I wonder if Aircell’s airline customers are tad peeved at the latest turn of events. The positive publicity they’ve enjoyed in the media – including on this blog – for bringing in-flight Internet to passengers is diminishing, as everybody and their brother questions the viability of the Gogo fee-for-service model, and as a growing number of consultants go on record to say that not only has Aircell been equipping aircraft for free (which we already surmised), but it has been giving airlines a slice of the early returns (yowers!).
Neither claim has been confirmed by Aircell or the airlines, by the way, but many folks are coming to the seemingly logical conclusion that if Aircell was getting a windfall of cash, it wouldn’t need to initiate layoffs.
In the true American tradition of propping up celebrities only to tear them down, the Monday Morning Quarterbacks are now out in the full force with their “I told you so” mantra. Truth be told, a few of them actually did tell us so. One man on the right side of the argument all along has been Connexion by Boeing’s former chief marketer David Friedman, who knows a thing or two about unsuccessful forays into the in-flight connectivity realm.
We highlighted some of Friedman’s comments on this blog in the past, but two quotes are proving particularly haunting, and should give Aircell’s customers pause today.
“We [initially] offered to give [Connexion] away as a trial for free but the airlines said, ‘If this is successful, you want us to pay for all these antennas?’ They were concerned that if customers were demanding it, it would put them [the airline] in a tenuous situation in terms of customer relations.
“So you have the cost of the system and cost of the infrastructure. You can offset that through a variety of ways, such as advertising. But sponsorship and advertising and direct fees is not enough! People believe, by the way, that they should have Internet for free because they are used to having Wi-Fi for free. Then couple that with the issue of power outlets. If an airline doesn’t have enough power outlets on the plane, how are they going to charge a flat fee?”
If things are as bad for Aircell as some people claim, what should its airline customers do? A growing number of industry insiders believe these airlines might opt to help sustain the Gogo offering, or, as Friedman notes in a new IAG podcast – “What would have to happen is the airline would have to contribute more of the cost of the equipment.”
Listen to the entire podcast in full at the following link: http://iagblog.podomatic.com/player/web/2009-09-22T13_54_52-07_00
For the record, Aircell says it recently received “substantial funding and commitments from existing and new investors and expect to add to those before the financing closes”.
Also for the record, despite questions about the Gogo business model – and whether people will actually pay for in-flight Internet – one thing is certain: passengers, many armed with free promos, freaking LOVE the service. Check out what people are saying right now: