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Software & Platforms for Ancillary Revenue Generation in IFE
Ancillary products present an attractive opportunity for airlines to enhance their revenue streams. There are
several categories of ancillary products, and to date, most airlines have only been able to generate revenues from
one or two of them. These are extras that are sold to passengers at the time of an online ticket purchase and
traditional on-board sales. Other ancillary revenue streams which have yet to be exploited by most airlines are
on-board advertising and sponsorship, and new generation ancillary products sold through in-flight entertainment
(IFE) systems on board the aircraft. This second category includes the new concept of destination-related
products, with the potential to generate revenues for airlines via sales commissions. An equally important issue
is the software and applications that will be hosted on the IFE system hardware.
The first generation of ancillary products comprises the basic on-board sales of snacks, drinks, and duty-free
items. These clearly require little dedicated technology, although credit card sales run the risk of fraud on
aircraft not equipped with an external connectivity system. The second generation of ancillary revenues evolved
about 10 years ago when airlines started offering additional products associated with on-line reservation and
ticket purchases made by passengers. These can be divided into two categories:airline products and non-airline
Airline products include baggage check-in; priority or advanced boarding; reserving seats with additional
leg room; and buying food and drinks on flights without in-flight catering as standard. Airline products
generate direct revenues for airlines.
The second category comprises non-airline products, including travel insurance, hotel reservations, and car
hire. This category generates sales commissions for airlines, but requires the airline’s reservation system to
have dynamic packaging. These pre-flight and reservation related products are estimated to now account for $85
billion in revenues for all airlines. This contrasts with the annual airline industry profits of $35 billion.
There are also several categories of ancillary in-flight products. The first of these was when airlines
started offering external connectivity to passengers, which made it possible to send text messages and emails,
and to browse the web. This is a service that has been paid for by passengers flying on US domestic flights.
Some airlines use other connectivity systems and charge passengers directly. Typical daily rates in the US for
domestic flights are $8-20 per. Similar rates are charged by European carriers
External connectivity was also extended to some intercontinental flights by airlines that had used high
bandwidth satellite communication (satcom) systems, such as Ku- and Ka-band. These high bandwidth satcom systems
also made it possible to provide broadcast and internet protocol (I.P.) TV on aircraft.
In addition, an increasing number of airlines have opted to provide in-flight external connectivity on a
complimentary basis, in response to passengers’ growing demands for it. Despite the higher bandwidth of later
generation systems, the cost of providing external connectivity is still high, however, so airlines need to
formulate business models that somehow cover this cost.
Low-cost carriers (LCCs) and inclusive-tour airlines charge for the service, just like many of the North
American airlines. Passengers can use the service for text messaging, emails and surfing the web; while airlines
can use the external connectivity systems to offer additional IFE services and a wider range of in-flight
ancillary revenue products.
Following on from in-flight connectivity, a new generation of in-flight ancillary products is emerging. The
first of these is live TV, for which passengers can be charged or not, depending on the airline’s business
model. Another element of new generation in-flight products is passengers paying to access IFE content, in
particular films and audio content hosted on the IFE server.
An in-flight ancillary product that has gained interest in recent years has been the use of in-flight
advertising and sponsorship. This is a revenue stream that airlines can exploit without aircraft having external
connectivity or any capability for in-flight and destination-related shopping. That is, advertising and
sponsorship can already be used on the simplest and cheapest portable wireless systems. Advertisers can
subsidize the cost of operating a wireless IFE system that is used to provide free content or which markets a
limited amount of paid-for content. At the other extreme, advertising and sponsorship revenue can be used to
subsidize the cost of providing external connectivity for an IFE system that uses broadband external
connectivity, allows passengers to stream content from ground sources, and provides a wide range of in-flight
shopping that includes destinationrelated products. This targeted marketing can be done via an aircraft
connectivity platform, but the system would have to be linked to the airline’s frequent-flyer and passenger
A new generation of in-flight ancillary products is destination-related products and services. These will
be the sale, through the IFE portal, of items, such as hotel and car hire reservations, restaurant bookings,
and excursions and trips. All of these require access to the booking engine on the ground, so the aircraft
needs to have external connectivity.
What is needed?
Few airlines currently offer new generation ancillary revenue
products and so do not generate the potential additional revenues. The industry is in its infancy, but there are
signs this is changing, and the sale of in-flight and new-generation ancillary products is expected to grow over
the next few years.
