DN - Defence Notes

Ryanair launch puts cellphone suppliers on a high

20th February 2009 - 22:50 GMT | by The Shephard News Team

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Yesterday’s launch by Ryanair of an OnAir trial with all the makings of a full commitment has come as a welcome boost to the onboard cellphone community.

OnAir chief executive Benoit Debains expects to see a flurry of service launches over the coming months and is confident of having 90-100 aircraft operational and no fewer than 14 committed airlines in the bag by the end of the year.

That tally could include at least a couple of Airbus A380 operators. “They want complete GSM/Internet solutions,” said Debains. “Lead time on the A380 is about two years, so service entry could come as early as 2011, and Ku-band technology could be part of the mix.”   

Meantime, rival AeroMobile continues to go from strength to strength with launch customer Emirates (Inflight Online, February 16), while new long-haul carrier V Australia is gearing up to offer the service from the summer.

Over the next few months all eyes will be on Ryanair, however. “We’re euphoric to be launching Europe’s first fleetwide onboard cellphone service,” said chief executive Michael O’Leary. “We plan to equip our entire fleet over the next 18-24 months. I was a very happy and contented user of the service on the way back from Rome the other night. We expect millions of our passengers to use it as they become familiar with it, and we see it as a growing source of ancillary revenue, allowing us to continue lowering our fares.”

O’Leary said the airline would equip its entire 181-strong fleet if the six-month trial, in 20 mainly Dublin-based Boeing 737-800s, proved satisfactory. Further installations, carried out by Ryanair’s own engineering staff, will continue in the meantime, bringing the total of outfitted aircraft to around 50 by the end of the trial period.

He emphasised the exploratory nature of the initial effort. “This is a six-month trial. If for some reason it proves unsuccessful, we may not continue with the rollout. But experience in the rest of the world shows that this is unlikely to be the case. In essence we have signed up to equip the entire fleet.”

The service is being heavily promoted on the aircraft, with eyecatching decals on overhead luggage bin doors, ads in the inflight magazine and PA announcements, and in the Ryanair Website. Initially about 80 per cent of passengers boarding the Dublin-based aircraft can expect to find the service available – the figure is influenced by operational decisions leading to the redeployment of the aircraft from time to time.

Customers of Vodafone, O2 and another 50 European cellular providers can use the service, which costs Eur2-3/min for voice calls, about Eur0.50 to send a text message and Eur10-15/Mb for BlackBerry Internet access, depending on the mobile operators’ mark-up. Passengers pay to receive calls and to make calls and send texts, just as in international roaming.

O’Leary suggested yesterday that there was still work to do on securing the roaming agreements needed to broaden the availability of the service: “I say to the Irish mobile phone operators: get off your backsides and offer this service because your customers want it,” he thundered.

Current system capacity per aircraft is six simultaneous voice calls and unlimited text messaging and mobile phone email, with the voice capability to be expanded to 12 calls by the end of the year. O’Leary sees his passengers using the service in a considered way: “In general they won’t use it for rubbish, trivial communications, though some teenagers might.”

As for business use, O’Leary was his usual trenchant self. “Currently 30-40 per cent of our passengers are business travelers - we expect the number of bankers flying with us to rocket in the months to come as they get a dose of reality,” he said. “But the bulk of usage will come from teenagers and visiting friends and relations. This is a mass-market service - any offering that, like Connexion by Boeing, is aimed solely at business travellers is doomed to fail.”

He was equally forthright about his revenue expectations in the short term. “Most of the revenues go to OnAir and the mobile operators – we get a small share,” he said. “We’ve carried out no revenue projections, for two reasons: it’s a trial, and the revenues will only become significant when the whole fleet is fitted.”

But he made no secret of his hopes for the future: “We expect this ultimately to be a significant source of revenues. And we’re even more interested in the use of connectivity as the key to introducing things like IFE and gambling, though that won’t be for four or five years yet.”

Questions about who paid for what in getting OnAir aboard the airline’s 737s got the dead-bat treatment. “We split the cost of installing the equipment. Ryanair paid for the installation work, we invested in the equipment,” said Benoit Debains. “The cost of modifying each aircraft is a six-figure sum – we have split the expense with OnAir, and our revenue share reflects that,” confided O’Leary. As to who might foot the bill for removing the equipment should that prove necessary, nobody was saying.      

That question was prompted by Ryanair’s last venture into IFE/connectivity, which ended with handheld IFE being unceremoniously dumped after a few months. “We expect onboard mobile phone to be far more of a success than that was,” said O’Leary. “We were overtaken by technology – the kids were all coming aboard with their own entertainment. By contrast, OnAir allows passengers to use their own devices, instead of foisting on to them something provided on board.”

O’Leary evidently sees the basic OnAir service as just the start of something much bigger. “We want to get this up and running first - then we’ll see what else we might be able to offer through the system,” he declared. “We don’t expect the service to be profitable in the short to medium term – but it could turn out to be a very substantial business for both us and OnAir when we’re carrying 100 million passengers in five years’ time.”

Characteristically, the Ryanair boss ended on a two-fisted note. “Our business is booming – there’s nothing like a good deep recession for getting people to turn away from flabby full-fare carriers,” he quipped. “There’s never been a better time to launch a service like this. There’s far too much doom and gloom - this launch will put a bit of a spring into people’s step.”

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