Oliver
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Joined: Tue Oct 12, 1999 4:02 am

In-flight Connectivity: Costs Borne By The Airline

Fri Jun 28, 2013 3:23 am

For my Master thesis, I conduct a cost-benefit analysis of in-flight connectivity (onboard internet and mobile phone usage) from the perspective of a hypothetical airline. For the financial analysis I still lack certain assumptions and maybe someone can share their experience/knowledge regarding any of these points:

- Equipment Costs: I assume that final IFC equipment prices and the corresponding revenue share between airline and connectivity provider are subject to individual negotiations and agreements. However, are there any official list prices for IFC equipment/complete IFC solutions? I'm only familiar with the rough figures per aircraft of 100,000 USD for air-to-ground equipment and 200,000-300,000 USD for satellite connectivity solutions (Ku-Band).

- Installation Costs: What are the required days and staff for the installation of different types of IFC equipment? I would assume overnight installations for air-to-ground equipment, but how many days and man-hours are required for more sophisticated installations like Row 44? What is a feasible assumption for the hourly costs of the corresponding airline maintenance staff?

- Fuel Burn: What is the effect of different IFC antennas/radomes on aircraft fuel consumption (weight/drag)? I mostly heard of figures in the range of +0.5% for Ku-Band radomes on short-haul aircraft, but would assume the effect is smaller on long-haul aircraft.

- Revenue Share: What are the most common revenue share agreements between airlines and connectivity providers? Roughly speaking, to which degree is revenue sharing influenced by how much the airline pays for the equipment (e.g. up-front payment of 30% of actual equipment costs relates to a share of only 30% revenues for the airline)? Are the installation costs (vs. equipment costs) usually completely borne by the airline?

Thanks for your insights or links to other sources.

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