Wi-fi prices brought to Earth

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As in-flight wireless internet access - so-called wi-fi - moves from being a tantalising prospect for the near future to a current reality for many travellers, the price they are willing to pay to stay connected is falling.

According to Innovation Analysis Group, which has been surveying the in-flight connectivity market for three years, in 2006 the typical traveller who opted for a fixed annual payment for wi-fi was prepared to pay $200. But that figure has dropped to $137.

"Clearly this decline puts pressure on the few providers in the market and certainly puts a question mark on the decision by one vendor to charge $49 per month, which translates into $600 per year," says IAG chief Addison Schonland.

FLAT APPEAL

He says that while respondents still like the idea of a flat fee, they are now "prepared to pay a lot less for the service than even three years ago".

Most of IAG's 185 survey respondents live in North America, where in-flight wi-fi is becoming more prevalent, and is considered to have the greatest potential in the near term because of the quick expansion of Aircell's air-to-ground-based Gogo broadband system. (IAG's survey was conducted online among travellers who frequent both Twitter and selected web sites that attract people who have an interest in in-flight connectivity, including Flightglobal's Runway Girl blog.)

aircell
 © Aircell

Richard Owen, a former executive director of the World Airline Entertainment Association who now heads IFE&C consultancy GlobalPoint Group, thinks that passengers are willing to pay less and less for airborne wi-fi because prices on the ground have been falling.

"It has become almost an expectation for a number of business travellers that they will be provided [wi-fi] at low or no cost, and that has translated I think to some degree into what passengers, particularly business passengers, may be expecting on commercial flights," Owen says.

And, he adds, while three years ago in-flight wi-fi was widely anticipated but had limited availability, today it is a reality on many US domestic flights. So, he says, passengers are "starting to think much more about, 'what would I actually pay for this service if I had it on a plane?'"

TECHNICAL HURDLES

Owen says, however, that passengers are going to have to adjust their pricing expectations to account for the fact that providing wi-fi in the air is technically much more challenging than in a hotel, and that there are airworthiness considerations that do not bear on ground-based providers: "This is not as simple as putting in a wireless router and making it work on an airplane."

In addition, the pricing equation has become more complicated since Boeing's Ku-band satellite-supported Connexion service was first offered on some international flights operated by Lufthansa and other carriers. Connexion was ultimately a commercial failure, and ceased providing services to airlines at the end of 2006.

Today, passengers want to connect via a much wider range of portable devices. Aircell - which has become the dominant provider of in-flight wi-fi in the USA - offers a number of pricing options for Gogo use. Passengers with laptops are charged standard fees of $9.95 for using Gogo on flights of 3h or less, and $12.95 for flights of more than 3h.

The company also allows users to access Gogo on their smartphones - on flights of any length - for $7.95 per trip.

"I think part of what we're seeing evolve is a pricing mechanism that charges based what people do on a plane," says Owen, who notes that there are different bandwidth requirements for full internet access versus simple BlackBerry or text usage.

IAG's survey also asked respondents to divulge the frequency of their in-flight wi-fi use if it was made available to them. A full 47% said they would use it on every flight, and another 48.6% said they would use it occasionally.

"Our research, we believe, clearly shows the market is going to show strong demand. Indeed, the anecdotal feedback from vendors is that service take-up is higher than they projected. This result is consistent with our data," says Schonland.