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W18758

INTELLIGENT AVIONICS: BREAKING INTO THE INFLIGHT

ENTERTAINMENT INDUSTRY

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Rob Britton, Robert Mackalski, Mary Dellar, and Mary Towers wrote this case solely to provide material for class discussion. The
authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised
certain names and other identifying information to protect confidentiality.

This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights

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organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; www.iveycases.com.

Copyright © 2018, Ivey Business School Foundation Version: 2020-01-27

As his laptop screen went momentarily dark in the glare of the sun, Dr. Rob Britton paused from his work to
peer out the small, oblong window to his right. On this April evening in 2012, an indigo expanse flecked with
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downy strokes of white met his gaze. Britton was a seasoned traveller, yet the sight of the North Atlantic
ocean at 35,000 feet never grew old. His lifelong wanderlust had inspired a rich and fulfilling career. Having
worked in the travel and airline industries for more than 40 years, Britton could unequivocally say that he
loved his job—although he was “officially” retired.

Retirement had come after 22 years with American Airlines, Inc., in a range of leadership roles, including
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corporate communications, food and beverage services, advertising and marketing planning, and inflight service.
Unsurprisingly, Britton’s years of experience made him an invaluable asset to Intelligent Avionics Ltd. (IA), an
entrepreneurial company that hoped to break into the inflight entertainment (IFE) industry under its own brand
name: AURA. According to Britton, he enthusiastically joined IA’s team in 2010 because “working for a small,
nimble start-up after years with large and often slow-moving companies was appealing, as was the prospect of
selling a tangible product” (see Exhibit 1). Britton served as IA’s vice-president of marketing on a consulting
basis. He was responsible for marketing communications worldwide and sales in the western hemisphere.
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Diverting his gaze from the window, Britton returned to his notes detailing the past few days. He and half a
dozen IA team members had promoted AURA at the Aircraft Interiors Expo (AIX), an industry trade show
held annually in Hamburg, Germany. AIX had been disappointing, and Britton wanted to help devise a
concrete plan for moving forward. Although AURA had many interested prospects worldwide, it had no
launch customer. Britton knew that in order to secure a customer base, IA first needed to decide which product
line it was going to market. Initially, AURA was to be a next-generation, seat-centric system. This inaugural
system was branded AURA Works midway through the development phase, when IA chose to offer customers
two additional options: AURA One and AURA Connected.
Do

With a small development team working on three IFE system designs, the time had come to meet with IA’s
leaders to determine where the company should focus its efforts. How should IA market and launch its
offerings? In addition to contemplating which lines IA should bring to market, organizational and locational
issues gnawed at Britton. He struggled with the company’s virtual structure, given that IA was composed of
fewer than 15 staff members living in five different countries (see Exhibit 2). Britton contemplated how the
structure was affecting IA’s effectiveness.

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THE HISTORY OF INFLIGHT ENTERTAINMENT

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The IFE industry was nearly as old as commercial aviation itself. In the 1920s—Hollywood’s silent era—
movie projectors and screens were installed on a few passenger aircraft. However, it was not until the 1960s
that IFE technology really began. During this time, celluloid film looped through a series of projectors
throughout the cabin; each projector sent sound to tiny speakers in armrests, which passengers listened to
through soft plastic tubes and earpieces resembling toy stethoscopes. Although crude by today’s standards,

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such technology was a step toward individualizing passengers’ viewing experience.

IFE technology remained relatively unchanged for two decades. By the 1980s, it mirrored tape-based
technologies found in homes. Multiple videocassette (VHS) tapes were sequentially loaded into a single
video player, and the signal travelled via cable to projectors throughout the cabin. One of the drawbacks of
this system was that every passenger had to watch the same video channel at the same time.

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The 1990s saw the development of audiovisual on demand (AVOD), which enabled passengers to choose
what they wanted to watch and when they wanted to watch it, rather than viewing a single movie chosen
by the airline and begun at the convenience of the cabin crew. As with its predecessors, AVOD was not
without problems; in this case, its servers were heavy and unreliable.

The first decade of the twenty-first century saw rapid technological advancements that led to the
development of free-standing (i.e., hand-held) devices with preloaded content; seat-centric systems that
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eliminated the server and put content and processing power at each seat; and wireless streaming, either to
passengers’ own devices or to airline-supplied tablets. Such advancements greatly changed how passengers
interacted with IFE.

