Samer Majali CEO, Gulf Air

Gulf Air, based out of Bahrain and one of the largest airlines in the Middle East, aims to be one of the most progressive in terms of providing in-flight entertainment and connectivity services. The airline is going one step further than most by offering live TV as part of its overall service to passengers and could become a showcase for some of the most innovative in-flight entertainment services around. Samer Majali, CEO, talks about why the airline has decided to adopt such a bold strategy in terms of providing these services to passengers. 

VIA SATELLITE: What is the significance of Gulf Air’s deal with Panasonic Avionics?

Majali: This particular deal with Panasonic was very important. We are the first airline in the world to install this particular hardware and software. There are three main benefits to the customer. The first one is mobile telephony and SMS, and the ability to use GPRS to access Internet on smartphones. The second is broadband Internet, which allows you to access whatever services you want, including social media. And third, for the first time in the world, you have live TV. We are offering four channels, initially starting with sports and news channels. 

VIA SATELLITE: How many channels will you look to offer in the future?

Majali: We will start with four. The providers are planning within the next 12 months to add another four channels, so there will be a total of eight channels. But there is no limitation. It is about coming to an agreement with others to broadcast on airplanes. For us, it is about trying to select a TV channel that has the broadest range of interested audience on-board.

VIA SATELLITE: What is the return on investment for Gulf Air on such services?

Majali: We are the first to offer live TV over the land and international waters using Ku-band satellite technology, and definitely one of the first airlines to offer this range of products (telephony, broadband and live TV) across continents on a global basis. From a financial perspective, there are some things here to point out. We do get some returns from the usage of the service, particularly the broadband Internet and the telephony service. That goes partially to pay back the cost of equipment during a period of time. The rest of the payback comes from the investment in our brand and product, and encouraging people to fly on Gulf Air. We also want to encourage our frequent flyers and the people that use Gulf Air to continue to use Gulf Air, as we continue to upgrade our products. So there is a direct and indirect financial impact to recover the investment that we made. 

VIA SATELLITE: What is your pricing strategy for this?

Majali: The live TV element is free of charge. This supplements the movies that are already part of the in-flight system on-board, so the entertainment aspect is free of charge for the entire airplane. The other two elements, Internet and telephony, will attract international roaming charges for which we have agreements with service providers. The charges will appear on telephone bills as if they were roaming charges. The airplane is like a virtual country, so the charges will be in-line with international roaming. For the Internet, the charging scheme is somewhere in the region of $15 for one hour, and less than $30 for 24-hour unlimited usage. 

VIA SATELLITE: A number of Ka-band satellites are launching here. Why did you decide to go with a solution based on Ku?

Majali: I do know that Ku-band right now is fairly reliable. The kind of coverage that it offers right now is perfectly adequate. The antennas’ on board the aircraft tend to keep aligned with the satellites to almost all different altitudes and so on. So, the current coverage provided by the satellites is actually very adequate. We have actually been doing trials since the beginning of October on all the services, and in fact, the reliability has been very good. The Internet is free of charge now to our passengers so they can find out how convenient it is in terms of speed or whether there has been an interruption to the service. 

VIA SATELLITE: What is the timeline in terms of rolling this out across your fleet?

Majali: In October we launched the service on our first aircraft, which travels to the Far East, and in mid-December we launched the second, which is dedicated to Europe. With the two airplanes, we have global coverage on our route network from East to West. This will be officially launched as a commercial service and we now expect to launch this across the remainder of our fleet within the next four to five months — almost one airplane every month — and we are going to install it on our long range 320 airplanes. So by the end of next year, we will probably have at least 20 airplanes with high-speed and high-capacity connectivity. We are also going to install limited capability on the short-range fleet, so the fleet is dedicated in region. That will be telephone services and GPRS, which will allow some limited Internet usage. So all of the Gulf Air airplanes will have either a high-level of connectivity or a more basic level of connectivity, depending on where they are flying. 

VIA SATELLITE: How important to do you see these services as part of your overall strategic roadmap?

Majali: It is revolutionary in terms of air travel, but it may also be considered controversial. I think the Internet, text messaging and live TV may cause some issues. The live TV service is an extension on the movies that you already have on-board. It gives a broader range of entertainment options to our passengers who can either watch movies that are already in the system or get access to live TV. The Internet provides access to VPNs, (Virtual Private Network), which appeals to the business traveller. This is particularly important on the long-range flights where they have the choice of doing work on-board. The only issue we have is on voice telephony, which is something we need to gauge how passengers perceive the service. We need to find out if it is considered a nuisance. We can modify it once we get to know customer preferences and usage. 

VIA SATELLITE: Do you believe offering such services gives Gulf Air a competitive advantages over other airlines?

Majali: I think it does give us a competitive advantage. We are the first to do this on a global basis, and definitely in the region. We are marketing ourselves as the travel friendly airline that offers passengers what they want. Our schedules and network are geared this way. It is about having a very frequent flight schedule and the number of flights and destinations in and out of a region. We are offering convenience and a good quality service on-board. The IFE is an extension of our services. We will be offering far more products on-board. 

VIA SATELLITE: By the time this is rolled out across your fleet, how much will the investment have cost?

Majali: The one-off payment for the installation of the hardware is in millions of dollars. But, on a fleet of 30-40 airplanes, this is not a major issue. The operational issues such as buying the content is quite expensive, however, we think we can recover most of those costs from the usage of the service. We think the payback period is anywhere between four to six years, though it is difficult to gauge. It really depends on the usage. If this takes off, the payback period will be much faster. But, if people only use it occasionally, or find the Internet services too expensive, then the period becomes longer. It is a new territory, but we think within six years that we will be able to pay back this investment plus cover the operational costs of the service. 

VIA SATELLITE: If we have this conversation in 12 months, what do you hope to have achieved?

Majali: I would hope to say that this has all been worth it. We are aiming to be the leader in cutting edge technology, but if you are at the forefront and make decisions based on studies and analysis, you are taking a risk. Apart from any technology issues, there is a risk in terms of whether people will accept it. From a technical aspect, it has all been proven, but the commercial risk is important. The issue is whether this investment will directly recover the costs involved in installing the equipment and operational costs, as well as whether this is something our passengers want. So hopefully we can say in 12 months time that it has been successful from a passenger appeal point of view and financial point of view.