“Passengers today are paying mainly for connectivity and
IFE content, but the biggest potential in the future is
targeted and personalized advertising and shopping
solutions. Having spare time while on board and being
connected opens up so many opportunities for new revenue streams the airline can participate in,” says
Stephanie Schuster, senior director business development at Axinom.
There are several steps airlines will have to take before they can start opening these new revenue streams.
This involves airlines making hardware and technological changes to their onboard systems. For example, high
bandwidth external connectivity is only provided on a minority of commercial aircraft, although the portion is
External connectivity is clearly essential to integrate real-time payment solutions and CRM systems, provide
live TV, allow access to live streaming content from providers, such as Netflix, and allow the purchase of
destination-related items. Airlines have generally considered highbandwidth external connectivity to be too
expensive and need to implement a business model that subsidizes or fully covers the cost of providing the
service. New-generation high-bandwidth connectivity systems will, however, help airlines reduce the cost of
A Seamless Holistic System
A major issue with providing ancillary products is the requirement of data and intelligence. Most IFE
systems have been configured to be stand-alone devices for the sole reason to provide entertainment. They
barely even cover the fixed cost of installation and operations owing to the cost of providing premium
content. To capitalize on the new generation ancillary revenue opportunities, the IFE systems need to be
integrated or interfaced with airlines’ CRM systems.
First, a complete range of all categories of ancillary products from pre-flight to post-flight needs to
provide the passenger with a seamless experience.“Several factors are preventing airlines from
moving faster ahead with generating more from these ancillary revenue streams. One issue is
payment and personalization, and most airlines’ IFE systems do not have seamless integration. If
they did, passengers would not have to re-enter their credit card and personal details each time
they make a purchase,”says Schuster.
There is also the integration of an airline’s system, such as frequent-flyer and customer relationship
management (CRM) with the on-board system, as well as issues relating to aircraft hardware and external
connectivity equipment. An integrated and holistic system means that the IFE system will recognize the passenger
when they are in their seat, and link this to their personal data from the CRM system or the ticket purchase.
There are several possible ways to configure a system to provide a seamless service using connectivity.
“One example is a hybrid solution for payment,”says Schuster.“This would show the
passenger options like duty-free articles, food, and beverages, destination vouchers,
entertainment, telecommunication services, flight upgrades, further transport services like Uber
and baggage claim information. There are also airport services, such as terminal hotel and meeting
options for purchase. These services could make use of an integrated connected catalogue, CRM
and payment service. The usage of selected partner services, for example, ground transport or
hotels services could be free, while other connectivity services for the internet, in general, could
The new-generation ancillary products will also have to be offered at appropriate
touchpoints. Examples of these can include ordering drinks and stating meal or movie content preferences during
on-line check- in, travel to the airport, airport check-in, and the pre-departure period. Such promotion of
these sorts of ancillary products can be conveyed through the airline’s app on the passenger’s PED. Other
appropriate products during these touchpoints may include destination-related products, or post-flight products,
such as grocery items or taxi reservations to take the passenger home after a returning from a trip. Marketing
via the app on a PED would be convenient at these pre-flight touchpoints, and would make use of Wi-Fi
connectivity available on the ground and mainly within the airport terminal.
At touchpoints in later stages, such as during the flight, it would then be appropriate to offer
destination-related products, in-flight shopping, access to streamed IFE content from on-ground sources, and
in-flight items such as drinks.
The large number of touchpoints at the off- and on-aircraft phases of the entire journey and passenger
experience, and the appropriate products to offer, must be carefully identified and analyzed, so that the
passenger does not get annoyed by the over-promotion of an excessive number of products at too many touchpoints.
Not only does frequent-flyer data allow airlines to better target appropriate ancillary products to
particular passengers, but so does analysis of passengers’ buying behavior. This is like using data from global
distribution systems (GDSs), and revenue management and revenue accounting systems to re-optimize available
fares on each route at regular intervals.
Therefore, as well as creating a holistic reservations, IFE and an ancillary revenue-generating system,
airlines would benefit from having the post-ancillary product purchasing analysis process in place at the start.
This will allow them to refine touchpoints, and the appropriate products promoted to regular passengers at each
The Axinom Platform as Solution
Digital Platforms built by Axinom are different because the offer is based on software only. Axinom’s
products and services that are used for IFE systems or connectivity portals are individualized and custom built,
installed on existing hardware, integrated with on-ground and onboard services and certified by the buyer. The
company is also specialized in content protection and studio approvals for customer solutions, but the content
itself is not part of the offer.