At IA’s inception in 2010, three factors were raising the stakes in IFE: (1) twenty-first century technological
improvements; (2) heightened airline focus on customer experience; and (3) rising passenger expectations
as a consequence of the innovative services offered by Asian airlines and some new U.S. domestic carriers
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like JetBlue Airways Corporation.1

INFLIGHT ENTERTAINMENT MARKET AND STRUCTURE

Trends within commercial aviation and IFE markets had always been inseparable. Although commercial
aviation had matured in industrial countries across North America and Europe, where large incumbents
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dominated the space (see Exhibits 3 and 4), countries like China, India, Turkey, and Indonesia were growing
rapidly. In fact, the Federal Aviation Administration of the United States (FAA) forecasted a fivefold
expansion in passenger volume by 2050.

Such an expansion meant that the IFE market, estimated at US$3 billion2 annually, was also growing. This
market had two categories: retrofit, which modernized older aircraft with new systems, and linefit, which
installed IFE in brand new aircraft. Retrofitting meant dealing first and foremost with airlines, and linefitting
engaged both manufacturers and airlines (the actual end customer).
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1
Asian airlines were raising the bar globally with service delivery (mainly cabin crew) and seats and other onboard
amenities. Leaders like Singapore Airlines Limited and Cathay Pacific Airways Limited had been bested by the massively
subsidized Persian Gulf trio of Emirates, Etihad Airways, and Qatar Airways Company Q.C.S.C.
2
All dollar amounts are in U.S. dollars unless otherwise specified.

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Both the Boeing Company (Boeing) and Airbus SE (Airbus) had massive orders for new aircraft (see

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Exhibits 5 and 6),3 and sales of the smaller, more fuel-efficient regional jets looked promising (see Exhibits
7 and 8) given the industry’s belief that fuel prices would continue to rise. But IA was also considering
retrofitting existing aircraft because installing a new system on new aircraft required more government
approval4 and more negotiation with aircraft and seat manufacturers and with other suppliers. Retrofitting
aircraft still involved a lot of regulatory compliance, but mostly with the airline itself. Britton estimated

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that nearly 15 per cent of the world’s wide-body fleet (approximately 800 aircraft) was being retrofitted
with new IFE systems each year. In addition, thousands of single-aisle aircraft had older systems or did not
have IFE systems at all. A potentially smaller business jet market was also an option (see Exhibit 9).

In large domestic markets, like the United States and the European Union, the airline industry had become highly
competitive in the wake of government policies that had economically deregulated and privatized carriers over
the previous four decades. In these places, competition had driven down prices, making flying cheaper than ever
before. This competitive output market contrasted significantly with the imperfect input markets for labour,

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infrastructure, fuel, and hardware. Trade union monopolies supplied airline labour, metropolitan markets were
served by single airports, the Organization of the Petroleum Exporting Countries (OPEC) and megaproducers
determined fuel prices, and little competition existed among the companies that manufactured equipment—from
entire aircraft down to subsystems such as seats, software controls, and cockpit hardware.

Just as the large aircraft market5 had been governed by a Boeing–Airbus duopoly for decades,6 two
companies dominated the IFE market: the Japanese giant Panasonic Corporation (Panasonic) and the French
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defence and aerospace firm Thales Group (Thales) held 90 per cent global market share. Panasonic and
Thales had grown steadily, and their continued success was largely dependent on the power of incumbency
and costly service contracts. Service contracts for installed systems were extremely profitable—especially
for older, failure-prone systems that left airlines with no choice but to buy a service contract for repair. In
the absence of competition, Panasonic and Thales had little incentive to invest in new technologies. By
ignoring the potential of innovative technology, Panasonic and Thales had actually created an opportunity
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for a number of aspiring firms to enter the IFE market.7

AN OPPORTUNITY IN THE INFLIGHT ENTERTAINMENT MARKET

With 90 per cent of the IFE market controlled by two giants seemingly disinterested in exploiting new
technologies, the English serial entrepreneur Clark Stevens and young visionary Connor Martins saw an
opportunity to carve out a niche in the IFE industry by designing an original, state-of-the-art IFE system
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with the best of new technology. In 2010, inspired by fresh approaches and attentive to industry trends, they
formed Intelligent Avionics Ltd.

