2011 Passenger Survey Results

2. About this report History and purpose Last year, we released the 2010 Passenger Survey Results and received a very positive response. In this report, we have conducted all new research with a broader range of respondents, more content and more in-depth analysis. Our goal is to provide information that will aid passenger airlines in making strategic decisions about in- ight entertainment and connectivity programs. Who we are digEcor, Inc. is a worldwide leader in handheld in- ight entertainment. Specializing in proprietary devices and content management, we work with our clients to elevate their passengers’ in- ight experience. Our mission is to provide low cost, full service entertainment that drives revenue to airlines. You can nd us on the web at www.digEcor.com or call us at 1-801-489-2022. © 2011 digEcor, Inc.

7. 85% y Economy, 9% y Business and 6% y First class

10. What in uences you when buying an airline ticket? *Based on a scale of 0 to 5 (0 being No In uence and 5 being Very In uenced) 0 1 2 3 4 5 # of Responses Ticket Price # of Stops IFE System Meal Service Movie & TV In- ight Frequent Flyer Most Important 2nd Most Type Show Selection Internet Program Important Least Important Least Important © 2011 digEcor, Inc.

11. Analysis & take-aways IFE System Type Movie or TV Show Selection 2010 Comparison: Less important this year 2010 Comparison: A little less important this year Key Take-away: Downward trend in an IFE system’s Key Take-away: Content selection is less in uence over airline preference important than IFE system type In- ight Internet Availability Frequent Flyer Program 2010 Comparison: N/A (didn’t test last year) 2010 Comparison: N/A (didn’t test last year) Key Take-away: Wi-Fi is not a big factor in selecting Key Take-away: Frequent yer programs have a an airline wide ranging impact on airline decision Ticket Price Number of Stops 2010 Comparison: A little less important this year 2010 Comparison: A lot less important (biggest drop) Key Take-away: Downward trend in ticket price Key Take-away: Passengers are willing to make sensitivity but still most important more stops than before Meal Service 2010 Comparison: A little more imporant this year Key Take-away: More important than content selection and Internet availability © 2011 digEcor, Inc.

13. How do you prefer to receive or view entertainment in- ight? 70% Seat Back System Passenger Owned Device Airline Provided Handheld Overhead System 45% Average 30% Average 11% Average 14% Average 60% 50% Preference 40% 30% 20% 10% 00% 18 - 25 26 - 30 31 - 35 36 - 40 41 - 45 46 - 50 51 - 55 56 - 60 60 + Age Groups © 2011 digEcor, Inc.

14. Analysis & take-aways The Impact of Age Younger and middle aged generations embrace handheld technology while older generations prefer embedded systems. As passengers age, the preference for seat back and overhead systems increases at a near identical rate and the preference for handheld devices (both passenger owned and airline provided) decreases slightly. Though, the preference for passenger owned devices decreases more rapidly than the preference for airline provided handhelds. Airline Provided Handhelds Although handhelds rank low, additional surveying shows that 40% of passengers who have used a portable device, such as the digEplayer, prefer it over other IFE solutions. Further, case study has shown that uptake rates for handhelds are not negatively affected by the availability of in- ight Internet. The two services have shown to be complementary. © 2011 digEcor, Inc.

15. What type of interface do you prefer for a seat back system? *The overwhelming preference is for all navigation to occur through a touch screen. However, the desire for a touch screen interface decreases with older passengers who increasingly prefer to have controls next to the screen. Though, that preference, as shown below, is still in the minority. 18 - 25 26 - 30 31 - 35 36 - 40 41 - 45 46 - 50 51 - 55 56 - 60 60 + Touch Screen Wired Pop-out Control by Screen Wired Pop-out Control in Arm Rest Controls by Screen © 2011 digEcor, Inc.

16. What features are important in an IFE system? 1 Destination information 2 Daily news, weather, sports or nancial reports Most desired 3 An outlet to power your device features 4 Food and beverage ordering (additional explanation 5 Moving map on the next page) 6 Stream music or movies from personal device 7 Message airline’s customer service team 8 Peer-to-peer game play 9 Peer-to-peer communications (e.g. IM) 10 Parental Controls *Respondents ranked each feature © 2011 digEcor, Inc.

17. Determining the break in desirability of IFE features A natural break occurred in the data that separated the rst six options on the IFE feature list from the last four. The graph to the right shows the grouping broken down by age. In every age group, the rst six options are noticeably preferred over the last four options. The only exception is among passengers over 60 years old where a slight overlap exists. Rank Age © 2011 digEcor, Inc.

