Supply of in-flight Wi-Fi far exceeds demand

Rapid technology advancements keep driving broadband speeds and availability on planes, but passengers seem less than eager to connect.

By Minyanville.com Feb 28, 2013 3:53PM
Woman using computer on airplane copyright Compassionate Eye Foundation, Lifesize, Getty ImagesIncreasing data rates, a recent U.S. regulatory simplification, and a steady growth of global in-flight Wi-Fi installations suggest that popularity of onboard Internet access should be booming.
 
But a number of signs contradict that assumption.
 
According to the Wall Street Journal, analysts estimate that only 10% of fliers hook up for in-flight Internet. On flights operated by the 100%  "Internet-equipped" fleet of Virgin America, the average rate of usage is only 16%. 

The percentage of U.S. fliers who use their Apple (AAPL) iPads, laptops, and other mobile devices during the flight, is, however, significant at more than 70%, according to a recent survey by IMS Research.
 
GoGo Inc. the largest in-flight broadband provider in the US, keeps increasing prices and adjusting fee schedules to keep up with its mounting losses. According to its latest filing with the Securities and Exchange Commission, the company lost $9 million on operations in the first half of 2012. Roughly 5% of fliers used GoGo broadband on flights where the service was available.
 
The situation with onboard wireless broadband is especially dire in global markets, where only a handful of airlines offer expensive in-flight Internet options, primarily on long-haul routes.
 
European aircraft manufacturer Airbus recently exited from OnAir, one of the largest in-flight connectivity providers. Airbus sold its 33% stake to co-owner SITA, the company providing communication and IT solutions for the air transport industry.

Boeing (BA), the main competitor of Airbus, dropped its similar Connexion project in 2006. 

Deutsche Lufthansa (DLAKY), an online broadband pioneer, said its FlyNet in-flight access equipment had been installed on 80 out of 105 aircraft in its long-haul fleet. The figure is less than 20% of the company's total fleet. No surprise: The cost of installation per plane is estimated at about €330,000 (or $435,000) an investment that's reflected in the high prices passed on to customers.
 
Passengers of Lufthansa flights are charged €10.95 ($14) for one hour and €19.95 ($26) for 24 hours of Web-surfing while above the ground. Delta Air Lines (DAL) offers 24-hour service for just $14, but only on domestic flights.
 
The difference is no surprise when you look into technology behind each of the services.
 
GoGo, the provider of in-flight internet to Delta Air Lines and other major US-based carriers, currently relies on the extensive ground cellular tower infrastructure across continental US, so-called air-to-ground (ATG) approach. GoGo equipment for aircraft is relatively inexpensive (around $100,000) and quick to install.
 
On the other hand, the technology has speed limitations (up to 9.8Mbps) and the connection is obviously unavailable on longer transcontinental flights. That's where satellite links come into play: civil aircraft worldwide now rely on satellites to provide Internet (and sometimes cellphone) connectivity while in the air across the globe. Technology advances in the sector swiftly.
 
Satellite connectivity providers striving to deliver higher speeds are now adding additional bandwidth on proven L- and Ku-band satellites. They're also deploying brand new Ka-band satellite systems (Inmarsat Global Xpress, ViaSat), with promised speeds up to 50Mbps.
 
This type of Internet access with a promised bandwidth of  12Mbps or more for each customer will be featured this year on JetBlue (JBLU) and Aer Lingus (AELGF) flights in Europe. GoGo plans to offer a similar satellite-based option in 2015.
 
Still a majority of carriers provide very limited in-flight connectivity service, if any at all. Air France-KLM plans to start its in-flight broadband trial this March with massive rollout in 2014-2016. Russian airline Aeroflot (AETA) plans to add 26 more airplanes to its current fleet of five Wi-Fi-enabled long-haul aircraft. All Nippon Airways (ALNPY) looks to introduce the service in summer.
 
Some companies move in the opposite direction. Australia's Quantas (QAN) in December 2012 dumped its in-flight broadband project because of weak demand. Its commercial trial on service to Los-Angeles and London attracted less than 5% of passengers, the company said.
 
Despite the challenges of humble demand and costly deployment, analysts foresee the bright future for the industry.
 
"Passengers can increasingly expect to have access to inflight connectivity, be it Wi-Fi or GSM, or in some instances both," says Mary Kirby, editor in chief of the Airline Passenger Experience magazine. "There is room for everybody to play -- ATG, L-band, Ku-band and Ka-band."
 
However, "It's imperative that carriers manage passengers' expectations when selling in-flight connectivity sessions," adds Kirby.
 
IMS Research predicts the number of aircraft with in-flight connectivity equipment installed will grow nearly five times in less than a decade: from about 3,194 in 2012 to 15,351 in 2021.
 
The question is how fast the adoption rate will grow.