Stevens, the angel investor, knew aircraft interiors and IFE systems well, having founded Aero Technics Ltd., a
successful company that provided interior contract maintenance and engineering to several large, highly
regarded airlines, including Virgin Atlantic Airways Limited and Emirates. Martins had a proven record for
Do

3
IA’s research team determined that Boeing and Airbus had orders for more than 2,100 long-range mid-size aircraft (i.e.,
787s and A350s). Just this one aircraft size, with approximately 300 seats per jet, amounted to a potential of almost 650,000
linefit seatback units.
4
Principally, certifying aeronautical authorities such as the FAA and its E.U. counterpart, the European Aviation Safety Agency.
5
Planes larger than approximately 130 seats.
6
Boeing and Airbus had 100 per cent market share for big jets.
7
Each firm was generally tied to one of the three solution types: free-standing devices (hand-held, similar to a bulky tablet),
installed seat-centric systems, or wireless streaming. Most of these aspirants were start-ups, but some larger firms also
entered, such as Lufthansa Technik AG—the maintenance, repair, and overhaul subsidiary of the German airline.

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high-tech innovation, having helped Tesco PLC , a large U.K. grocery retailer, pioneer its online presence. He

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was also responsible for the growth of Mezzo Movies Ltd., a company that made free-standing IFE devices.

Believing they were on to something big, Stevens and Martins enlisted other creative thinkers with
experience in the airline industry to help them get IA off the ground. Britton was approached to provide
marketing and North American depth. And although Britton knew that succeeding in a concentrated market

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characterized by conservative airline decision-making and high development costs would be challenging,
he also believed IA was capable of developing an IFE system more responsive to market needs than
anything that was currently available.

THE INTELLIGENT AVIONICS APPROACH: A TRIO OF AURA SOLUTIONS

The entire IA team believed that a new approach to the IFE market was necessary. While Panasonic and

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Thales continued to offer rigid, expensive hardware and proprietary software, IA chose to manufacture
using readily available personal computer (PC) components and the Microsoft Windows 7 operating system
(OS). By leveraging the economies of commodity components and the large community of Windows OS
developers, IA sought to establish target prices 30–50 per cent below those of incumbents. IA believed that
their approach would deliver cost savings and ensure greater reliability and improved flexibility.

IA began to develop three related but distinct systems that they viewed as solutions to the problem of
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technological stagnancy in the IFE industry.

The first IA solution was AURA Works, which included seatback touch screen devices that were linked,
via Ethernet, to an onboard hard disk of stock content (i.e., movies, music, and e-books). Such content could
be refreshed at a desired interval, typically monthly. Using a wireless connection or universal serial bus
(USB) stick, daily updates, such as news programs, could be loaded to the main disk and then distributed
to each seat. Flight-specific content, including customer information and individualized greetings (e.g.,
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“Welcome aboard, Mr. Gonzalez”), could be similarly refreshed. AURA Works provided several screen
sizes and mounting options. While larger screens were typically reserved for first and business classes,
screens in any class might be mounted on seatbacks or armrests.

Regardless of screen size or location, AURA Works abolished the need for enormously heavy servers, thus
reducing aircraft weight by as much as 1,000 kilograms and eliminating the risk of server failure. Server
malfunction was the single point of failure that could cause every screen on an aircraft to “go dark.”
No

Frequent flyers were all too familiar with this problem, which required the crew to reboot the entire system,
sometimes unsuccessfully. Even if the system could be restarted, customers often could not resume
watching a movie from where they left off; instead, they had to start at the beginning. AURA Works aimed
to enhance passengers’ experience by ensuring that they would never face a dark screen.

Midway through the development phase of AURA Works, IA chose to broaden its product line—a decision
based on sales calls, industry trends, and technological change. Early sales experience revealed that smaller
carriers needed a less-expensive, entry-level solution, and a handful of forward-thinking airlines told IA that
any installed system would soon be obsolete due to the rise of wireless streaming. While they continued to
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develop AURA Works, IA added two product lines: AURA One and AURA Connected.

As an entry-level system, AURA One offered a low-cost means of replacing older, videotape-based
overhead systems (i.e., drop-down screens every several rows) with digital content. Capable of being
installed overnight for about $15,000, this system improved video and sound quality and removed the hassle
of managing multiple videotapes and a failure-prone electromechanical tape player. AURA One’s target

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 Page 5 9B18A067

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market was small and mid-size airlines that did not have the budget for more expensive systems. Because

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all three AURA systems used the same master content module, airlines wishing to upgrade from AURA
One to one of the other two systems would save money and installation time.

AURA Connected wirelessly streamed entertainment to passengers’ or airline-supplied personal electronic

devices via an onboard intranet. This system responded to persistently high fuel prices that motivated

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airlines to shed aircraft weight, and responded to the increasing ubiquity and falling costs of devices that
were Wi-Fi enabled.

IA believed that, collectively, AURA Works, AURA One, and AURA Connected could capture a broad
portion of the market, consisting of companies that varied in size, current IFE offer, and financial ability.
As indicated, all three systems used the same modular components, which enabled design flexibility and
promoted economic efficiency. Both the seat-centric AURA Works and AURA Connected could be linked
to the Internet via ground- or satellite-based systems.8 By enabling Internet connectivity, AURA Works

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and AURA Connected broadened customer offerings and airlines’ ability to sell a range of additional
services on board, including access to the Web and online shopping, as well as hotel reservations, theatre
tickets, and similar services at a flight’s destination.

Unlike the incumbents’ systems, which included a one-year warranty followed by expensive service agreements,
IA’s AURA products carried a five-year warranty. IA had calculated that they could offer such a warranty
because of the demonstrated reliability of PC hardware and software. Prospective airline customers regarded this
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bundled solution as very attractive because it offered an alternative to expensive service contracts.

ORGANIZATIONAL CHALLENGES

Although Stevens and Martins were, respectively, an hour south and north of London, England, IA’s
development team was in Scotland. Australian executive William Davidson took on the role of chief
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technology officer following the resignation of the Scottish head.

Britton was concerned by substantial tensions within the company that stemmed from Martins’s and
Davidson’s disagreement on the management of IA’s virtual structure. With Davidson in Australia, and the
software developers and hardware designers thousands of miles away in Scotland, Martins doubted
Davidson’s ability to oversee AURA’s development from a distance.
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To make matters worse, the eight-person development team was pressed to simultaneously perfect all three
AURA systems. In preparation for the AIX, they were under a great deal of pressure to accomplish an
enormous amount of work in very little time.

SALES AND MARKETING CHALLENGES

IA encountered a number of sales and marketing challenges common to newcomers seeking to penetrate a
market dominated by entrenched incumbents. Such challenges included navigating the multi-faceted IFE
Do

selling process, attracting attention at industry trade shows, and developing multi-channel communications.
The IFE selling process was complex because it required the simultaneous consideration of numerous
factors. In particular, companies had to contend with lengthy selling cycles and account for the role of
multiple players in the purchase decision. As an added challenge, a new entrant like IA would have to
establish brand presence in conventional and online industry publications.
8
For example, Gogo Inc. in the United States.

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Two of IA’s primary difficulties were learning how to cope with a long selling cycle and establishing a

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rapport with potential customers. “Martins had some relationships from his previous experience with
Mezzo,” said Britton, “but much of the sales effort seemed a lot like cold calling.” As the only representative
for the Americas, Britton had his work cut out for him. With only two other marketing representatives—
one covering Europe and the Middle East, and the other covering Asia-Pacific—Britton knew that IA’s
small team was as taxed as he was. The sales team, Britton noted, was “short-handed” and lacked “the

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market intelligence—like who was in the market for a new system—that the incumbents took for granted.”

IA also struggled with delays as a consequence of the sheer number of departments and individuals who had,
or thought they had, a role in the purchase decision. According to Britton, “Multiple players had a distinct
role in the decision to buy a new IFE system, and all of them need to be ‘on board,’ so to speak.” Such players
included varied departments within airlines, aircraft manufactures and seat makers, and, indirectly, passengers
themselves. IA pitched to a mid-size, highly regarded European airline with a strong global network and had
significant support from several departments; however, they lost the bid to an incumbent because, as an insider

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confided to Britton, the airline “just couldn’t risk going with an unproven system from a start-up.”

Britton believed that it was essential to establish a presence at the two major industry trade shows to
effectively showcase its products: the AIX, held every spring in Hamburg, and the Airline Passenger
Experience Association Expo, held every autumn in a different American city. Although both shows
presented excellent networking opportunities, they were expensive and short. “In a sense,” Britton
contemplated, “a year of sales effort gets crammed into just a few days.”
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Product promotion in the digital age also presented unique challenges. As online writers and bloggers of
varied skill and experience played an increasing role in publicity, it became more difficult for companies
to control their public image. Although Britton believed that many qualified industry writers existed online,
too often, self-professed “experts” were either uninformed or financially influenced by pre-existing IFE
giants. Communication in the space had become more expensive because specialized industry magazines
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blurred the distinction between advertising and editorial content, thus making it almost mandatory for
companies to buy advertisements if they wanted publicity.