The Axinom platform has been designed to take all the elements into account.“There are several
main modules. The first of these modules are hosted on an airline’s ground-based systems, while
latter modules are hosted in the IFE platform server. All content is chosen and purchased by the
customer and can be ingested by the content service providers that include publishers, TV
broadcasters and channels, telecommunications companies, and radio stations,” says Schuster. “The content
can also include existing TV channels, recorded TV shows, movies, images, audio content, and any related metadata.
It also includes adverts, an inventory of items available for in-flight shopping, or destination information and
content related to destination-related products and shopping.”
A first module is the video ingest and processing (VIP) hub.This is purely related to movie and
video content. It is required for encoding and encrypting the video content provided by film and movie studios
that must be protected. The VIP module can integrate forensic watermarking solutions on visual content to make it
identifiable in the case of theft and can host multiple language versions of the same content for use on various
parts of the airline’s route network.
The managed content can be transferred to the content management system (CMS).This module is the central
interface managing all kind of digital assets, for example, also from third parties that are not media. These
include information related to destination, in-flight catering, the moving map, all adverts that the customer
wishes to show via the portal, and the inventory of items that can be bought by the passenger in the shopping
The media and content modules flow data and information into the CMS. “The CMS is a webbased interface for
managing all content types, and is used by the ground-based editor,” explains Schuster. “The functions of
the CMS can include captive portal content and subscriptions assigning pricing, managing advertising, and
creating content for each fleet and sub-fleet.
The CMS can create content sets and rules, to provide the right content and accompanying languages, according to
the routes and geographical region in which the aircraft of the sub-fleet is operating.
These rules can include instructions on which part of the content set should be shown to which passenger group
or in which time.”
“One rule is that the IFE system needs the ability to detect when a passenger is using a PED,
and specify what content can be viewed on the device,” continues Schuster.“This applies to
issues such as early window (EW) and late window (LW) movies, since only LW movie content
can be viewed by PEDs. Another set of rules could specify which items are complimentary, and
which must be paid for, and how this varies according to cabin class.
Following on from the CMS is the content delivery system (CDS).“The CDS transfers the
content from the CMS to the IFE server on the aircraft,” says Schuster. “Many systems are
simply using USB drives, but we want to be able to use all available connection pipelines to get
data onto the aircraft. These include the cellular and Wi-Fi on-ground connectivity systems, as
well as the high bandwidth Satcom systems. In addition to the main content uploads, there are
also incremental content updates. The CDS can prioritize certain parts of the content. The CDS
also must switch between the on-ground (mass storage, cellular) and Satcom connectivity
systems to achieve the lowest possible cost. The switch also depends on whether the content is
being loaded while the aircraft is on the ground or in the air.”
Information, including IFE and aircraft operational and maintenance data, must be downloaded from, as well as
uploaded to, the aircraft. The CDS, therefore, synchronizes all data in both directions.
The in-flight services (IFS) module is hosted on the IFE server on the aircraft and receives the data and
information from the CDS.“The IFS has software
running on the onboard server, and the digital rights management (DRM) runs on the server. There are various
functions provided by the IFS, depending on the feature set and required backend integrations of the on-board
“These functions are: the media server that assists in streaming the content from the server to the client
devices (personal or seatback screens), the
captive portals to manage connectivity, and the DRM which has the ability to authorize protected
content. Then there can be a local advert targeting server, and also in the IFS the content rules
can be managed. Public announcements made in the cabin are also controlled by the server and
coordinated with showing and running the content, so that showing movies, playing audio content
and running other types of content, such as completing purchasing transactions, are all paused
while public announcements are in progress.”
The IFS will also hold the catalog of the entire content available on the system. The advert server has rules,
such as what days of the week adverts are displayed, and which adverts are displayed before the start of a film,
or while viewing certain classes of content. In a hybrid setup, this can also include targeted online advertising
by utilizing connectivity, on-ground customer CRM and cloud-based advert exchange servers.
The final module in the Axinom platform is the connection to the front-end applications, which is the
interaction point visible to the passenger provided via the IFE portal, to the in-seat screens or PEDs. The
front-end SDK controls the connection between the server software and the front-end application.
Disclaimer: The article was originally published in the June/July 2018 issue of Aircraft Commerce and has
been reproduced with modifications with permission.