Apple's (NASDAQ: AAPL ) iPad Mini is about to start racking up some serious frequent flier miles on Hawaiian Airlines (NASDAQ: HA ) . On Thursday afternoon, Hawaiian announced that it will begin offering iPad Minis to customers on its Boeing (NYSE: BA ) 767 flights on Sept. 1. The devices will be specially configured to serve as personal entertainment devices, offering a variety of games and more than 100 hours of TV shows and movies.
This iPad Mini deployment will allow Hawaiian to improve the customer experience on its older Boeing 767 widebodies. It could even become a profit center for the carrier, if many economy passengers choose to rent the iPads. At the same time, it represents yet another win for Apple in the aviation sector, which is quickly becoming a major customer for iPads.
Freshening it up
The iPad Minis will be a complimentary perk for business-class customers on all of Hawaiian's 767 flights. They will also be available for economy-class customers to rent for $15 to $17 on most of those flights, including all 767 flights between Hawaii and the continental United States. The iPad Minis will replace the dated portable "digEplayers" currently available on the same flights.
Easing the transition
For Hawaiian Airlines, the iPad rollout is a stop-gap measure. While the 767 has been the mainstay of Hawaiian's widebody fleet for most of the past decade, the carrier is now transitioning its widebody fleet to the Airbus A330. Hawaiian's 767 fleet is expected to drop from a peak of 18 aircraft in 2009 to just seven by the end of 2015 and will be more or less phased out by the end of the decade.
Unlike the Boeing 767s, Hawaiian's new A330s come equipped with a personal audio/video on-demand system at every seat. As a result, there is no need to use iPads as portable entertainment devices on those aircraft. The A330 AVOD systems offer free music and a few complimentary videos, but the vast majority of content costs between $4.99 and $7.99.
Since most of Hawaiian's widebody flights are at least five to six hours long, an attractive entertainment option represents a significant "ancillary revenue" opportunity. There's nothing quite like having a screen in front of every passenger, begging to be used, as is the case on Hawaiian's A330s. However, iPad Minis are also likely to see strong customer uptake -- certainly more than "personal digEplayers."
A growing force in aviation
From Apple's perspective, Hawaiian's iPad Mini rollout is a relatively modest customer win. However, it's part of a growing trend among airlines to integrate the iPad into their business plans.
For example, in 2011, United Continental (NYSE: UAL ) became one of the first airlines to move to a "paperless" flight deck by putting its flight manuals and charts on iPads. The company distributed iPads to all of its roughly 11,000 pilots. These iPads allowed pilots to do away with their heavy flight bags, which typically held 12,000 sheets of paper each! The reduced weight leads to significant fuel savings for United over the course of a year. Moreover, it makes it easier for pilots to access materials they need.
AMR's (NASDAQOTH: AAMRQ ) American Airlines has followed in United's footsteps and recently completed the rollout of its own iPad-based electronic flight bag. Other carriers have been more interested in using iPads in customer-facing applications. Australia's Qantas has already deployed iPads as in-flight entertainment devices, as Hawaiian is doing. Back in the U.S., Delta Air Lines (NYSE: DAL ) has deployed iPads for customer use throughout the concourses in its recently renovated terminal at LaGuardia Airport in New York.
Brave new world
Airlines, like many other businesses, are embracing the latest technology revolution and looking for ways to use it to their advantage. Hawaiian Airlines was an ideal candidate for using the iPad as an in-flight entertainment system, and though it isn't likely to become a long-term iPad customer, the broader trend in the airline industry favors companies like Apple.
The iPad in particular seems poised to dominate the skies, despite scattered wins by Samsung and other vendors. The iPad's good security and reliability helped it win FAA approval as a replacement for those paper flight manuals. And its premium feel and reasonable cost also make it desirable as an in-flight entertainment amenity. The symbiotic relationship between Apple and the airlines is likely to prove profitable for both in the long run.
Hawaiian Airlines' commitment to service has won it a loyal following. That's one reason it's one of the most attractive airline stocks today. But some of the most profitable airlines have taken a more bare-bones approach to travel, with great success. (Hint: You won't find iPads anywhere on their flights!) Click here to learn how two of these airlines are leading a revolution in the industry, and discover whether they can keep delivering big gains for shareholders!