In-flight broadband is coming soon for travelers on some American Airlines and Virgin America flights. But will the companies hit the right price point to attract customers?
Aircell, a company that sells air-to-ground telecommunications equipment to airlines, said this week that its in-flight broadband system will be used on some Virgin America and American Airlines flights originating from San Francisco and Los Angeles to New York and Miami.
American Airlines will initially enable 15 of its 767s with broadband, and eventually it will offer Internet connectivity on 500 planes. Virgin plans to provide broadband on all its planes, according to a blog posted on GigaOm on Tuesday.
The new service, called Gogo, will cost US$12.95 for cross-country flights and US$9.95 for flights lasting three hours or less.
Airlines have been talking about offering in-flight broadband for years. But so far the service hasn't really gotten off the ground. Boeing was the first to come up with a service, called Connexion, which debuted in 2004 on a few international carriers including, Lufthansa, SAS, All Nippon Airways, Japan Airlines, and Singapore Airlines.
But the service was cancelled in 2006 when the company was unable to find business among domestic airlines. A big problem with Connexion was that the entire system was bulky and weighed around 400 pounds, making it nearly impossible for it to be used on smaller domestic planes.
Other companies, such as Aircell, which uses a network of some 92 antenna towers across the country to transmit wireless signals to planes flying above, and Row44, which provides in-flight Internet service via satellite, have been pushing forward despite Connexion's failure. Both of these companies use Wi-Fi routers inside planes to provide broadband access to passengers.
Several carriers, including American Airlines, Virgin America, Alaska Airlines, and Southwest, have already said they would test broadband service on their planes using one of these two service providers. And in December, JetBlue demonstrated its in-flight broadband on a flight from New York to San Francisco.
Finally, American Airlines and Virgin America are offering a commercial in-flight broadband service.
How much are people willing to pay?
Now, the true test will be whether passengers actually use the service. And that will depend on several factors. The first is price. How much are people willing to pay for in-flight broadband? Judging from the in-flight phone business, not that much.
In 2006, Verizon Communications exited the in-flight telephone service business, which it had inherited from GTE. The service had been operational for more than 20 years.
The reason Verizon got out of the in-flight phone business was simple. People weren't using the service because it was too expensive. Verizon charged non-Verizon customers US$3.99 to connect domestic calls and US$4.99 for each additional minute. International calls required a connection fee of US$5.99 and $US5.99 for each minute of calling.
Aircell's service is priced much more reasonably. At AU$10 and US$13, the price point could appeal to business travelers. After all, many travelers pay Boingo US$9.95 for Internet access in airports. If Aircell could strike a deal with Boingo or some other aggregator like T-Mobile, it could make the service even more compelling in terms of price.
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