More from Minyanville
15Comments
Feb 28, 2013 8:04PM
Feb 28, 2013 4:48PM
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I travel quite a bit, taking 4-5 trips a years.  I have never purchased in flight wifi.  I don't need to "be connected" so badly that I can't wait until I land to see the pictures of someone's stupid cat on my Facebook Feed.
Feb 28, 2013 4:41PM
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Fat lot of good when the Stews tell everyone to shut down cell phones, laptops, and so forth.
On top of that, the fee is high, and a fee should be good for the flight duration.

Mar 1, 2013 10:06AM
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I'll use it if it's free, but I won't pay the airline for the service.  They already nickel and dime you to death as it is.
Feb 28, 2013 10:51PM
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Ok, I guess I am a bit of an expert on this subject as I travel between 15 and 22 weeks a year on business over the last 17 years... I have purchased about 24 Wi-Fi connections over the last 3 or 4 years and far too many more than 4 years ago. The previous problem was bad WiFi connections and bad IInternet connections. If it goes no where good like getting your money back! Generally I am usually frustrated with how poor the connection is, as it limits my ability to get work done, while I am otherwise in my seat prison. IE setup a VPN tunnel to my work, get and reply to emails, and then if I have time do stupid browsing and news updates like I am doing right now.  All the stuff that I otherwise must do and than would like to do after I get home, or to my hotel, or in the taxi to my hotel over my blackberry... Over the last couple of years the connections have improved but it still isn't fast enough for a good data connection so a "patience warning"  should be in the pop up screen. :)  Also, the connection isn't as reliable as it should be and I know from some tools that lately it isn't the WiFi but the connection from the plane to the ground or the sateliite that is the problem. From what I can tell most business users have been burned already and are resisting trying it. But if anyone gets a connection and it works everyone else will turn on and connect. I remeber this one lady who pratically shouted how tickled she was that ger reader connected into the wifi and then dozens of people connected and than go figure it crashed!
Mar 1, 2013 11:18AM
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The author is an idiot. Its over priced, not "passengers not eager to connect". I bet most people using it are business travelers who are reimbursed.

Feb 28, 2013 11:23PM
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A major problem is the time it takes to get past the pop up or redirect in the browser so as to pay for the connection. That part goes so slow that most people think the connection is dead and give up. It as if the ceonnection is runing like an old dial up modem from the early 1990s, but after they get your money the connection always improves significantly. So patience is part of the secret sauce to successfully using WiFi on an airplane.

Feb 28, 2013 10:59PM
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I might also add that cellular connections are not reliable to the point of being terrible, but long haul over the ocean flights are more reliable which I understand is a satelitte link.
Mar 1, 2013 11:44AM
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It's great on longer flights but too expensive for short flights.  I think if they instead went for volumn instead of a few users at higher cost, they would be rolling in the dough.  Charge $2.50 for an hour and $8 for a 24 hour period and most people would sign on. At 2.50 its not even a thought, charge me, let me see the destination weather, check on my rental, pull directions, check game scores, and most on board would do the same. 
Mar 1, 2013 12:23AM
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I love it. I Call clients with my Business Voip app. email clients. Watch Netflix, Sporting events etc, etc. It will take a little time for it to catch on. Makes the flight go quickly.
Mar 1, 2013 9:52AM
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It's not worth it to me to pay for wifi service on a plane. People are so used to getting free wifi on the ground, I'm sure they feel similar to me. Unless you really need it for work, there's not much of an appetite to pay for it.
Feb 28, 2013 10:43PM
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the only planes I have been on which offer wifi are Southwest on their shortest flights.....on the longer flights it isnt offered, and only on one plane out of six.....for them to really know the validity of the offering it needs to be done on bigger scale.  They will never know unless they offer it across the board.
Mar 5, 2013 12:20AM
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I travel about 5 times a year on business, and use in flight WiFi every time.  All of my business applications are accessible with an internet connection and work fine (although a bit slow).  I catch up on emails, use IM to update staff and work through mundane work to pass the time.  I rarely have time to catch up on Face Book.  As a business expense,the $10 fee is a no-brainer.  I didn't realize so few people used the service.  But I wouldn't either if I didn't have work to do.  I'd just read a book if I was on a vacation flight.
Mar 4, 2013 8:05PM
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Wireless radiation isn't good for you.  See studies at   www.bioinitiative.org  I wish they would have a part of the plane where wifi and cell phones are not allowed.  
Mar 1, 2013 8:27AM
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I travel at least every other week for work and I was on over 100 flights last year.  I connected on almost every single one of them (where GOGO was offered) that were over 60 minutes long.  The on flight internet saves me a good 2 hours of emails and other tasks that i would struggle to do without connecting to the web (and sometimes VPN). 

 

I'm thankful that companies like Delta are making GOGO an option on more and more of their flights, so other business travelers like me can make the most out of spending time in the air.

 

 

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