Expect Free Wi-Fi On Most Airlines Soon, But Maybe Not For Everyone
Ben Baldanza
Many customers, especially younger ones, expect Wi-Fi to be available on planes. With the increasing use of smartphones and tablets, the demand for internet access while in flight has increased significantly. JetBlue has offered free Wi-Fi for years, and Delta Airlines recently announced that members of their loyalty program will get free access beginning in March. Most airlines still charge for online access and a few don’t offer it at all.
Airlines have realized the importance of offering Wi-Fi as a way to attract more passengers and enhance their in-flight experience. The Delta move is a big one, and will push their large competitors to match over time. As a result, it is likely that in the near future, offering free Wi-Fi, for at least some customers, will become a standard for most airlines. This will help to keep passengers entertained, connected, and productive during their flight, ultimately improving the overall experience. Whether it will encourage the real discounters to offer it in the first place is another issue.
Wi-Fi Usage Onboard With the notable exception of JetBlue (and I serve on their Board of Directors), airline Wi-Fi has been limited and expensive. For while, Delta Airlines offered text and messaging for free but charges $28 for day-long internet access on their aircraft. American still charges $10 on most devices for just 30 minutes, and more for access that lasts for the full flight.
Surveys show that about two-thirds of customers would choose a flight with Wi-Fi over one without, but surveys like this are notoriously hard to trust. That’s because they often assume neutral prices, so of course we’d all want more for the same price. In practice, no airline publishes their take-rate of paid Wi-Fi, so it’s unclear what the average flight revenue is from this source.
Since most airlines offer this service, and most with a fee, it’s safe to assume that airlines, especially those trying to attract business customers, feel that this is an ante to playing the airline game. It is almost certain that offering Wi-Fi is a cost center, not a profit center, for every airline. But many airlines feel that not offering Wi-Fi has a greater cost in terms of lost ticket revenue.
Cost Of Providing Wi-Fi Access Onboard Providing Wi-Fi onboard has an upfront expense and ongoing expenses in terms of aircraft weight, and thus fuel burn, along with any contractual fees or revenue sharing by the supplier. Wi-Fi is becoming much more popular, with many planes being ready-equipped on delivery, which eliminates pulling the plane out of service for installation. Also, satellite-based providers are becoming more prominent and economic, making the systems less sketchy than the earlier implementations.
Ten years ago at Spirit, we approached all the then-available providers with a simple proposition: They pay for the installation, and an ongoing weight penalty to cover our incremental fuel cost, and then tell us how much of each dollar collected by customers they would share with us. No one took this offer, and then it was clear that the providers saw success as the install and ongoing fees. Airlines, however, have a different hurdle to leap to justify this expense. Spirit began offering high-speed Wi-Fi in 2022, a first for an ultra-low fare carrier. They charge a fee of $3 -$6, and they have promoted this on TV business shows saying that they are happy with the economics of their deal with supplier Thales. They stopped short of saying that this was a new profit center for the company, however.
Where Society Is Moving On Wi-Fi Access It has been a joke observation that the only places people pay for Wi-Fi is on airplanes and at expensive hotels. That’s because cheap hotels, as well as almost every coffee shop and big chains like McDonald’s, Starbucks, and Panera offer it for free. Many smaller locations see this a competitive advantage. It’s not unrealistic to expect Wi-Fi for free almost everywhere we go, and that’s why even small fees onboard have historically greatly reduced the take-rate.
Younger professionals especially see this and expect free Wi-Fi. This is why airlines like American and United will not let Delta have an onboard advantage like this for long. The same thing happened with change fees. United initially announced that they were eliminating change fees, and within months change fees were gone at all the big U.S. airlines. United likely made this change to be more competitive with Southwest, but that didn’t stop it from spreading to many markets that Southwest doesn’t even serve.
It seems clear that Wi-Fi is becoming more available, and less costly, even free, everywhere we go. Airplanes won’t be immune to this trend.
The Most Price-Sensitive Customers May Still Be Left Out Spirit touted that it was the first ultra-low cost carrier to offer Wi-Fi, differentiating them from Frontier, Sun Country, Allegiant, and other airlines that have decided not to take on this expense. Customers that choose these airlines for their rock-bottom prices accept a lot of compromises, and for now, at least, no Wi-Fi is one of them. Even Delta’s widely-applauded announcement of free Wi-Fi comes with the caveat that you have to be in their loyalty program. It’s free to join any airline’s loyalty program, but you still give them information that some might not want to share just for free Wi-Fi.
It’s a fair bet to say that those travelers flying for business or willing to pay a bit more for a nicer experience (the “premium leisure” traveler) will increasingly be offered free Wi-Fi when onboard. Those who buy only based on a low available fare may continue to miss out, but also may enjoy a few hours being unconnected.
forbes.com |
