Thinking Outside of the Aircraft: In-Flight Connectivity Nok Air Style
Patee Sarasin is not your typical CEO. He is flamboyant, frequently outspoken, and part of a new breed of CEOs trying to change the airline industry. At the heart of his ambitious plans for Nok Air is the airline’s “connected” strategy working with the likes of Row44 and Thaicom. He shares his insight with Via Satellite on this ambitious plan for the airline.
If you offer passengers in-flight Wi-Fi for free, what is the real impact? According to Nok Air’s CEO Patee Sarasin, it could mean adding 10 percent more passengers, which could equate to 200 million Thai Baht ($6.2 million). Sarasin says the investment in in-flight Wi-Fi will pay for itself in the first year of operations.
“We have free Wi-Fi for passengers on the ground, [but] what we want to do is connect them in the air. I think in terms of revenue that will lead to an increase of 10 percent. We carry eight million passengers a year so, if you had 10 percent to that, you are adding close to another one million passengers. This is the difference that Wi-Fi makes. … It will pay for itself, basically. I can foresee now that a lot of new customers will fly with us because of the Wi-Fi piece and that is the return on the investment,” Sarasin says.
Nok Air, one of a new breed of low-cost airlines in Asia, aims to be nimble and creative, and outflank much bigger, cash richer airlines. One of the ways it will look to do this is through an expansive Wi-Fi strategy with a key satellite component, which Sarasin hopes will strike a potential chord with passengers.
“Many airlines are very conservative. For us, I think there could be a lot more creativity in the airline business. I think satellite will be one of them. Once something like this is a success, it will spread like wildfire,” he adds.
Nok Air will be one of the first in Asia to offer In-Flight Connectivity (IFC) services. In June, the airline teamed up with Thaicom and Row44 to connect its fleet and start offering these services to passengers. Sarasin admits the Wi-Fi initiative was one of the most important for his airline and said it took him a whole year to get it started and, in late September, Nok Air launched its first “connected” aircraft delivering 10 Mbps.
“It was actually a year ago that I came up with the idea that we should have Wi-Fi. In those days, people were laughing at me, and I am sure other low-cost airlines were laughing at me,” he says. “We kept it a secret, we looked at different systems; we looked at whether we should use land based antennas or satellite. We also had to look at the experience with Thaicom. So it took us a long time to initiate this. This was a major launch for us [and] we see this as an industry changer.”
However, while the launch has now taken place, Nok Air believes this will only be the start of bigger plans. One of the interesting things for Sarasin about having IFC is that it will open up new business models for the airline. “We are going to try everything. This is really the first step for the Wi-Fi system but, personally, I think it goes beyond connectivity … It is more about what you look to do with it. We are now developing a new business model, which will make use of the Wi-Fi and improve the customer’s experience. We are looking beyond the connectivity part.”
Offering the Right Services
After connecting its first aircraft, Nok Air plans to have another six aircraft connected next year. Sarasin also says having Wi-Fi will help the airline understand the customer. With a more connected world than ever before, Sarasin says the traditional battle lines between low-cost airlines with less services and more expensive airline services are blurring.
“I think customers will choose airlines based on the types of services they will provide. Even though airlines are supposed to be ‘low cost,’ we don’t necessarily aim to be the cheapest. I am surprised other low-cost airlines have not looked to deliver Wi-Fi quicker, but I believe they are copying us right now. I see our main competitors have just announced that they are going to be testing Wi-Fi, as we are installing it,” he says.
However, the key to success is — once airlines are connected — coming up with innovative and creative strategies to get passengers’ attention.
“The first challenge is that you have to be consistently connected. Secondly, it has to be able to support the applications that people want to use. There is no point having connectivity if people can’t use the applications they want to use. If you are going to have something working in the air, you need to make sure customers are satisfied,” Sarasin says.
One of the things Nok Air will be working on is forming partnerships with the likes of key retailers to offer passengers unique opportunities through its Wi-Fi system. While Wi-Fi is a medium of connectivity, Sarasin and his executive team think about what you do with it once it is up and running. He calls this “the key question;” for example, Nok Air has formed a partnership with one of the department store brands in Thailand, which has branches all over the country. Under this partnership, Nok Air passengers can order goods through its system at special prices that don’t even exist in the stores and then those products will be delivered to their house or hotel within an hour after they land.
“We are looking to work with the taxis, hotel companies, etc. You can book your travel packages, etc. This can be done all on Wi-Fi, and the service will be there when you arrive. We will have some more ideas once we start using the Wi-Fi system and we have it onboard. We want to see what people like, and then we can adjust to that. If you think about when you travel, how many times do you forget something? So, if you can have that delivered by the time you arrive, at a special price, that could be attractive. There are many times, I travel and I forget something. On this trip to London, my suitcase was busted on the way here. I ordered a new suitcase and had it delivered to the hotel. These are the sort of things that could work.”
Sarasin admits he will be testing out the system himself and, over the first year, the key metric will be the numbers of usage. He believes the service will be very popular. Overall, he expects 20 to 30 percent of passengers will use Nok Air’s IFC services. VS