The iPad Takes Flight

The iPad is Apple's fastest-growing new product category, outpacing both the iPod and iPhone in early adoption. Even though it's just three years young, the iPad still has a plethora of potential global opportunities ahead of it as it finds its way into a wide range of niche sectors like health care and education, among others.

Another incremental opportunity has always been in airplanes, but due to an intense regulatory environment hasn't materialized thus far -- until now.

American Airlines has now announced that it is the first airline to roll out a comprehensive Electronic Flight Bag program, where pilots will use tablets in the cockpit instead of old-fashioned paper manuals. Late last year, American scored FAA approval to use Apple's device during all phases of flight on all of the current Boeing aircraft models in its fleet.

Instead of lugging around 35 pounds of paper in their carry-on kitbags, pilots will just tote around a 1.35-pound iPad.


American estimates that the weight reduction will translate into saving 400,000 gallons of fuel annually, or $1.2 million based on current fuel prices. That's in addition to the 24 million pages of paper documents that are no longer needed. The digital format allows for faster updating also.

American's program alone won't necessarily move the needle for Apple. The airline has now deployed over 8,000 iPads within its fleet -- a drop in the bucket relative to the 19.5 million iPads sold last quarter. At 1.35 pounds, these appear to be older iPad 2 models that American has deployed, translating into $3.2 million to $4.2 million in sales depending on whether or not they're cellular-equipped models. Again, hardly a game-changing sum for Cupertino.

Instead, the potential lies within broader adoption throughout the airline industry, which could represent more meaningful upside. American is just the first, and the estimated fuel savings will pay for the hardware costs in a few short years. Other airlines will inevitably follow suit, although they could potentially opt for rival devices. Airlines that go with the iPad will also have periodic upgrade cycles.

Airline adoption is just one of numerous sectors that the iPad is infiltrating. Combined with all of the other incremental opportunities, the iPad is still just beginning to take flight.

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Editor's note: A previous version of this article stated American would save $12 million annually on fuel costs. This has been corrected to $1.2 million. The Fool regrets the error.

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Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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