19. How Wi-Fi affects the ticket buying decision, broken down by age Impact on selecting an airline Earlier in the report, we showed that In- ight Internet has little impact on choosing an airline. In fact, the availability of Wi-Fi was the second lowest factor that we tested. Impact by age Impact The availability of in- ight Internet has the strongest impact on passengers age 26 to 30, shown by the green line. Starting with age 31, the impact of Wi-Fi steadily declines. The rate at which it declines, shown by the orange line, is the fastest of all the factors. Comparison to ticket price To put this in perspective, the red line in the Age graph shows the impact of ticket price. © 2011 digEcor, Inc.

20. Why do you want the Internet? We surveyed both the willingness to pay for individual services and the overall desire for each service if it were provided for free. Pay Free Desire to Use General SMS Instant News Sites Email Web Browsing Messaging Videos *Anomaly shows that passengers prefer Email access over News Sites if having to pay but prefer News Sites over Email access if the Internet is available for free

21. Commentary on Wi-Fi pricing Most businesses do not An IFE vendor perspective reimburse for Wi-Fi usage The following comment was left on a LinkedIn forum by Business Travel News released in May 2010 an employee of a large IFE vendor. the results of a survey that asked corporate “ travel managers whether or not they reimburse for in- ight Internet. If one can step back from the technical, social and emotional issues concerning ‘Internet’ on airplanes; I “ submit that the justi cation for installing a Hi-Speed Of the 230 respondents who guide Broadband System on an airliner is the ful llment of a) corporate travel policy within their Airline Operational Data Communications and b) organizations, only 34 percent said it's OK Passenger Convenience. for travelers to unsheathe their corporate cards to access Wi-Fi on all ights, though Any ancilliary revenue the airline may get from the use an additional 7 percent said they would of the system by the passengers for voice, data, etc., reimburse wireless Internet access costs, using their smart phones, PDA's, Tablet PC's or Laptops but only for intercontinental or long-haul is a bonus. It is dif cult to believe that the investment ights. The remaining 59 percent majority required can be justi ed by the added revenue from said travelers are on their own when it passenger usage, especially during the early years of comes to paying onboard Wi-Fi expenses, EIS. This service has to be looked upon as a passenger regardless of the length of haul.” ‘perk’ and a market differentiator in a highly competitive market. However, the biggest factor that will in uence passenger usage, besides availability, is ‘Seamless Performance,’ at least for the international long haul carriers.” © 2011 digEcor, Inc.

22. An analyst’s perspective on Wi-Fi revenues Airlines to offer free Wi-Fi & Market research rm In-Stat News estimates that revenue begin streaming content from Wi-Fi will grow from $225 million in 2011 to over $1.5 Delta Air Lines, as of Oct. 4, 2011, is billion in 2015 in the United States. Amy Cravens, an In-Stat offering free in- ight Wi-Fi with two Senior Analyst, remarked: objectives: to make money from the “ services that passengers use once While airlines initially viewed in- ight broadband as a connected and to encourage the uptake of competitive differentiator, it is now simply viewed in the U.S. the pay-for-access content. market as a competitive requirement. The future of in- ight Wi-Fi will be less about convincing airlines of the merit and Passengers have up to 24 hours after the more about leveraging the network to provide a broader ight to nish watching any “rented” breadth of services." content on their own personal devices. Lufthansa is launching a similar rental service. Cravens added that, similar to the hot spot market, Wi-Fi will most likely become a commodity and the revenue During Summer 2011, American Airlines opportunity will reside with the services and features and not trialed streaming content via the Gogo the connection. in- ight Wi-Fi. And competitor Row44 is launching a new “walled garden” with pay-for-access content. © 2011 digEcor, Inc.

25. 1 - 2 Hours 2 - 4 Hours 4 - 8 Hours 8+ Hours Flight Length Flight Length Flight Length Flight Length Read Read Read Sleep Listen to Music Listen to Music Sleep Watch Videos In- ight Magazine Sleep Watch Videos Read Sleep In- ight Magazine Listen to Music Listen to Music Watch Videos Watch Videos In- ight Magazine In- ight Magazine Play Games Play Games Play Games Play Games Working Working Working Working Browse Internet Browse Internet Browse Internet Browse Internet *Browse the Internet: Filtering for only respondents from the United States where Wi-Fi is more common, Browsing the Internet only moves up one position on 4 - 8 hour ight segments. © 2011 digEcor, Inc.

