Airlines Entertain Tablet Ideas

By SAM SCHECHNER

When French airline OpenSkies wanted to upgrade entertainment options on the small fleet of Boeing 757s it flies between Paris and New York, it decided against wiring its aircraft with a traditional seat-back video system.

Instead, it bought nearly 500 Apple Inc.

iPads and preloaded them with an array of video to hand out to passengers on board.

Rather than the up to $3 million per airplane that typical in-flight entertainment systems can cost to install, according to industry executives, the airline says it spent about $250,000 per plane for its iPad-based system, which the premium-class-only airline lends out free to all of its passengers.

“We found that in terms of costs, you actually get a very good product for less,” said Karin Drylie, director of marketing and product for the OpenSkies, which is owned by International Consolidated Airlines Group SA’s

British Airways.

A growing number of air carriers are tapping into consumer technologies like tablets and wireless streaming to help them upgrade their in-flight service—without breaking the bank. A few, like OpenSkies and Qantas Airways Ltd.,

are distributing or renting tablet computers to passengers. Others, like Delta Air Lines Inc.

are installing wireless video systems that stream movies and TV shows from onboard servers to customers’ own portable devices for a price.

The result is a new market for in-flight entertainment, both for small airlines with older planes, and for short- or medium-haul planes that make up roughly three quarters of commercial airplanes. Those airlines and types of planes have often not offered much more to passengers than in-flight magazines and a handful of overhead screens. But new technologies—drawn from the world of consumer electronics— are changing the cost-benefit equation.

The new systems come in different flavors. In one, airlines preload content and specialized in-flight applications onto tablet computers that flight attendants then distribute in the cabins. Last week, for instance, El Al Israel Airlines Ltd. began handing out iPads to its business-class passengers, like OpenSkies.

Last December, AMR Corp.’s

American Airlines began issuing Samsung Electronics Co.’s

Galaxy Tabs for no charge in premium cabins on some flights, including on 767s that don’t otherwise have individual screens. On the low-cost end, Asia-Pacific carrier Jetstar Group rents out iPads preloaded with content to passengers on some routes, too.

In another model being pushed by incumbents in the in-flight entertainment business, airlines install a plane-wide content-streaming system with an array of movies, TV shows, games and other content, generally alongside broader Internet access. The airlines can then beam their content to passengers’ devices, as well as to wireless screens they distribute or build into seats.

American Airlines has already started rolling wireless video out to some planes, and Delta last week said it, too, would offer in-flight streaming on all two-class U.S. flights by the end of 2013—including the roughly 350 planes in the U.S. that don’t currently have individualized in-flight entertainment systems.

Both airlines’ wireless systems allow passengers to rent movies and TV shows, providing them with a new revenue stream. The airlines’ prices start at 99 cents for television shows and $3.99 for movies.

Preloaded and wireless systems can help airlines save money over traditional systems also by saving weight. A wireless system could cut hundreds of kilos by ditching miles of cabling. For a single 767 airplane with 260 seats that translates into 80 metric tons less fuel consumption in a year, or nearly $90,000 at current fuel prices, said Lufthansa Systems, an airline IT provider that is a subsidiary of Deutsche Lufthansa

AG.

Wireless systems can also be more flexible. “Typically whatever you build into an aircraft lasts for 5 to 10 years, and that doesn’t match the speed that you see in consumer electronics,” said Norbert Müller, head of Lufthansa Systems’s wireless in-flight entertainment system. “We can help airlines keep up by building less into the aircraft.”

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Some commercial aviation executives say that distributing tablets directly to passengers is likely to remain a novelty—or a stopgap before new planes with new built-in systems are delivered. In part, that is because it is impractical to distribute a full plane’s worth of tablets on wide-body jets with hundreds of passengers, they say. Some passengers may also break or try to steal the devices.

Wireless systems where consumers bring their own devices, avoid those problems.

Two in-flight entertainment providers, Panasonic Corp.

and Thales SA, have recently started selling such systems, which could help them account for a growing portion of the currently $2 billion to $3 billion annual market in coming years. “Wireless delivery systems, which we’re really just starting to see, that’s really where the future is going to be,” said Michael Planey, a product-development consultant for the in-flight entertainment industry.

Nevertheless, many airlines say there is still plenty of life left in seat-back screens, especially as they grow larger and more sophisticated.

Air France KLM

is adding online streaming but is keeping in-seat video, too.

Christian Herzog, Air France KLM senior vice president of marketing, said he prefers a 15-inch seat-back screen over “a tablet that I have to balance on my knees.”

Write to Sam Schechner at sam.schechner@wsj.com