Summary
This space has been the promised land of airline ancillary revenue from way back before 9/11, when Boeing brought us their Connexion service.
Boeing's product worked as promised, but the economic model did not. Boeing canned the service just as, many would argue, it was starting to gain momentum. The loss of Connexion hampered the in-flight entertainment industry - but two new firms are offering in-flight WiFi now with mixed success.
Analysis
Yesterday was opening day for the WAEA conference in Palm Springs. An apt location for an industry for whom hope springs eternally. The in-flight entertainment business perpetually promises wonderful technology and content to keep people busy when flying. But the reality is that the technology breaks often and is the bane of airline maintenance. The most frequently broken items on an aircraft are IFE systems.
The panacea for many is that enabling a passenger to bring on their own equipment (Apple iPhones, iPods, etc.) means no more IFE hardware to worry about. But these devices are best used when connected to the Internet. So connectivity is the sweetspot - sell passengers Internet access, make a bunch of cash and spend little on any equipment. Great idea, right?
Anyone who has used in-flight Internet access will confirm that it is truly a wonderful thing. Time flies and the cramped seating sort of gets lost in the process. Having such access is a solution to many of today's travel irritations. According to one source, an average user sucks up 50Mb of content per session (typically one flight). This number is much higher than last year and can be expected to grow rapidly again next year. There simply is no such thing as too much bandwidth - just like on the ground.
Among the broadband access providers, two stand out - Row44 in California, found on Southwest Airlines and Alaska Airlines and Colorado-based AirCell's GoGo service found on American Airlines , Delta Air Lines , Virgin America, AirTran and soon on United Airlines.
Both these firms had prominent displays at this year's WAEA. Both firms provided interesting feedback on how they are developing their business. Airlines desperately need more revenue sources. In-flight WiFi offers this, but usage has to grow faster.
Listen to these short interviews with each firm and get a sense of where the technology, industry and business models are headed. Row44, AirCell.
Addison Schonland consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
