In-Flight Internet's Ongoing Bet

New York Times business travel writer Joe Sharky weighs in on the current state of in-flight Internet: Sharkey notes that with a quarter of mainline jets equipped with Wi-Fi--over 700 planes--there's still not enough information to know whether or not Aircell will succeed financially with its offering. Aircell and airlines release pretty scanty information, although the tea leaves indicate a relatively low rate of paid usage--relative to what's needed to make these services go.

Sharkey got Aircell exec Ron LeMay to admit that the company was installing its gear at its own cost, using some of the huge private equity reserves it raised, which means the airlines bet less and Aircell bet more. Aircell needs to recover $100,000 per aircraft, or somewhere between 20,000 to 30,000 sessions per plane to break even on install after expenses of offering services, in my estimation. That's several hundred flights with good uptake.

The point of this particular column is noting that Continental is trying both Aircell (on 21 aircraft) and an in-flight entertainment system that offers email and instant messaging access without Web surfing. It's a good head-to-head look at what people will pay for.

For its part, Aircell wants to get corporations on board ostensibly with negotiated rates that would make it easier to roll out company-wide access. The widely discussed scuttlebutt is that Aircell isn't willing to discount much, if at all, to aggregators like Boingo, iPass, FiberLink, and others who would resell service to millions of existing customers. Aircell may want to strike direct deals with companies, but might find itself building infrastructure that aggregators already have in place.

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