How does pricing affect the take-up of inflight connectivity?

Passenger using a laptop on board an aircraft
A passenger using a laptop in flight. Image: Emirates.

At the recent Aviation Festival in London there was a lot of talk about how the pricing of inflight connectivity can affect its take-up.

Some airlines bundle inflight Wi-Fi as part of the ticket price, while others charge on a per-flight or per-hour basis.

All these methods have their pros and cons.

Edouard Piquet of Aeromexico said that when it rolled out Panasonic Ku-band connectivity on its Boeing 787 Dreamliners the take-up was only about 4%. He said Aeromexico charges for the service, but the actual costs were not discussed.

“Our trials showed that if it was free the take-up rose to about 40%, but declined to only 4% if we charged,” he said.

“We are putting Gogo connectivity on our 737s as well – all our competitors are doing it and we are following suit. We strongly believe providing inflight connectivity is crucial to our business success.”

Frederick St. Amour of Global Eagle Entertainment said it was partnering with Orange to put connectivity on Air France’s narrow body aircraft.

“We can get fixated on revenues, but operational services are important first and foremost. You need to find a way to solve the Rubik’s Cube riddle of how to provide connectivity for free,” St Amour said. “This may be via sponsorship of content.”

Bill Sullivan of ViaSat said that the take-up rate for its free Fly-Fi Ka-band services on JetBlue averaged about 40%.

Short-form video streaming is also free, but it charges for “long-form” video streaming. Amazon Prime customers get access to their content for free.

“The take-up rate is sometimes a lot higher – we’ve seen in excess of 100% at times on long-haul flights, showing that passengers are connecting more than one device,” Sullivan said. “JetBlue really values the 12Mbps service we provide. It is a business differentiator for them.”

United Airlines is in the process of installing United Wi-Fi across its fleet, and it is now available on more than 700 aircraft. Pricing for internet access is charged by flight segment (from takeoff to landing).

On aircraft equipped with DIRECTV, pricing for internet access is a fixed per-hour rate, with access and charges starting at the time of purchase and ending when the passenger disconnects.

He said that United is charging $4 an hour, and had also been charging $2 an hour [for a slower service], but has now stopped it.

Todd Hill of Panasonic Avionics said that Emirates had been giving free Wi-Fi connectivity via Inmarsat’s SwiftBroadband service on its Airbus A380s.

Passengers can enjoy 10MB of data for free, or buy 500Mb for just $1.

Emirates is also now offering connectivity via OnAir and Panasonic’s Ku-band service on some of the airline’s Boeing 777 aircraft, charging $1 for 500Mb.

He said Panasonic was targeting long-haul fleets because the service is expensive on wide bodies.

“I think a paid-for service is the way to go,” Hill said.

Juha Jarvinen of Finnair said that it would be charging for inflight connectivity on its long-haul services when it is launched.

“We believe people are prepared to pay for a good service,” said Jarvinen.

Gogo, who were not represented on the discussion panel, now charges $16 for an all-day pass on its air-to-ground service or $59.95 for month’s pass.

All agreed that pricing is a conundrum, but keeping the quality of service is key. That is, if you give inflight connectivity away for free, but the take-up then becomes so high that the service being offered declines, you end up worse off. That is, the passenger experience may then become very negative. A paid-for service may have a lower take-up, but the overall experience might be better for the passenger if total bandwidth to the aircraft is limited.

Arkefly Managing Director Hans van de Velde spoke about its use of the AirFi battery-powered Wi-Fi box. While this doesn’t give connectivity with the ground, it does allow the passenger to order duty-free or catering products; play games with other passengers; engage in on-board chat sessions; read destination information; enrol in airline loyalty programmes or report faulty seats.

The service is free and van de Velde said that it gets about 35% of passengers using the service with more than 90 concurrent connections per flight.

“On average, we are observing between 25,000 and 35,000 page views per day. The average uptake is around 22%. The lowest uptake has been 18% and the highest was 35%,” he said.

“We have also found that 39% of users play games via the system.”

With Inmarsat’s Ka-band GX system coming on-stream next year and spot-beam HTS Ku-band on its way with Intelsat’s EpicNG satellites the discussions over pricing options versus free access will likely roll on and on.

Spot beam HTS Ku-band “promises” to provide a lower cost per bit that could change the pricing dynamic.

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