26. How interested are you in each Entertainment category below? - 3.81 Movies new 3.64 Internet - 3.29 Current News Most desired 2 3.25 Television Shows content types Ranking change from 2010 - 3.23 Music 2 3.21 Live Television 1 2.69 Casual Games (e.g. Mahjong) 3 2.60 Shopping 2 2.54 Audio Books 1 2.41 Music Videos 1 2.20 Independent & Student Films 2 2.11 Book Summaries - 2.06 Advanced Games (e.g. Halo) 2 1.99 Casino Gaming *Based on a scale of 0 to 5 (0 being No Interest and 5 being Extremely Interested) © 2011 digEcor, Inc.

27. Po pu lar Satisfaction © 2011 digEcor, Inc. pr e- re DVD lea se pr Le 3.85 e- ss DV p D op re ula lea r se re le 3.26 as Pop e( u 6 - lar 12 DV m D os ) Movie type below? re Po 3.53 lea p se ula (1 r D - 5 VD yrs ) P (m opu 3.20 or lar et c ha las n 5 sic yrs s ) How interested are you in each 3.18 fe Pop sti va ular lm ov lm ies 3.00

28. What does the previous graph show? Passengers’ strongest preference is for popular, pre-DVD release movies. However, passengers are more happy to watch popular DVD release movies than less popular pre-DVD release movies. This result, which was mirrored in the 2010 Passenger Survey Results, goes against the belief of many airlines that early window content always trumps classic titles regardless of popularity. © 2011 digEcor, Inc.

30. How likely are you to look for or purchase the following product types? - 2.89 Gifts 3 2.85 Travel 1 2.79 Books Ranking change from 2010 1 2.78 Electronics Most desired 3 2.65 Movies, Music & Games products - 2.65 Food, Health & Beauty - 2.55 Apparel, Shoes & Jewelry - 2.48 Computer & Of ce - 2.36 Home & Garden 2 2.29 Services 1 2.19 Sports & Outdoors 1 1.98 Toys, Kids & Baby - 1.93 Tools, Auto & Industrial *Based on a scale of 0 to 5 (0 being No Interest and 5 being Extremely Interested) © 2011 digEcor, Inc.

31. If you nd a product you want, how much are you likely to spend? 2011 Results 2010 Results # of Respondents Peak Peak $0 < $10 < $25 < $50 < $100 < $250 $250 + *The average price passengers are willing to spend has decreased © 2011 digEcor, Inc.

32. Which services would you like to have availabile in- ight? 2.54 Rental Car Reservations 2.52 Hotel Reservations 2.49 Mobile Destination Guide 2.49 Show or Event Tickets 2.28 Theme Park Tickets 1.97 Calling Card *Based on a scale of 0 to 5 (0 being No Interest and 5 being Extremely Interested) Rental car opportunity A report earlier this year estimated that 15% of passengers who intend to rent a car, board the airplane without an existing rental reservation. The data above echoes a desire to secure a rental car after boarding. © 2011 digEcor, Inc.

33. Likelihood to use a credit card in- ight grouped by country of residence *A full explanation is on the next page Australia 35% England 30% France % of Respondents 25% Australia 20% 15% 10% Average w/ Outliers 05% Average w/o Outliers Australia Outliers 00% Likelihood © 2011 digEcor, Inc.

34. Overall likelihood to use a credit card in- ight The average response was 2.5 on a scale of 0 to 5 (0 being Not Willing and 5 being Extremely Likely). This exact middle of the road average is the result of most respondents selecting either 1 or 5 (as shown by both the orange and grey lines). How country of residence affects likelihood Grouping the data by country yielded some interesting spikes or outliers (green dots). Most responses, regardless of country, are grouped in similar areas, which is shown by the smoother orange line with the outliers removed. The grey line shows the skewing that results from the outliers. Comments on the outlying countries Australia was consistently inconsistent. The data shows higher polarization than other countries. Meaning, the Australian respondents generally were either Extremely Likely or Not Likely At All to use a credit card without many responses in the middle. This result may in part be due to a small number of respondents from Australia. England showed a spike near the Not Likely side and then followed the normal trend. France likewise showed a spike in the middle (representing some indecisiveness), though otherwise followed the average. © 2011 digEcor, Inc.

2011 Passenger Survey Results

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2011 Passenger Survey Results

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