U.S. airlines are adding Wi-Fi to more of their planes, but it could still be years before the biggest carriers have their fleets fully equipped with the wireless technology and passengers can expect to have access to e-mail and the Internet when they board any flight.
Only one major airline, AirTran Airways, has equipped its entire fleet with Wi-Fi using a service called Gogo, which relies on ground-to-air gear over the 3 MHz spectrum from Aircell. AirTran has a fleet of 136 aircraft, and Aircell said Gogo is available on more than 500 aircraft on six U.S. airlines, including all 28 planes flown by Virgin America.
But AirTran’s fleet is smaller than those of the biggest carriers, such as American Airlines, Delta Air Lines and United Air Lines. This week, American said it had nearly 115 planes equipped with Gogo. It also expects to have 300 more planes in its 500-plane fleet equipped with Gogo within two years.
In late July, Delta said it had 219 aircraft with Gogo and expected 330 of its planes to be have the technology installed this year. United has said it will only have Wi-Fi on 13 long-distance flights in the second half of 2009. US Airways has yet to roll out Gogo on its planes, saying it plans to do so early next year.
Some airlines, including Southwest Airlines and Alaska Airlines, are relying on Wi-Fi technology that connects planes to satellites from a vendor known as Row 44. Westlake Village, Calif.-based Row 44 is also working with two other unnamed airlines, the company’s president, Gregg Fialcowitz, said in an interview. (Row 44 got its unusual name from the back row of a crowded plane where one of the founders sat when he was a young traveler taking a backpacking trek.)
Both Southwest, which has more than 500 planes, and Alaska Airlines will move forward quickly to roll out service to their entire fleets, Fialcowitz predicted, noting that the two airlines recently concluded successful tests on several planes. Row 44 received authorization from the Federal Communications Commission for the Wi-Fi service in early August.
“The airlines want to roll out Wi-Fi to their entire fleets as soon as possible because they don’t want their passengers to fly today with Wi-Fi and then have the experience tomorrow of not having it and being disappointed,” he said. “The airlines want it ubiquitous throughout the fleet.”
And ubiquity will matter tremendously, said Robert McAdoo, a financial analyst at Avondale Partners who conducts research on nearly 20 airlines and has used Wi-Fi on planes. “Wi-Fi is absolutely here to stay on U.S. airlines, and it’s absolutely an advantage to airlines to get their fleets totally equipped,” he said.
While Delta is “going gangbusters” with Wi-Fi rollouts, as a spokeswoman at Aircell put it, McAdoo said it could be as long as three years before we see widespread Wi-Fi capability on flights from numerous carriers. Among other things, Wi-Fi on availability will probably affect travelers’ decisions about what airlines to fly, McAdoo added.
The dilemma for travelers today is finding which flights offer Wi-Fi, since Wi-Fi is available on relatively few of the thousands of planes flying across the U.S.
“One thing that’s very clear is that there’s so little Wi-Fi coverage [across fleets] right now that a passenger can’t figure out what flight to take easily,” McAdoo said.
The revenue benefit of offering Wi-Fi, from the standpoint of the airlines, will ultimately not come from the access fees, which can run from $6 to $13 per user per flight with Gogo. Instead, it will come from selling more airline tickets to customers who choose an airline because it has Wi-Fi on every flight, McAdoo said.
McAdoo said it costs about $100,000 to equip a plane with Wi-Fi from Aircell, although Aircell and the airlines would not discuss their costs. Airlines have two choices, he said. They can either pay the $100,000 cost per plane to have Wi-Fi installed and then recoup the cost from access fees, or they can have Aircell pay for the installation and have the vendor recoup the investment from the fees. Either way, the revenues to the airlines are negligible, although the carriers could reap major rewards by selling more tickets, McAdoo argued.
A hit with passengers
By all accounts, passengers report positive experiences using Wi-Fi in flight. McAdoo said his own experiences have been good; he said he could access live stock quotes over the Internet faster at 10,000 feet than he could in his office. He also had access to video streams without buffering problems. However, he was quick to note that Wi-Fi is a shared network, and a crowded plane with many Wi-Fi users could slow down connections.
An American Airlines spokeswoman said the company has received many positive responses from passengers. “We’ve gotten e-mails from passengers writing from a flight in the air about how they love the service and thanking us for offering it,” the spokeswoman said. American has posted some of the comments, all unsigned, including one from a user saying streaming YouTube videos on the plane went faster than it did at home.
Aircell, which sets the Gogo pricing for the airlines, announced more flexible pricing in July, including a $5.95 plan for flights lasting 90 minutes or less. A 24-hour pass is available for use on a single airline for $12.95, initially from Delta and AirTran. Busy road warriors, meanwhile, can get a 30-day pass on a single airline for $49.95, available from Delta, Virgin or AirTran.
The pricing also allows users of Wi-Fi-enabled handheld devices to pay $7.95 for flights longer than 90 minutes.
Fialcowitz said Southwest and Alaska will set their own pricing for Wi-Fi on Row 44 technology and are testing prices from $2 to $10 a flight. Row 44’s financial approach seems to be similar to Aircell’s, he said, with one approach allowing airlines to share equipment costs and revenues and another allowing airlines to assume most costs and set pricing. It costs about $200,000 to equip a single plane with Row 44 technology, he said.
Prices charged for Wi-Fi will probably have an impact on luring a range of users, not just business travelers, airline officials said.
Young travelers will use the service for access to social networks, while business travelers will use it for work tasks, such as updating e-mail, so they can spend more time with family once they get home, American’s spokeswoman said.
Each airline surveyed its passengers about features they would like, from more legroom to better meals and Wi-Fi service, Fialcowitz said. “Oddly enough, Wi-Fi has come out on top of every survey, and while business travelers are interested in it, leisure travelers are just as much so. They include the younger traveler who wants Wi-Fi more for entertainment and social networking.”
While Row 44’s technology is arriving on planes about a year later than Aircell’s, Fialcowitz said Row 44 will ultimately be more successful globally because of the satellites it uses, which can provide Wi-Fi connections over oceans and entire continents. Row 44 will provide a Wi-Fi signal in each plane that is up to 10Mbit/sec., shared among users. An Aircell spokeswoman said Aircell does not advertise a bandwidth rate, although she equated it to the speeds commonly seen in Wi-Fi connections in coffee shops.
Aircell is also planning to upgrade to LTE wireless technology when it becomes available, increasing the bandwidth available on planes, the spokeswoman said.
The U.S. airlines are all talking about Wi-Fi service that is data only and does not include voice over Wi-Fi. American’s spokeswoman noted that the Federal Aviation Administration bans cell-phone use on planes, and carriers extend that ban to voice over Wi-Fi usage. Some analysts have viewed the voice ban as a convenient excuse for avoiding the problem of passengers annoying one another by talking on the phone during flights, but they predicted that if airlines get enough demand for voice service, it could be offered someday.
Surveys by some airlines have shown that passengers don’t want the annoyance of voice over Wi-Fi calls, however. “We don’t see it coming,” said American’s spokeswoman.
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