The Disconnect In Demand For In-Flight Broadband And Service Success

from the something-doesn't-match-up dept

Wed, Aug 30th 2006 10:07am — Carlo Longino

Boeing's decision to shut down Connexion, its in-flight broadband service, wasn't too surprising, given the few carriers that had rolled out it. But in some sense, it was puzzling, because there's such an apparent interest in in-flight broadband -- something backed up by yet another survey about it. So, if interest is so high, why can't somebody make in-flight internet access work? Connexion has failed, Tenzing's big plans never took off, and Airfone's overly expensive and underwhelming services were never popular. The biggest problem is the tremendous cost of outfitting airlines with the equipment to make the systems work, with Connexion's costs reported to be up to $500,000 per plane. With the airline industry bouncing from one financial crisis to another, and the most successful carriers being those that can hold their costs down the best, this is a pretty insurmountable hurdle. The bigger problem is that the real demand for this service, in all likelihood, isn't as high as all these surveys and media stories would indicate -- or in a world of free WiFi hotspots, demand falls off the table once a fee is introduced. Interest in the services carries on, with several companies participating in a recent FCC auction to secure licenses for air-to-ground spectrum. It sounds like most of these companies will use different technology than Boeing's satellite-based system, which could help them lower costs, but the more fundamental question they've got to answer is whether the demand to pay for this sort of service actually exists. Airline JetBlue was one of the winners of that auction, and it could use free in-flight internet access in the same way it uses its in-flight TV: as a perk to encourage business. That could be a more workable model, but still, an expensive one.

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19 Comments

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Anonymous Coward, 30 Aug 2006 @ 10:57am

Its supposed to be about competition...but...
If the airlines realized that having broadband available on every flight would GREATLY increase the chances of business travelers choosing that airline, then it would come down to giving that airline a competitive edge.

Its NOT a money maker. Its a loss leader to steal customers from the competition. Thats all it could possibly be. I would NEVER spend 20$ to have 2 hours of broadband under the most uncomfortable seating arrangement imaginable. But I WOULD choose a different airline if I knew I would be able to at least get some WoW (or second life for you second lifers..) time in during the flight. that would at least make it more bearable.

But all of that is irrelevant anyways. The way security is going at airports nowadays, its a burden to bring a laptop. Hell, its a burden to travel period. Instead, I video conference, and then go home and play WoW there. It doesn't work for everything, but it certainly works for most things.
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dorpus, 30 Aug 2006 @ 10:59am

Subsidize it
Government-subsidized airlines like JAL or Lufthansa have internet access. They also tend to have nicer flight attendants and better food. Hard-scrabble US airlines have always been known for using only price as their selling point -- otherwise, the service stinks.
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Yo ho ho..., 30 Aug 2006 @ 11:14am

What's the point?
Unless they are offering free porn, I can't get excited about boradband on airprlanes when I have to sit in a 12-inch seat with no recline and my knees wedged into the seat in front of me....

Airlines have to realize that seat comfort is a bigger issue than broadband -- so give me a nice big seat without attitude, and then we'll talk.
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- Anonymous Coward, 30 Aug 2006 @ 12:01pm
  
  Re: What's the point?
  "Unless they are offering free porn, I can't get excited.."
  
  Uh, dude.. haven't you ever heard of google? Head on over to the image search and get all the free porn your little brain desires. All you need to access it from an airplane is...
  
  Broadband.
  
  Your other point is quite valid tho.
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Anonymous Coward, 30 Aug 2006 @ 12:01pm

Its a zero sum game. If one airline starts offering it and steals away customers, then the others offer it. When that happens, then they all lose money. Why would anyone want to do that?

If you can't charge for it, its a hobby.
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- Anonymous Coward, 30 Aug 2006 @ 12:03pm
  
  Re:
  Because that is what you are forced to do in a competitive market. The fact that they can collectively decide to not do it is an indication that there is no real competition in the airlines.
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Paul, 30 Aug 2006 @ 12:06pm

Seat Size
Airlines know that the seat size is an issue, but money talks for this round.
The more people they can fit on a plane the more money per flight they make. If they make the seat bigger then they either have to make the plane bigger or raise prices, and since making the plane bigger isn't very likely the prices will raise.
There is of course the 3rd option where the airline decides they can make up the price difference in volume, thinking they will steal the competitions customers, and that would most likely be true but prolly the most devistating option for the airline in the long run.

Lets say 1 airline makes the seats bigger and keeps costs the same, they steal some customers from the other airlines. The other airlines say "oh shit" at their income loss and so they decide to impliment larger seats with the same cost and regain their customer share. So now we have the majority of the airlines with bigger seats at the same cost, these airlines are now all making less money than they were with the smaller seats because they are charging the same, getting the same customers, and moving less people per flight. What do they do? Raise the price to make up the difference.

There is already a solution for people who are willing to pay more for a bigger seat. It is called first class.
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- Anonymous Coward, 30 Aug 2006 @ 12:17pm
  
  Re: Seat Size
  Yeah. the fact of the matter is, hadly anyone is going to pay more for a larger seat if they can pay less for a smaller seat. You have this option as first class if you want. Whiny people that complain about cheapness and tiny seats just want bigger seats without having to pay. If people were willing to pay, I promise there would be more room in the seats. When my flights are $100 for coach and $200 for 1st class, then I might think about first class. When my flights are $500 for coach I can deal with the tiny seats.
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  - Tyshaun, 30 Aug 2006 @ 12:42pm
    
    Re: Re: Seat Size
    Yeah. the fact of the matter is, hadly anyone is going to pay more for a larger seat if they can pay less for a smaller seat. You have this option as first class if you want. Whiny people that complain about cheapness and tiny seats just want bigger seats without having to pay. If people were willing to pay, I promise there would be more room in the seats. When my flights are $100 for coach and $200 for 1st class, then I might think about first class. When my flights are $500 for coach I can deal with the tiny seats.
    
