In-flight Wi-Fi will be free in two years: IFEC expert

Whether charging you for beverages or bilking you on baggage, US ‘legacy’ carriers have sold their souls to the ‘unbundle everything’ business model.

The result, according to in-flight entertainment and communications (IFEC) expert Michael Planey, is that passengers truly resent any additional fees. In short, they are reaching a point of “fee fatigue”, which is NOT GOOD for in-flight Wi-Fi.

Southwest 737 with radome.jpgThe problem, says Planey, is that, unlike baggage or ticket fees, in-flight Wi-Fi is optional, and therefore, when prompted to plug in their credit card digits, passengers are taking a gulp (of their high-priced beverage)…and then deciding against the purchase.

Having increasing access to free Wi-Fi on the ground doesn’t help. But coupled with “fee fatigue” the pay-for-service model for in-flight Wi-Fi just ain’t gonna fly for passengers aboard short- and medium-haul flights, says Planey.

Key quote:

“The service is going to be free in less than two years,” he predicts.

Long-haul travel, such as overseas flights, is a different story, he says.

[I know what you may be thinking: "I just received my Happy Holidays 'free Gogo promo' coupon from Aircell. Isn't in-flight Wi-Fi already, technically, free?" The answer is yes, right now, but the pay-for-service model is the centerpiece of Aircell's strategy. It wants to give you a taste of the service in hopes that you'll be willing to pay for it in the future. In other words - the holidays won't last forever. Nor will those promos (unless Google/Lexus/eBay start to feel really generous).]

So what does this mean for Aircell, the dominant provider of in-flight Wi-Fi in the USA, and a firm that has pulled off a huge feat in securing deals with EVERY US ‘legacy’ carrier, including, recently, the truly venerable Continental Airlines?

Is it chitty chitty bang bang for Aircell?

Not so fast. In order to keep the service alive, “airlines are going to pay because it’s going to become the cost of doing business”, says Planey.

Interesting!

That said, one wonders if airlines will have to start paying out-of-pocket to cover the cost of in-flight Wi-Fi sooner rather than later.

Here’s why. A few months ago Southwest Airlines announced an agreement to equip its 500-plus Boeing 737 fleet with Row 44′s Ku-band satellite-based in-flight Internet solution.

But the carrier has been very quiet about what it intends to ultimately charge passengers for Wi-Fi.

“The longer that they are taking to roll this out, the more I believe they are going to offer Wi-Fi for free,” says Planey.

Just think about it. Southwest is enjoying great success with its ‘Bags Fly Free’ campaign. “They want to be the fee-free airline. This is the way they can differentiate themselves from the other airlines,” he says.

Randy, a flight attendant from Southwest, says in the following YouTube video that he doesn’t know how much management will charge “if they charge”…hmmm. Check out the video:

I must admit I now feel compelled to run LiveTV’s chart about how folks want higher and higher bandwidth, but want it for free, so here it is:

LiveTV slide.JPG

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7 Responses to In-flight Wi-Fi will be free in two years: IFEC expert

  1. Cary December 21, 2009 at 8:48 am #

    Unfortunately, in the U.S., the flying public is much like the majority of its citizens who expect services and programs from the government without having the burden of paying for those services through higher taxes. As you can see, the current deficit in the U.S. is several TRILLION dollars with no end in sight.

    Do we really expect the airlines to continuously make investments in new and improved services and not somehow pass the cost on to the consumer? If we really demand a safe, comfortable, and quality product in terms of commercial air travel, we must be realistic and be willing to pay for these services, otherwise the airline industry will continue to limp along a very dangerous path. The business model has changed drastically and the travelling public needs to realize this.

    What will happen? Will the airline, in the sake of “keeping the customer happy”, make cuts in other essential services in order to deliver? Where will those cuts come from? I shudder to think…

  2. Bob December 21, 2009 at 10:31 am #

    It’ll be interesting to see how long it’ll take before Aircell goes back to their customers asking for a hand out in the form of new contracts. It’s clear their business model will fail (the company is already in deep financial trouble) the way their contracts are currently negotiated. As airlines move to a free model, Aircell’s technology will be overwhelmed by demand and that will be the nail in the coffin–they have no clear path to keep the system running when demand doubles or triples as passengers get the service for free. That’s exactly why WN and AS are the smarter airlines (and they have the balance sheets to prove it).

  3. David Parker Brown December 21, 2009 at 1:31 pm #

    I have said previously I think wi-fi on airlines will have to go free (http://www.airlinereporter.com/?p=1671).

    Some airline will do it first to have an edge over other airlines and others will have to follow. With my iPhone now, I feel like I should be able to get internet anywhere I go and it feels kind of free (even though I know I am paying a monthly service). I think it will get to airlines that have free wifi and those that have none.

  4. Yossarian December 21, 2009 at 8:05 pm #

    Bob-I’m curious why you think Aircell’s business model will fail? Are you saying all nine airlines that signed up with Aircell are wrong and two are right? Are you 100% certain WN & AS are going with Row 44? I work in the industry and I’m hearing some things that contradict what you’re saying.

    And what of Panasonic?

  5. Klaus Hergeschiemer, from G Section December 22, 2009 at 1:26 am #

    No offence, but the smart money is with Bob’s observations.

    Yossarian, you obviously work in the industry because you appear to assume that airlnes make informed and smart decisions. That’s your first mistake.

    I haven’t flown an Aircell-eqipped aircraft in recent weeks, but unless things have changed, I still see a price point on the landing page. Of course, I haven’t yet paid for a session because of all the lovely ongoing freebie sessions Aircell hands out like candy.

    I bet if you ask any one of those airlines if they would feel just as comfortable saying “yes” to Aircell today, as they did when they first signed on and before Aircell decided to trash the market with gratis sessions, you may find yourself with some sobering news.

    Then again, maybe your sources tell you that Aircell is planning a prfound change of strategy and will adopt an alternative revenue generating model (eg Advertising-based), in which case I will concede that I am uninformed and my conclusions are dubious at best.

    Leave it to an airline industry guy to believe a product will make money by giving it away.

    No offence.

  6. J Lawley December 22, 2009 at 4:21 am #

    Free Inflight WiFi may be possible within the continental US where AirCell offer the equipment to carriers at $100K and sponsor the service provision but how will this work globally?

    When major IFE vendors offer Ku systems at $1M+ per shipset and the service provision is thousands of $$ per aircraft/per region/per month the operators will have a tougher time proving the business case

  7. Bob December 22, 2009 at 10:33 am #

    @Yossarian: Aircell’s revenue depends on passengers paying for service and the price they’re paying will likely be $0 in the next couple of years. Row 44 has a different model that can stand up to free Wi-Fi. Also, Aircell (although they have customers) has a lot of debt and they can’t pay it off at 50% or 20% of $0. They’ll figure something out but it’ll involve new contracts with their customers or a new advertising model.

    I think WN wants Row 44 because they can more easily get to $0. I think AS wants Row 44 because they cover AK and HI. Aircell can’t do either of those easily. Since both carriers have enough cash to pay for the more expensive system, they can reap the longer term benefits.

    Just my $0.02.