Despite these challenges, IA garnered positive media coverage early in its formation, owing, in part, to its
innovative approach and an industry desire for change. “Some industry reporters and bloggers were keen
to see fresh thinking in IFE,” said Britton, “so our new solutions garnered a lot of interest, along with a
‘David versus Goliath’ narrative. Airlines worldwide seemed keen for new entrants.” Britton believed that
the AURA website was engaging and well-designed, IA’s sales collateral was consistent, and its advertising
No

powerful, albeit limited.

Encouraged by early publicity, the team ventured to the 2012 AIX in Hamburg.

TROUBLE IN HAMBURG

Britton, Stevens, Martins, two other sales executives, and a technical specialist arrived in Hamburg for the
2012 AIX with a mix of enthusiasm and concern. They had invested many resources in development, which
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included partnering with Factorydesign, a highly respected, award-winning industrial design firm based in
London. After 18 months of sales and marketing efforts, they were eager to secure a launch customer. They
knew they needed to close a sale in order to demonstrate AURA’s viability to the market, raise internal
morale, and generate revenues.

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Hours before the show opened, anxiety rose exponentially as IA ran into technical glitches. Although the

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AURA Connected prototype worked perfectly, the technology team, despite a Herculean overnight effort,
could not debug the AURA Works demonstration system. It did not work for the entire three days of the trade
show. “We were all embarrassed, especially because we installed a working ‘V1.0’ prototype in an aircraft-
cabin mock-up a year earlier at AIX,” Britton recalled. The AURA customer proposition mantra, “Ultra
lightweight. More reliable. Lower ownership cost. Happier passengers, happier crew,” began to sound hollow.

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FINAL QUESTIONS

Folding up his seat tray, the preternaturally optimistic Britton could not help but feel a bit gloomy about
IA’s direction. Flying home from Hamburg, he was preoccupied by questions about IA’s marketing strategy
and organizational structure. What should be the firm’s priorities? What product lines should IA offer, and
to whom? Did IA have the right organization to create and execute on a winning marketing strategy?

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Britton glanced outside at the spring-green Texas landscape. As he felt the landing gear thump the runway
at Dallas/Fort Worth International Airport, he knew the coming year was not going to be easy.

This case was prepared by Professor Rob Britton (Georgetown University), Professor Robert Mackalski (McGill University,
Desautels Faculty of Management); faculty lecturer Mary Dellar (McGill University); and Mary Towers (McGill University).
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No
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EXHIBIT 1: INTELLIGENT AVIONICS EXECUTIVE TEAM BIOGRAPHIES

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Clark Stevens, Chairman

Stevens was an aircraft interiors entrepreneur who created three profitable aircraft interiors businesses over
20 years.

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Connor Martins, CEO

Martins was finance director and one of the pioneers of Tesco.com, the online store of the U.K. supermarket
chain. From 2004 to 2008, he founded and led Mezzo Movies Ltd., which gained success by providing low-
cost, rapid-deployment IFE hand-helds for boutique, charter, and low-cost airlines.

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William Davidson, CTO and VP, Asia-Pacific

Davidson served as CTO and head of development for the trio of AURA solutions and led AURA sales
activity in Asia and the Pacific. Previously, he was president of Boeing Australia and managing director of
Smiths Group plc, a U.K. company with customers in aerospace and other sectors. Davidson was a fellow
of the Royal Aeronautical Society.
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Rob Britton, VP, Americas

In his over 20 years of experience with American Airlines, Inc., Britton rose to head of advertising and
marketing planning after serving in other leadership roles, including food and beverage services, corporate
communications, and international affairs.
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Amy Thomasson, VP, EMEA

Thomasson joined the AURA team after a successful run at a major equipment supplier for aircraft cabins.
Thomasson had extensive experience in inflight service and provision, having begun her career in inflight
service for Scandinavian Airlines (commonly known as SAS).

Note: CEO = chief executive officer; CTO = chief technology officer; VP = vice-president; EMEA = Europe, the Middle East,
and Africa.
No

Source: Company files.

