2/7/2003 Anticipation builds for in-flight broadband Net access
CHICAGO (Reuters) -- Travelers are cheering the long-awaited news that real-time Internet connectivity is now available from an airline seat -- even if it is just a test on one regularly scheduled flight. But will the airline industry's unprecedented economic malaise imprison this development for the time being, shelving it after scattered tests instead of making it a commonplace service?
But will the airline industry's unprecedented economic malaise imprison this development for the time being, shelving it after scattered tests instead of making it a commonplace service?
Maybe not, according to some industry observers who believe the carriers still need to lure their best business travel customers not only with competitive prices but with service that differentiates them and promotes repeat trade.
"I see Internet connectivity as a way of enhancing revenue yield -- it probably has a life of its own" despite uncertain times, says Phil Roberts of Unisys R2A Transportation Management Consultants.
Making it available should "attract the high yield business customer. It's a market share decision driven by technology," he adds, and one that could be pursued even by a carrier in bankruptcy if it can demonstrate the investment at least pays for itself.
"Product competition has to be matched," adds Paul Biederman, a professor of airline and travel management at New York University's School of Professional Continuing Studies.
Because ticket prices on some routes are often pretty much the same, "the only competition out there has to do with product content, and if one company makes a breakthrough, the others have to match it."
The first test of live, real-time airborne broadband Internet access on a regular commercial flight began in January aboard Lufthansa's daily service between Frankfurt, Germany, and Washington's Dulles airport -- flights LH418 and LH419 -- using a Boeing 747-400. Every first-class and business-class seat is equipped with an Internet plug-in (as well as a power plug) and scattered seats in economy class have the same.
For the three-month test the airline has on board 50 laptops it will hand out for anyone not carrying their own who wants to try the connection. The technology, under development for several years, comes from Connexion by Boeing. Data streams to and from the airplane in flight via satellite.
"My first thought was 'now there's another chance for not getting relaxed travel (with) no phone or e-mail,"' said Ulrich Hoffmann, sales director for Bericap GmbH, a German-based manufacturer of plastic caps and closures, who was on board the first flight where the service was offered.
But he said he figured he could always disconnect if he wanted peace.
"With new technology, when you try it the first time, very seldom it starts to work from point zero. But this worked immediately. It was absolutely fantastic," he told Reuters from his office near Wiesbaden.
He said he communicated with his company's internal system and with a customer and "it worked perfectly." One passenger on the plane sent an e-mail to a fellow passenger "and it arrived in four minutes," he added.
Hoffmann said he would consider the service valuable for taking care of critical situations that arise, particularly during long flights that must be addressed quickly, and that he would be willing to pay a premium for the service. Right now, he said, it would give airlines offering it a "competitive edge" in attracting business.
One of the airline's executives reported that the service has been so popular that some fliers have eschewed their usual trans-Atlantic nap in favor of surfing the Web.
During the test the service is free, but Lufthansa says it envisions eventually charging passengers 30 to 35 euros (about $30 to $35) per flight leg. The product is designed to make money, with the airlines paying Boeing an up-front fee to install the hardware and sharing some of the ensuing passenger fees with the aerospace giant.
The Lufthansa test will be followed by a similar one later this year on British Airways. Japan Airlines and Scandinavian Airline Systems have said they would deploy some long-range flights with the technology in 2004.
Connexion officials have said they hope to ultimately install the service on some 4,000 jets -- about a third of the world's commercial fleet -- over the next 10 years. How much it costs to retrofit a plane for the system has not been disclosed.
At one point American, United and Delta had planned to invest in Boeing's Connexion venture, but dropped out when bad economic times hit. Boeing has said they may still become customers for the service in the future.
A competing in-flight technology, from Seattle-based Tenzing Communications, has also had some deployment primarily for e-mail and short messages. Rather than real-time connectivity, it operates by sending bursts of data back and forth from the ground to the plane.
The company, in which Boeing rival Airbus owns a 30% stake, said last year that it too was developing a plan to add live broadband satellite connectivity to its product.
