Loan helps Scottish company focus on innovating solutions for pandemic-hit sector
Dunfermline in-flight entertainment (IFE) specialist Bluebox Aviation Systems Ltd. is keeping ahead of the innovation game, thanks to a loan from UMi Debt Finance Scotland. The UMi Debt Finance Scotland loan scheme, supported under the Scottish Growth Scheme, is designed to help Scottish businesses innovate, grow and diversify.
Bluebox’s IFE software is available on a range of platforms, including passengers’ own devices, and provides services such as on-board retail and movies, TV, audio, games and other digital content, in any aircraft cabin. The company serves over 40 airlines and aircraft operators across the globe, and has a global support network in Europe, the US, Australia and Singapore.
Bluebox CEO, Kevin Clark, started his career in designing communication systems for military aviation, and applied research into structured coding techniques for high performance hardware devices. He joined AviIT Ltd. in 2012 to develop its Bluebox Avionics joint venture, and in 2017, the two companies became Bluebox Aviation Systems.
He said: “From the outset, Bluebox focused on the provision of inflight entertainment systems on hand-held devices, mostly for long-haul carriers. However, this really took off in 2010 when the iPad was launched, because we could then port software onto a tablet that offered superior technology compared to what was on the market previously and so delivered a much better passenger experience. Better even than the best of the seat-back systems available at the time.”
Business grew swiftly for Bluebox, and they have so far deployed 25,000 iPad-based IFE units across the world. By 2014, wireless technology on aircraft had developed significantly and the proliferation of passengers bringing smart devices on board was well underway. So the company developed a solution to host the IFE on servers installed on planes so content could be sent through the cabin wirelessly, for passengers to access using their own devices.
Two years later came the game changer, Bluebox Wow. A small box weighing just two kilos, Bluebox Wow is a portable unit that sits in the overhead bin and provides the same content experience, but saves airlines the certification, installation and maintenance costs of the installed server and associated wireless access points. All of the components are contained within the Bluebox Wow unit. This is now the fastest growing part of the business.
But innovation is the name of the game, especially for a software company, and the business knew that a quieter market because of COVID-19 meant they could focus on product development and enhancement, rather than driving up new customers:
Kevin continued: “In the early stages of COVID we looked at our market to take stock and try to forecast how it may develop in the mid-term. Aviation has been hit particularly hard with travel restrictions and passenger numbers falling, but we recognised the potential to create solutions that would meet expected demand as the sector recovers and airlines know how their business models are going to evolve.
“COVID safety protocols caused airlines to restrict their onboard services – suspending trolley-based retail services and clearing seat-back pockets of high-touch paper materials. Though digital content was already our specialty, and an integrated retail solution was on our roadmap with some initial development underway, we realised that our touchless retail proposition, in particular, would help airlines revive this significant revenue stream and ensure passengers had access to this important part of their onboard experience when it came to their confidence and comfort travelling again. Expediting our development programme to deliver this as a commercially-ready solution as soon as possible was going to require investment, which we would need to finance externally.
“I already knew the head of UMi Debt Finance Scotland, Tom Brock, and when their loan limit was raised, we realised this could be a good route for us to go. Tom is a real innovator, and he knew what we did, so it made it very easy for him to understand the need and the fit. This was in direct contrast to other financial institutions that would look at the business and decide we didn’t fit the profile for the funding sources available in the COVID-19 world.”
Kevin said the process was simple: “Dave Young at UMi Debt Finance Scotland became our investment lead, and he was a breath of fresh air. Very enthusiastic but also pragmatic - and most importantly he bought into what we were trying to do and really became an advocate. I can’t recommend them highly enough.
“The UMi loan decision certainly had an interest in the fact that we do all our development in Scotland, boosting our involvement in the local community.”
Tom Brock, UMi Debt Finance Scotland Fund Manager, said: “Bluebox is a real success story, the perfect example of a Scottish business doing well in a difficult financial time by seizing the opportunity to innovate further. By acting quickly, they now have the financial support to develop the latest generation products, upgrade the processing capabilities of Bluebox Wow and add sophisticated enhancements that would serve both an immediate and enduring market need.”
Kevin said this work would put the company well ahead of the game when flying numbers picked up: “The loan from UMi Debt Finance Scotland means that we’ve been able to take some of the risk to build ahead of market.”