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EXHIBIT 2: INTELLIGENT AVIONICS ORGANIZATIONAL CHART, 2012

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Clark Stevens
Co-Founder and Chairman
London, England, Area

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Connor Martins
Co-Founder and CEO
London, England, Area

CTO and VP, Asia-Pacific VP—Europe/Middle East VP—Americas

William Davidson Amy Thomasson Rob Britton

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Brisbane, Australia Umbria, Italy Dallas, United States

Development Team
Developers (8)
Scotland
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Note: CEO = chief executive officer; CTO = chief technology officer; VP = vice-president.
Source: Company files.
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No
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EXHIBIT 3: THE WORLD'S TOP 50 AIRLINES BY CAPACITY

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(WEEKLY AVAILABLE SEAT KILOMETRES IN MILLIONS)

Global Rank Airline December 2012

1 United Airlines, Inc. 6,149.39
2 Delta Air Lines, Inc. 5,643.67
3 Emirates 4,992.91

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4 American Airlines, Inc. 4,800.88
5 Southwest Airlines Co. 3,276.52
6 Deutsche Lufthansa SE 3,158.82
7 British Airways 3,049.52
8 Air France 2,825.52
9 China Southern Airline Company Limited 2,596.67
10 Singapore Airlines Limited 2,375.71
11 Cathay Pacific Airways Limited 2,311.92
12 Air China Limited 2,193.52

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13 US Airways 2,016.79
14 China Eastern Airlines Corporation Limited 1,987.44
15 Turkish Airlines 1,918.11
16 Qantas Airways 1,863.46
17 Qatar Airways Q.C.S.C. 1,798.31
18 Koninklijke Luchtvaart Maatschappij N.V. 1,785.62
19 Korean Air Lines Co., Ltd. 1,734.52
20 Thai Airways International Public Company Limited 1,702.80
21 Air Canada 1,671.16
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22 All Nippon Airways Co., Ltd. 1,549.77
23 LATAM Airways Brasil 1,494.02
24 Ryanair DAC 1,476.21
25 Japan Airlines Co. Ltd. 1,375.61
26 JetBlue Airways Corporation 1,214.78
27 PJSC Aeroflot–Russian Airlines 1,197.67
28 Etihad Airways 1,135.83
29 EasyJet Airlines Company Limited 1,124.06
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30 Iberia, Líneas Aéreas de España, S.A. Operadora, Sociedad Unipersonal 1,046.12

31 Malaysia Airlines Berhad 1,039.17
32 Virgin Atlantic Airways Limited 1,005.24
33 Gol Linhas Aéreas Inteligentes S.A. 913.46
34 Asiana Airlines Inc. 876.32
35 Air India 869.25
36 Alaska Airlines 866.81
37 Saudi Arabian 859.67
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38 China Airlines 824.52

39 PT Lion Mentari Airlines 810.54
40 Hainan Airlines Co., Ltd. 789.65
41 Swiss International Air Lines AG 768.20
42 Jetstar Airways Pty Ltd 732.12
43 Air New Zealand Limited 710.17
44 WestJet Airlines Ltd. 703.52
45 Società Aerea Italiana 702.77
46 Jet Airways 682.16
47 OJSC Transaero Airlines 681.90
48 Air Berlin PLC & Co. Luftverkehrs KG 678.11
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49 Virgin Australia Airlines 667.35

50 EVA Air Corporation 661.81

Source: “United Ends 2012 as World's Biggest Airline, Emirates Third. Turkish and Lion Air the Biggest Movers,” CAPA
Centre for Aviation, December 31, 2012, accessed April 21, 2018, https://centreforaviation.com/insights/analysis/united-
ends-2012-as-worlds-biggest-airline-emirates-third-turkish-and-lion-air-the-biggest-movers-93047.

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EXHIBIT 4: SELECTED AIRLINES BY FLEET SIZE

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Airline Estimated Fleet Size Headquarters
Air Berlin PLC & Co. Luftverkehrs KG 140 Berlin, Germany
Air Canada 364 Montreal, Canada
Air France 381 Tremblay-en-France, France
Air Transat 32 Montreal, Canada

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American Airlines, Inc. 873 Fort-Worth, Texas, Unites States
Austrian Airlines AG 77 Schwechat, Austria
Azul Linhas Aéreas Brasileiras S/A 65 Barueri, Brazil
China Eastern Airlines Corporation Limited 349 Shanghai, China
China Southern Airlines Company Limited 423 Guangzhou, China
Delta Air Lines, Inc. 1,280 Atlanta, Georgia
EasyJet Airline Company Limited 217 Luton, United Kingdom
Etihad Airways 89 Abu Dhabi, United Arab Emirates
Garuda Indonesia 110 West Jakarta, Indonesia

