,995 at year-end 2011, or 16% compounded annual growth if I just use the aggregate 2016 count for the three leaders. I think it could continue to increase at an annual double-digit percentage through 2025.

Industry analysts project that total commercial aircraft will increase 43% from 21,000 in 2016 to 30,000 in 2025. I suspect the number of Wi-Fi connected aircraft will grow ahead of its base because carriers value connectivity as a meaningful way to attract and retain travelers. In 2016, about 48% of all global aircraft were either already Wi-Fi connected or being upgraded for Wi-Fi capacity.

According to a 2016 survey, 54% of passengers want Wi-Fi offered by their air carrier and 34% bring three or more devices with them. About 84% of passengers prefer aircraft equipped with Wi-Fi and are willing to pay for it.

In-flight Wi-Fi price points by paid providers are up with demand. A 2015 story in The New York Times noted that Gogo's price for a coast to coast U.S. trip had doubled from $13 in 2011 to $27 in 2015. Today, that same trip can cost $40 at peak demand (based on my own recent price check).

Typically, Mondays and Thursdays are the most expensive days to purchase in-flight Wi-Fi while Saturdays are the cheapest. Travelers can also cut their access costs if they pre-order access before they board or purchase only time-measured access for brief periods. But paying more for faster speeds is also an option.

Some carriers offer free satellite delivered Wi-Fi or discounted service. JetBlue recently rolled out a free high-speed "Fly-Fi" service to its entire fleet of 227 airplanes. American Airlines offers a $16 day pass via Gogo for each flight while Southwest Airlines prices a similar pass for $8 via Global Eagle's service. ViaSat is reported to be the leading provider of "free" in-flight Wi-Fi subsidized by the airlines.

In-flight Wi-Fi is an expensive amenity. Airlines spend as much as $20 million annually on in-flight entertainment plus hardware that can cost as much as $5 million per airplane, according to a 2014 report by CNN. In-flight systems are heavy too — up to a ton per aircraft —which increases operating costs. One calculation in 2013 estimated that a reduction of one kilogram (2.2 pounds) would save $3,000 in fuel costs a year.

Big international carriers can pay $90,000 to license just one movie over a period of months and major carriers can feature 100 titles at a time versus just 10 titles a decade ago when in-flight entertainment was mostly a communal exhibition. One CNN source estimated that airlines spent about $3 billion on in-flight entertainment in 2012, which could rise to $10 billion by 2030.

Although airlines have invested heavily in updating onboard seat-back systems, there is a movement among some to focus more on serving just personal devices. It would be cheaper, and perhaps less complicated, when it comes to abiding by varying cultural standards.

Airlines in general tend to avoid showing content with horror, sexual, political, religious or terrorist content, according to CNN's story. Thus communal or seat-back screen access can be limited. The Middle East is particularly sensitive about content that shows bare skin or sexual situations, although it tends to be tolerant of violence.

Europeans, in contrast, have a low tolerance for violence but are not averse to nudity, while Asian countries often shy away from content featuring homosexual themes.