    You hit the nail on the head about the price difference. Being a big guy (6'3'' 325 lbs) I'm always annoyed at just how small airline seats are (even compared to theater seats, which are notoriously small). What annoys me more is that on the same flight a $300 coach seat exists with a $1200 or so first class seat. Why 3 times as much? The seat isn't 3 times as big. First class services aren't nearly as nice as they once were. Most times I end up just buying 2 adjacent coach seats and wishing I could figure out something to do with the my knees. So you are right, if airlines could price "perks" like first/business class and broadband access in the "not extorsion" level pricing, more people would take advantage of it. Rught now, US airlines are content to pack folks in like sardines and cry poverty every couple of years.
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tychism, 30 Aug 2006 @ 12:11pm

WiFi in the sky
I don't see why they don't build the service into the price of the ticket. As astronomical as tickets can be, $5.00-$15.00 whether you use the service or not seems like it would be pretty easy to mask. It would certainly make the air travel experience much more enjoyable, regardless of seating. WoW can be THAT engrossing. =]
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Glenn Fleishman, 30 Aug 2006 @ 12:11pm

There's demand, and there's cost
Connexion's system used old satellites--which they argued were available at commodity prices--coupled with an 800-lb, one-week installation of gear. It worked well. It delivered much more bandwidth than Inmarsat's 4G system can hope to offer at a much lower price....if you had 2,000 planes equipped and dozens of passengers per flight. It wasn't so much the cost of installation, but operation. 800 pounds = about 4 passengers and their luggage worth of fuel. And the satellite bills had to be paid for massively underused transponders, because Connexion's approach required hundreds of transponders worldwide paid on a fixed basis. AirCell can use much lighter and simpler gear for their system, adding < 100 lbs. JetBlue only won a 1 MHz license, and it's symmetrically split by frequency range, so they have only 500 KHz to push to a plane. That could be used for streaming video or streaming live video to cached on-board servers.
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Anonymous Coward, 30 Aug 2006 @ 12:57pm

i can understand the airlines dilemma. first they pay their eomploys a TON of money. pilots make a good 6 figures. and i'm sure flight attendants and the like also make a decent ammount for the little work they do (walk up the iles a few times..giving out half cans of pop, or selling bottles of liquor for 5 bucks....if i'm wrong, please say so)

with that, the added cost of federal regulations...i.e. maintenance and the amazingly high cost of jet fuel. it's no wonder they cry that they aren't making money...it's true, because it all goes to opperation.

now, the only real way to try an make the money is by making x% more per seat per flight. so a coach seat cost say...$.40 per mile. 400 bucks for a 1000 mile flight. they want to make as much of that back as possible. charge a buck per mile? no...but maybe 60 70 cents.....that'll get money back.

now factor in broadband....up to 50 cents per mile...oops...getting closer to that buck a mile.

i would love to use broadband on a plane...take away from that loud humming jet noise. except i have a BIG problem. i have no laptop. could i bring my desktop on the plane? that'd be fun. some realtime CS:S from 35000 ft. awesome.
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Donald L Stevens, 30 Aug 2006 @ 1:00pm

internet access in airplanes
At first look, this is a good idea, but... I am 6'3" and when sitting in my favorite airline, there simply is not enough room for my laptop to have the screen at a convenient angle and for me to type. I look forward to a small keyboard connected to goggles for my eyes and the screen, headphones for the eyes, if you will. The other option to make this work is the new small form factor PC pushed by Microsoft.
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STupid Terrorists, 30 Aug 2006 @ 1:40pm

More STupid Terrorists
Has anyone forgot the fact that they stopped people brining on anything electronic? God-for-bid! She has a nail-file!!!! She might file away the window and crash the plane!

If I am going to pay for at ticket which includes a broadband price in it, as someone suggested above, I want to be sure I can bring 50 laptops along and download a ton of movies to sell so I can make back the money I wasted on 1st class...

PS: I only have one laptop and WoW IS engrossing...
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Anonymous Coward, 30 Aug 2006 @ 2:42pm

2 points on two different posts.

No competition between airlines? Stupid post of the day award goes to that one.

Second, why should there be a $5 or $10 charge on all tickets? Why should I subsidize your broadband access when I don't want it myself?

Fact is, people are too cheap to pay the price. They want it if its free, but would they pay for it?

Thats one huge reason why all the Muni-WiFi projects are either in trouble or will be in trouble. No one wants to pay for it.
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tychism, 30 Aug 2006 @ 5:30pm

WiFi in the sky
I'm sure we're all paying for the in-flight movies, regardless if we watch them or not. Same goes along with "complimentary beverages" served on board. The fact that it's a relatively insignificant amount compared to the actual cost of the ticket was my point.
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Anonymous Coward, 30 Aug 2006 @ 10:29pm

go wi-fi, not tolken ring with a netware server
airlines are griping because they wired their planes for the stupid airphones.

putting in a wifi hotspot will cost them next to nothing...... (i was going to say peanuts, but thought the better of it. :) )
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Constance Reader, 31 Aug 2006 @ 8:45am

Why would anyone pay such a high fee for wi-fi...
...when your battery will last you half the flight time you paid for, if you're lucky? I have a job whose major component is a corps of "road warriors", those of us who travel 50%-80% of the time. We do not work on the plane. Why not? Because we can't plug our damn laptops in, that's why not. I don't care what the tech specs are on laptop batteries, they do not last more than two hours before you need to find an electrical outlet. And very few airplanes have them.
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ELS, 31 Aug 2006 @ 3:08pm

putting in a wifi hotspot will cost them next to nothing......

If the FAA will let them...
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