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WILL INTERACTIVE FLY ON PLANES? NORTHWEST GROUNDS ITS PLAN, BUT OTHER AIRLINES WAITING IN THE WINGS

By Published on .

Airlines are ready to bring interactive entertainment systems to passengers, but there are likely to be long delays before takeoff.

The marketing lure of videogames, on-board shopping and video and audio entertainment to relieve the boredom of long flights intrigues most carriers. But in-flight interactivity already has had one near-collision.

Northwest Airlines-which had hoped to be the interactive airline pioneer (AA, May 19)-last month decided to postpone plans to expand Worldlink, earlier touted as the industry's "only interactive passenger entertainment system," offering movies, Nintendo videogames and shopping. The carrier had the system up and running on nine Boeing 747s but decided to remove the interactive component because of reliability problems.

Meanwhile, other airlines, including United Airlines, American Airlines, Continental Airlines and Trans World Airlines, also are said to be considering interactive passenger entertainment systems. British Airways and Singapore Airlines will go interactive within the next few months.

Besides the powerful marketing potential as another service amenity, interactive passenger entertainment systems will give airlines a new revenue stream-from advertising and sponsorship opportunities for marketers to reach key customers.

United, the nation's No. 1 airline, plans to give first- and business-class passengers interactive entertainment on its new Boeing 777s by next May. The rest of its wide-body fleet will be retrofitted by the end of next year.

If United meets that schedule, it will become the first U.S. airline to go interactive.

"United will be the first U.S. carrier to become interactive in the true sense of the word-all business services, faxes, video-games, theater reservations, shopping," said Bill Kopp, president of GEC-Marconi Inflight Systems, Bellevue, Wash., United's interactive systems provider. "Certainly it makes United more competitive and will drive other carriers to make similar decisions."

Still, United is quick to acknowledge the challenge of installing a software-intensive system in an environment that moves, changes temperature and is cramped for space.

"It's my sense that this is much more complicated than people originally thought," said Bob Williams, United's manager of onboard product support. "When you try to pull the whole thing together, it only takes a few things to upset the applecart."

For now, the focus is getting the system operating. But Mr. Williams and others in the industry have their sights set on advertising potential.

"We could look at this as a shopping center and have a product store featuring a number of companies and could give people coupons," he speculated.

Others agree. The more appealing the programming on in-flight entertainment, the better the advertising opportunity.

"I think the ad potential is powerful," said GEC-Marconi's Mr. Kopp. "If you can visualize a videogame, it takes 3 to 5 seconds to download, so why not have a McDonald's or Coca-Cola ad pop up during that time?"

Mr. Kopp and others recognize the tendency to jump the gun on major projects, especially when getting there first is a tremendous bonus in airline marketing.

But Northwest is paying the price for being the first in and now must take a step back.

The airline's original plan called for installing interactive passenger communications systems on every seat in its wide-body fleet. While it awaits technology improvements from developer Hughes-Avicom International, personal video systems will be installed in first- and business-class cabins-without interactivity-by mid-1995.

Northwest and Hughes-Avicom are disappointed, but they aren't giving up. The stakes are too high, especially with other carriers ready to try their hand at interactivity.

"We're still fully committed to the interactive concept," said Jon Forbes, chairman-CEO of Hughes-Avicom. "You're always disappointed when you embark on a project and it doesn't come in on schedule."

Mr. Forbes acknowledged the risks of being a pioneer.

"We admit freely we fielded the system prematurely. There's not a baseline of experience for a system of this complexity flying in a cabin of an airplane."

Northwest will have the option of activating the interactive system sometime next year, after some software and hardware improvements.

In the meantime, Virgin Atlantic Airways, another Hughes-Avicom client, reports better results with its interactive system that was installed earlier this year on six aircraft.

The system is "reasonably reliable," said a spokesman in London, Virgin's headquarters. Perhaps most importantly, the system gives the carrier a competitive edge since every seat-including economy class-offers the system. The system offers video-games and a wide range of movies; shopping, gambling and fax capabilities are in development.

Not to be outdone, rival British Airways proclaimed in June that it would spend $120 million on the "world's most advanced in-flight entertainment system." The interactive system, to be tested in two aircraft this winter, will offer "thousands" of videogames, in-flight shopping, hotel and car reservations and gambling.

Singapore Airlines will invest $50 million to install an interactive video system from Matsushita Avionics Systems Co. in 20 planes starting in first quarter 1995. Called the Cabin Management Interactive Video System, it will offer movies, digital audio and videogames, in-flight shopping and destination information via a video screen and handheld remote control.

But while foreign carriers are developing gambling software, they won't be able to offer it on flights to and from the U.S. At least for now, it's illegal.

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