That’s In-Flight Entertainment--for the Jet Set : Airlines: Valencia- based Airvision may be in for a dogfight as it offers carriers a program that does much more than show movies.
In-flight movies can be little more than a stiff neck and a stifled yawn for some airline passengers. But Charles A. Bucks thinks that his Valencia-based company can make a bundle by changing that--and giving airlines a way to earn extra revenue at the same time.
Bucks is chief executive of Airvision, which makes airplane entertainment systems that let passengers choose movies or other video programs from a list of options, and watch at their seats on their own video screens.
The basic idea is to mount the individual video screens on seat backs or on poles that fold out from armrests. But Airvision’s top-of-the-line system does more than show movies, letting passengers order drinks and food from their seats or request and pay for duty-free goods such as alcohol and cigarettes.
“You could put all of Macy’s department store on this thing,” Bucks said.
By selling the systems, Airvision, a subsidiary of the Dutch electronics giant N. V. Philips, hopes to rocket from sales of virtually zero in 1990 to $32 million in 1991. Indeed, Philips, whose products bear brand names that include Philips, Magnavox, Norelco and Sylvania, believes so much in the idea that it has pumped $40 million to $50 million into developing the technology for the systems, according to David J. Kluxdal, Airvision’s chief financial officer.
But Airvision has just started to sell the systems. The company recently announced deals with Mexicana Airlines, Air Holland and KLM Royal Dutch Airlines to equip a total of 24 planes with personal video systems. Bucks declined to provide dollar figures for the contracts.
Meanwhile, Airvision faces competition from companies that also make personal video systems for airliners. Before the Mexicana, Air Holland and KLM deals, Airvision had never sold a thing to airlines. But some of the company’s competitors, which also have corporate parents with deep pockets, have been selling traditional entertainment systems to airlines for more than 20 years. One of them, Irvine-based Sony Trans Com Inc., a division of Japan’s Sony Corp., does more than $100 million in sales a year.
Avicom International, another major competitor based in Pasadena, has also been selling airplane entertainment systems since the ‘60s. And Avicom, a unit of Hughes Aircraft (which is, in turn, a subsidiary of General Motors) recently struck a deal with American Airlines to outfit the first-class sections of 65 planes with a slightly different personal video system: individual video screens and videotape players at each seat.
Even Matsushita, the Japanese conglomerate that recently acquired MCA Inc., is in the business.
So what can Airvision do to compete? Bucks said Airvision has gone a step further than the competition in making its systems revenue-producers for airlines.
In addition to showing movies, Airvision’s top-of-the-line entertainment systems essentially put simple computer terminals at each passenger’s seat, allowing them to order food and drinks and shop from a computerized catalogue of duty-free goods--paying for them by sliding their credit cards through a slot, as on an automated bank teller. The systems even let passengers make hotel, rental car and plane reservations, and place long-distance phone calls from their seats.
The point of telephone, reservations and shopping features isn’t merely to provide more distractions for passengers. Airlines can charge fees for the services, making them revenue-raisers.
That could be important because Airvision’s systems don’t come cheap. Bucks said it would cost more than $1 million to outfit a Boeing 747 with one of the systems, putting a screen at every seat on the plane. But Bucks said a company that leased the systems could cover its lease payments--and even show a profit--with the revenues from duty-free sales, air-to-ground telephone calls and the like.
In December, Airvision announced a deal to outfit the first-class sections of two Air Holland Boeing 767s with its top-of-the-line systems. The systems are to be installed in the middle of 1991. Air Holland’s systems will also include “Air Show,” a channel with a video map showing the plane’s progress toward its destination.
The competition, however, is not far behind Airvision. Sony Trans Com and Avicom last fall teamed up to make a system such as Airvision’s, with shopping and reservations features. The two companies have a deal with Airbus, a European aircraft manufacturer, to provide the systems to buyers of the Airbus A330 and A340 airplanes. The two companies say their system could also provide up-to-date sports scores and stock market reports to passengers. So far, however, no Airbus buyers have bought the Sony Trans Com/Avicom systems.
Bucks, a former airline marketing executive, has been Airvision’s chief executive since August. Indeed, the company and its product were the idea of Arnold Steventon, a former aircraft parts salesman.
In October, Philips bought out Steventon and his original partner, Robert Butler, for an undisclosed sum.
Steventon thought up the idea of individual video screens for airline passengers in 1982 on an airplane flight to Los Angeles from Seattle, where he had seen the unveiling of Boeing’s then-new 757 airplane. It was a depressing time in the aircraft business, Steventon said, since the 757 was not selling well.
“Without new airplanes being built, my livelihood was at risk,” Steventon said. “I was just sitting on the airplane thinking about what I was going to do in the future” when the idea struck him.
With financial backing from Butler, who owned the parts company Steventon worked for, Steventon spent the next five years developing the idea and finding companies that had the necessary technology to make it work. Philips joined the development effort in 1988.
