Advertisers Climb On Board

American Demographics, Oct 1, 2002

Byline: PAMELA PAUL

If marketers have their way, airline flights will offer little escape from the advertising overload that fills our earthbound lives. Infomercials on movie screens, promotions on tray tables tops and maps that display passenger routes as well as company logos are just a few of the ideas that marketers hope will fly high with the ailing airline industry.

In the past year, advertisers have been lining up to connect with airline passengers, an appealing demographic of affluent, educated and mobile adults. Whether they're on a business trip or on vacation, these travelers are often in spending mode. And they're trapped for several hours, captive to marketing messages. According to the Los Angeles-based Airline Advertising Bureau (AAB), which sells in-flight entertainment media for most of the major carriers, each month more than 23 million passengers travel on airlines that offer ad-supported in-flight television services.

But there's a hitch: The industry has been reluctant to allow advertisers in. Though some smaller carriers have welcomed the revenue, the major domestic airlines have been wary. For most airlines, leasing space to advertisers means relinquishing territory to other brands, spending money to install new technology and potentially alienating passengers.

However, airlines' opposition to in-flight ads may be weakening, in part due to the slowdown in travel. The Washington, D.C.-based Travel Industry Association reports that revenue-per-mile flown in May was down from the year before by 10 percent on domestic flights and 12 percent on international flights.

Even before the hijackings on Sept. 11, most of the major carriers were in trouble. And though Sept. 11 put several new advertising developments on hold, airlines may be ready to think about new revenue streams again or, at the very least, to try to offset some of the costs of entertainment and amenities. According to the World Airline Entertainment Association (WAEA), a McLean, Va.-based trade organization that negotiates contracts between airlines and suppliers, in 2001 airlines spent $1.9 billion on in-flight entertainment and communications - more than double the $845 million spent in 1995. With trendsetting boutique airlines like Virgin Atlantic and JetBlue moving forward with innovative on-board marketing plans, it may be only a matter of time before the larger carriers follow suit. "About six months ago, nobody would take our phone call, but things are beginning to bounce back," says John Caldwell, managing director of the AAB. "The airlines would really like for advertising to be more of a revenue source, because there's a lot of costs involved in providing all the in-flight programs and amenities."

The latest buzzwords in airline marketing are "interactive" and "integrated" - involving Internet service, text messaging, personal video recorders, video-on-demand, video game systems and multimedia cross-promotional campaigns. Virgin Atlantic is expected to offer on-board text messaging by year's end, with sponsorship for the service to be sold to an advertiser next year. Within a year, Virgin hopes to provide full in-flight Internet access, using Matsushita hardware, so that passengers can access the Web on chair-back screens. According to Rob Brooker, a spokesman for the WAEA, in-flight multimedia is the wave of the future. But the real promise, according to industry experts, will be in terms of audience measurement.

"One of the difficulties of selling in-flight advertising has been statistics and results," says Brooker. "With built-in monitoring systems, advertisers will be able to track who watches what and for how long." Glenn Latta, executive vice president of LiveTV, an airplane satellite television service, says the firm's equipment uses GPS technology that will enable businesses to show destination-specific advertisements. For example, on a Hawaii-bound flight, a hotel chain could offer a promotion for its Honolulu properties.

Some of the technology is already in place. JetBlue was an innovator in on-board entertainment, offering LiveTV in 2000 with 24 channels of programming. JetBlue currently controls one channel, which includes a GPS-updated map as well as flight and route information. MapQuest sponsors the channel, which also runs in-house promotions for JetBlue.com and JetBlue partners like Expedia. Says Tim Claydon, vice president of sales and distribution, JetBlue is working to expand the channel's possibilities. "We expect that down the road, we'll go to a CPM [cost per thousand] model that will allow us to sell a percentage of these advertising screens," he says.

In June 2002, Denver-based Frontier Airlines became the second domesic carrier with satellite entertainment, announcing plans to offer LiveTV beginning this month. Last year, LiveTV ran still-image advertisements from companies such as Barron's and Club Med; by January 2003, LiveTV expects to offer full-motion video, often with a commercial running simultaneously on all channels.