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Icelandair Group hf 37 Iceland
IndiGo 50 Gurgaon, India
PT Indonesia AirAsia 29 West Jakarta, Indonesia
PT Lion Mentari Airlines 100 Central Jakarta, Indonesia
Deutsche Lufthansa AG 401 Cologne, Germany
Malaysia Airlines Berhad 98 Selangor, Malaysia
Pegasus Airlines 49 Istanbul, Turkey
Scandinavian Airlines (SAS) 151 Stockholm, Sweden
Singapore Airlines Limited 102 Singapore
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SkyWest, Inc. 755 St. George, Utah, United States
Southwest Airlines Co. 683 Dallas, Texas, United States
Swiss International Air Lines AG 94 Basel, Switzerland
United Airlines, Inc. 1,264 Chicago, Illinois, Unites States
US Airways 621 Tempe, Arizona, United States

Source: Company documents.

tC

EXHIBIT 5: AIRCRAFT OFFERING AND PASSENGER CAPACITY OF BOEING AND AIRBUS (2012)

Boeing Aircraft by Passenger Capacity

737 747 767 777 787

Passenger
126–220 400–500 181–375 301–386 210–290
No

Capacity

Airbus Aircraft by Passenger Capacity

A318 319 320 321 340 330 380

Passenger
107 124 150 185 239–380 246–300 555
Capacity
Do

Source: The Boeing Company, 2012 Annual Report, February 11, 2013, accessed April 19, 2018,
www.annualreports.com/HostedData/AnnualReportArchive/b/NYSE_BA_2012.pdf.

This document is authorized for educator review use only by MITCHELL FINK, IESEG School of Management until Aug 2022. Copying or posting is an infringement of copyright.
[email protected] or 617.783.7860
 Page 12 9B18A067

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EXHIBIT 6: NUMBER OF AIRCRAFT ORDERED FROM AIRBUS AND BOEING, 2009–2012

os
2009 2010 2011 2012
Airbus 310 644 1,608 914
Boeing 263 625 921 1,339

rP
Source: “Aircraft Orders—Airbus and Boeing 2003–2017,” Statista, 2018, accessed April 19, 2018,
https://www.statista.com/statistics/264492/aircraft-orders-from-airbus-and-boeing.

EXHIBIT 7: COMMERCIAL REGIONAL JET OFFERINGS (2012)

Embraer ERJ 145 170 175 190 195

Passenger Capacity 37–50 70–80 78–88 98-–14 108–122

yo
Bombardier CRJ700 900 1000 190 195
Passenger Capacity 75 76 100 98–114 108–122

Source: Company documents.

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EXHIBIT 8: COMMERCIAL REGIONAL JET DELIVERIES (2012)

Manufacturer Units
Bombardier 50
Embraer 283
tC

Source: “Bombardier’s Commercial Aircraft Deliveries Worldwide 2012,” Statista, 2018, accessed April 19, 2018,
www.statista.com/statistics/263823/bombardiers-commcercial-aircraft-deliveries-worldwide-since-2005; “Embraer—Aircraft
Deliveries 2016,” Statista, 2018, accessed April 19, 2018, www.statista.com/statistics/269938/deliveries-of-aircraft-from-
embraer.

EXHIBIT 9: NEW BUSINESS JET / PRIVATE JET SALES BY MANUFACTURER, 2012

No

Manufacturer Unit Sales Head Office

Airbus 8 Toulouse, France
Beechcraft 32 Wichita, United States
Boeing 12 Chicago, United States
Bombardier 179 Montreal, Canada
Cessna 181 Wichita, United States
Dassault 66 Paris, France
Embraer 99 Sao Paulo, Brazil
Do

Gulfstream 95 Savannah, United States

Source: “New Business Jet Sales up Slightly in 2013,” SherpaReport, April 8, 2014, accessed April 19, 2018,
www.sherpareport.com/aircraft/business-jet-sales-2013.html; and company files.

This document is authorized for educator review use only by MITCHELL FINK, IESEG School of Management until Aug 2022. Copying or posting is an infringement of copyright.
[email protected] or 617.783.7860