Nine months after activating a satellite-based internet service on their A380 fleet flying between Australia and the United States Qantas shut down the service this past weekend. Apparently usage was not sufficient to justify the costs of operating the systems. In a statement the airline indicated that the usage rate was less than 5 percent over the trial period. The company believes that this limited adoption is mostly attributed to the timing of the flights; passengers were more inclined to sleep on the overnights than pay for the internet connection.
Satellite coverage is limited over the Pacific Ocean and the systems are not cheap to install nor to operate on an ongoing basis. The kit weighs in at several hundred pounds. That means less cargo capacity and more fuel costs. If users aren’t buying the service then it is hard to justify the costs. Similar reports were heard in the early days of the gogo service rollouts. The US carriers soldiered on, however, continuing the deployments. Clearly Qantas feels the customer demand just isn’t there. With both United Airlines and Delta committed to adding comparable service on their aircraft flying to Australia it will be interesting to see if the competitive aspect of the market sees the service returning in the future.
And at the same time as Qantas is cutting the service Etihad has announced that by the end of 2014 they expect their entire fleet to have global connectivity. The announcement came as the carrier launched their first aircraft with "Wi-Fly" service. The Wi-Fly product is based on Panasonic’s satellite connectivity solution and is in service now on one of the carrier’s A330-200 aircraft. Etihad already has some other aircraft configured with the OnAir product they trialed previously. Etihad will be configuring their fleet with voice/data connectivity on all aircraft and augmenting that on their long-haul fleet with the wifi service as well. The carrier expects 10 aircraft to be configured with the Wi-Fly service by the end of 2013. Oh, and for first class passengers the in-flight internet service will be free.
Perhaps there is a finite number of tubes available out there on the internet and the convenient timing of these two announcements is more than just coincidence. Or there are vastly different ideas about what consumers want – and are willing to pay for – in-flight.
Related Posts:
- JetBlue’s new in-flight Wifi: Fast and Free*
- Upgrades coming to United’s p.s. in-flight internet
- Gogo shoots for the stars, launches satellite-based solution
- Trans-Pacific in-flight wifi coming to Qantas
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I sat on a panel with Scott Kirby in Phoenix days after US Airways announced they’d be rolling out wifi across the fleet. They were under no illusion that they would make money selling internet (that the usage fees would be greater than the cost). But they determined they were losing ticket sales by not offering internet. Customers who do care about the service would book carriers that offered it, and they’d lose the revenue. It was significant enough they couldn’t afford NOT to do internet.
And since the bulk of the cost is fixed, to over it across the fleet, and not much driven by a single customer’s usage I would expect that eventually wifi will be ‘free’ (ie bundled in with ticket price).
That will solve the issue of adoption. Very few will spend $12 or $20 or more perhaps. But a whole bunch of people will effectively pay an extra $1 in their tickets to use it. Once bandwidth is there it’ll get bundled in with other services.
Now maybe it won’t be with ticket price. It’ll be bundled as part of an ‘extras’ package. But it probably won’t be sold primarily as a standalone.
I’d be interested but only if there is power at the seat too.
While I agree that it will happen eventually, I think we’re still a long way from “free” wifi on an aircraft. Despite massive improvements over the last few years, bandwidth for Internet via satellite is still a constrained resource, and if everyone on the plane start using that resource, performance will degrade tremendously and quickly.
I agree that, especially in the US, carriers will lose business if they do not install wifi despite rather low usage rates (honestly, I’m surprised it was as high as 5%), but even though carriers will likely lose money on the service itself, I think that the purchase price will remain for quite some time in order to temper demand for a constrained resource.
Several hundred pounds? Are you sure?
Wow.
Someome needs a diet……
I am not enthusiastic about voice capabilities on flights. Etihad’s flights to EU leave at 1am. Anyone shouting in to Skype next to me will be looking for help surgically removing their IPad when arriving at FRA.
Compared to a 150 pound gogo kit that uses the ground relay in the US, a panasonic or onair satellite based system is very large for widebodies as it has a larger antenna, requires massive wiring to cover a much larger aircraft and requires 10-14 days downtime for the refit. Once in the air, each aircraft is monitored and assigned sats with complicated handovers when the aircraft crosses into another sats zone. The sad part is, people use this neat technology for bullcrap like posting and reading facebook :rolleyes:
Internet is a huge asset on long flights, i.e. Qantas, but your product must otherwise be competitive. If you don’t have flat seats, or good service, or a good mileage program, you will lose business travelers to a competitor.
United does not have international wifi and I consider that a disadvantage. However I will still take UA any day over Lufthansa because the lie-flat seats in C are far more valuable to me. Once LH installs comparable seats, I will probably ditch UA.
Anybody who does not have wifi installed on new planes is just plain stupid. This is the way of the future.
I expect to see WiFi become as a common as IFE, and either included in the ticket price or become a more cost-effective annual subscription for frequent flyers. And if people want to spend their time on Facebook, Flyertalk or MilePoint, so what?
I like the free WiFi for premium cabins. And it may become a benefit for top-tier elites, too. Makes sense to provide it, just like they do at hotels. (I realize hotels don’t have the weight issue, but there is still an installation and maintenance cost.)
I’m not sure I like the “Wi-Fly” name. They should probably re-think that one.
Works for me as a top tier elite benefit, though that’s probably the vast majority of the potential market for people who would pay for WiFi. While an occasional business traveler may need and pay for WiFi at the hotel, they can probably do without for the duration of a flight.
If the airlines can save on weight and expense for IFE equipment by offering WiFi instead, which can include some local content that is streamed, that may create the business case