Aeroflot Exec Ready for IFC’s Big Year

Russia’s national airline Aeroflot has close to 240 aircraft and one of the youngest fleets of any major airline, with an average age of just more than four years. Consequently, with a young fleet, the airline is looking to have a progressive In-Flight Connectivity (IFC) strategy to offer the next generation of services to passengers. In 2018, Aeroflot plans to install entertainment systems and internet access points on all aircraft of the A320 family. “This project is unique as the company that will be providing the whole range of services — including certification, equipment, and connectivity services — is Russian,” Aeroflot Deputy Director General for IT Kirill Bogdanov tells Via Satellite. “We continue to provide our cabin crew with mobile devices that help automate and facilitate their work. We are implementing solutions that will allow us to carry out preventive aircraft maintenance.”

Bogdanov admits that onboard Wi-Fi is becoming the norm, as an ordinary service required by passengers. With customers expecting to be connected to the internet wherever they are, the onus is on the airlines to provide next generation connectivity experiences. So, how is Aeroflot going about meeting this demand?

Firstly, it is planning to provide internet on medium-haul and long-haul flights. It is also looking at installing new equipment on its long-haul aircraft to increase internet speed and cut the cost of the service. Secondly, Aeroflot is aiming to provide connectivity services at all stages of a passenger’s journey. So, if a customer logs on during a short-haul flight, they will then have the opportunity to continue using the internet when they transfer to a long-haul flight, provided that the flight is also operated by Aeroflot. “We are paying particular attention to internet provision on board our aircraft,” Bogdanov says. “Like I said earlier, onboard internet is becoming an ordinary service that passengers expect as a matter of course. On top of that, the installation of new systems allows us to implement new solutions and provide passengers with new services that ultimately improve their customer experience. This includes catering development and automation, introduction of Advertising Video On Demand (AVOD) services, to name a few.”

Timeline

So, when will Aeroflot have all of its fleet installed with Wi-Fi? Bogdanov admits that this will be a long and gradual process for the airline. As of today, all of Aeroflot’s long-haul aircraft are equipped with the required systems. However, the airline is already planning to install new equipment. “We are working on installing equipment on 81 aircraft of the A320 family. All new aircraft will be equipped with the necessary equipment at the factory. For example, we expect Irkut to deliver MC-21 aircraft with all the necessary equipment already installed. In other words, this is an ongoing process, but the majority of Aeroflot aircraft will have the equipment installed by 2022,” Bogdanov says.

Aeroflot has been working on aircraft connectivity for almost a decade now. Bogdanov says that he hasn’t seen anything particularly surprising, as the airline usually learns about the trends well before the public. “This particular industry is not as big as it seems, and everybody knows everybody. The real issue is that sometimes it takes so much time between the decision-making and implementation stages that by the time the approved technology is installed, it is already outdated,” he says. “It is therefore important to be flexible, optimize processes, cooperate with service providers and government authorities. Let’s imagine that there’s a new competitive technology that enables fast data transfer. In Russia, the certification process for such technology may take up to a couple of years, meaning that despite knowing about the technology we cannot benefit from it, unlike our European peers.”

Business Model

One of the big issues facing any airline is what business model it uses to justify the investment in IFC. Some believe that charging for connectivity is still the best way, while other airlines are already looking to give connectivity away for free and find other ways to recoup the investment. “We don’t believe that the ‘best model’ exists,” Bogdanov says. “It all depends on technical capabilities, economic viability, and market conditions. We are constantly reviewing all possible options and working with service providers to find the right answer to this question. At the moment, we are charging passengers for onboard internet. However, we may as well provide free internet access in the future if the environment changes and if we think that such a move would be economically viable.”

For airlines, the Return on Investment (ROI) here remains a difficult puzzle to solve. Andrew Middleton, easyJet’s head of customer experience told Via Satellite last month that he still didn’t think any airline “had cracked it” in terms of a winning strategy.

“Return on investment in Information Technology (IT) is undoubtedly high. Certain services, such as hotel bookings and car rentals, are important as they provide additional income in form of commission from sales. Other services, such as onboard internet, are a part of Aeroflot’s premium-class value offer. They help us attract business and premium-class passengers. The development of catering and other services, including the introduction of e-catalogues, online payment for goods and services, development of entertainment services, provision of in-flight information etc., are equally important to us,” Bogdanov added.

Market Trends

Aeroflot is seeing a continuous increase in the number of aircraft with installed equipment. At the same time, the number of onboard internet users is also growing. Bogdanov says the re-equipment and development of satellite communications, as well as Air to Ground (ATG) LTE networks in Europe — and probably in Russia — will continue. “Data transfer speeds will increase. This will contribute to the emergence of new business models, content delivery models, new onboard entertainment solutions (game mechanics, virtual reality, etc.), as well as to the development of new business solutions and automation of business processes. For Aeroflot, it is important that we fulfill all our commitments on existing projects and introduce connectivity services on medium-haul aircraft in accordance with our initial schedule. We will let you know about the implementation of other projects when the time comes,” he says.

Big Data and AI

Aeroflot will look to use a connected aircraft to boost efficiency. Bogdanov says Aeroflot is actively implementing Big Data and Artificial Intelligence (AI) to drive efficiency. “The efficiency of any initiative is measured in monetary terms,” he adds. “Last year, we earned more than 900 million ruble ($14.1 million) due to using big data analysis in our marketing. We plan to expand the scope for big data and automate case implementation using AI. According to this concept, the aircraft is a center that generates huge amounts of data. By processing this data, companies can improve the quality of services provided to passengers, increase their ability to maintain control of the technical condition of the aircraft, and find new ways of implementing Electronic Flight Bag (EFB) solutions for cabin crew and other company staff.” VS