Inflight wifi is a $100 million business per year and is perhaps becoming the acceptable face of ancillary revenue in the air industry.
Market leader is Aircell, providing services to the likes of American, Delta, Airtran and many others.
According to Aircell, 1,009 commercial aircraft are equipped with wifi access from Aircell called GoGo Inflight Internet.
Meanwhile, Row 44 announced this week that it has raised $37 million, this only eight months after Aircell raised $176 million.
While others use ground based antennas, Row 44 leases telecomm satellites which can provide wifi access globally.
This is great news for the aviation industry as well as for passengers. Wifi is therefore perhaps the killer ancillary that people are actually prepared to pay for without feeling cheated.
Keeping passengers occupied with stuff that matters to them most will have them using their plastics like never before.
The ancillary business in aviation is exploding and last year the global airlines made more than $13 billion. Inflight wifi is so far a minimal revenue source.
But, lest we forget, so were check-in fees and other forms of ancillaries in the beginning.
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Oh yes, always assuming that the rates are acceptable to the private individual AND that corporate travel rules permit the expense claim for this AND that you don’t mind your neighbour reading your email AND that significant numbers forego the last interrupt free spot on the planet!
We know that US business culture is particularly driven by haste and working all hours but seriously folks – there are few emails anyone writes that can’t wait for a few hours.
……. oh and that your new corporate issue netbook is tiny enough to open in the shrinking space between you and the inconsiderate ******* in the seat in front who has just fully reclined his seat.
Ah, but then you will probably be thumbing away on your crackberry so seat pitch may not matter.
(I will be the guy next to you listening to music, or maybe watching a video downloaded to my not-iPhone and chilling out!)
@corporatetraveller in 52K:
oooh, grouchy
or perhaps just realistic??
As Shaw once observed “The art of accurate observation is often called cynicism by those who do not have it.”
Good update, Stephan. Would like to hear what folks think – last January I put together some thoughts on how airlines / Aircell / Row44 could capitalize on growth in digital media and location-based services to drive ancillary revenue as a customer acquisition channel rather than just relying on fees. If you’re interested, here’s the presentation:
http://www.slideshare.net/JonathanAlford/jonathan-alford-airline-digital-merchandising-public-dist-version-15feb10
A key of course is leveraging the competition between the digital media companies like Netflix, Amazon, Google or even Bing/Microsoft etc on a revenue-sharing basis by aggregating the passenger base however possible.
I gave this to folks at Amazon and some airlines, and at the time, Amazon wanted no part of a subscription-based video service or airlines, but now, lo and behold they seem to see the writing on the wall and are trying to launch one.
http://www.techflash.com/seattle/2010/08/report_amazon_pitching_netflix-like_tv-movie_streaming_service.html
So perhaps now’s a better time for airlines to pitch their tremendous base and deliver a great service to customers?
What do you think?
Inflight wifi is awesome, but that’s assuming there is enough room to open up your laptop. I guess that’s where the iPad comes into play.
I just can’t see this working in any meaningful way because apart from a business traveller where is the mass demand for this service. Unless this service is very cheap, most people will just wait till they arrive.
I did a post on how introducing in-flight lottery type games to earn revenue from unsold premium seats could generate extra income and would be something most passengers would have a go at and not feel they were being ripped off.
Here’s a link to the post – http://www.epok.com/2010/09/ancillary-revenue-and-the-airlines-%E2%80%93-do-they-know-what-theyre-doing/
Nice to see another realist whose enthusiasm for technology is tempered by thought!
@corporate traveller in 52K…
cynical as the best of them here, don’t you worry.
i would simply say that if this is such a damp squib, surely there is massively something wrong with those that agreed to investment a combined total of around $210 million in the services.
The due process and customer discovery would surely have indicated that there is a desire for such services?
So it might not be *your* cup of tea, but it might be desirable for many others.
And if an airline can push a new ancillary revenue to passengers, then it will certainly try.
It’s the same with many technologies. Few can see a major need for it until the tipping point of mass adoption and then many wonder how they did without it.
Kevin – I would certainly hope that some sensible market research was done, as I would have hoped also happened before Boeing started their ill-fated “Connexion by BOeing” to do the same thing about a decade ago!
My question would be “what has changed in the intervening period” – and the ONLY thing I can think of is that there are now (many more) wifi capable devices that are small enough to be used comfortably in an economy seat. So the question becomes “what would induce people with small, wifi capable devices to make significant use of them on a flight?”
And I still can’t see a satisfactory answer that creates a mass market beyond techno enthusiasts large enough to make it work!
However, I’m willing to offer a free suggestion to anyone from the relevant businesses who happens across this thread – do a deal with Boingo, The Cloud and many others who provide a roaming wifi access service, even some mobile phone providers. Even sceptical little me might use the service occasionally if it came as part of my Boingo mobile phone wifi access package (circa $7 per month, unlimited usage). Better to get lots of little incremental sums from such a deal than little or nothing from a high priced one off connection charge – but would it be enough for a profitable business? Still sceptical I’m afraid.
Good idea, Norm. I also agree charging fees will most likely limit the market to a fraction of what it could be. However, there are ways to finance the cost via other means – namely customer acquisition deals with digital media and search firms.
The airline passenger base is tremendous on an aggregated basis, and the competition among companies like Amazon, Netflix (US only for now), Apple of course, Google, Bing, and others is fierce. They will fight over 40 Million pax per month (US) and potentially more as the technology develops. But airlines and Aircell need to present it right.
Laptops are of course a key device, and being 6’3″ tall, I completely understand what a pain it can be in coach. But mobile devices will continue to be a fast-growing opportunity for passengers to read e-books, watch movies, play games, etc.
In fact on a recent flight, of the 11-12 people sitting in closest proximity to me, 3 were watching movies on either laptop or mobile, 1 was reading an e-book, 4 were playing games, and the others were sleeping or reading a physical book.
What do you think?
Jonathan – your observation about laptop/mobile use, which I share, is one of the reasons in flight wifi won’t take off (pun entirely intended!).
With smartphones, tablets of various kinds, netbooks and laptops it is now so easy to load up before you go with hours of personally selected entertainment. That is just what I do – load my smartphone (no, NOT an iPhone) with several hours of the better output of the BBC and then watch it on my phone in flight. Is that as good as on a large screen – no, but it is comfortable and convenient. I can even carry on watching whilst in the inevitable queue for the bathrooms!
How about a REALLY radical idea that the airlines start charging for in-flight entertainment access? Given that so many people now take their own entertainment and that, as a result, the airlines are spending fuel dragging all that seat back equipment through the air unused, charging for it might actually offset some of the costs of putting it in place. And if it doesn’t – remove it and save some money all round.
This is our latest innovation in providing a ‘reason’ for corporate travelers to use inflight Wi-Fi. If we can make their trip just a little better it may be worth the couple of bucks spent on GoGo.
CloudClick.info