Many commercial flights offer in-flight Wi-Fi to passengers but charge for internet usage. This means that on-board Wi-Fi is entirely dependent on passengers’ willingness to pay, which, for the overwhelming majority of passengers, has been remarkably low. In fact, only about 8-10% of airline passengers pay out of pocket for in-flight Wi-Fi. Given the cost of equipping a plane with Wi-Fi capabilities, low take rates can be discouraging for airlines.
However, Viasat has been exploring new business models to boost internet use on flights. At its core is the assumption that airlines offering free access to internet-based content will become more popular to passengers, thereby making them more profitable through higher yields and passenger load factors. However, the cost of providing in-flight Wi-Fi must then be recovered from other sources—and Viasat believes that sponsorships and sponsored access to content can contribute significantly.
Don Buchman, vice president and general manager of Viasat’s Commercial Aviation commented, “Being connected is a part of our everyday lives, and we expect to be able to access our content from the cloud—for free virtually anywhere—even at 30,000 feet. Passengers and crew want access to their apps, content and data on their own devices—and they want these connections to be reliable, safe and fast no matter where they are—on the ground, in the air or at sea.”
There are many benefits to giving passengers free access to the internet when in-flight. For one: they have access to their own digital content and streaming media service libraries, which means they can pick up where they left off on their movie, TV show or playlist. This in turn increases passengers’ experiences, while delivering a major cost savings benefit to the airline: as they no longer need to negotiate, or be required to obtain, expensive entertainment licenses. In addition, if the airline maintains a sponsorship deal with a streaming player, the passenger may be able to access the sponsors’ extensive library of entertainment—even when off their flight. Either way: a win-win-win situation.
Good examples where the traditional business model is changing includes Viasat airline partner JetBlue, which has pioneered the sponsorship model by teaming up with Amazon Prime to provide free in-flight Wi-Fi to all passengers. Another approach led by American Airlines is offering sponsored access to content, such as Apple Music. In January 2019, American and Apple announced a sponsored access deal, where American Airlines passengers flying on Viasat-equipped planes would get free access to more than 50 million songs in Apple Music’s library.
To be able to offer free online services, airlines and sponsors alike want to ensure the in-flight internet service provider (ISP) can handle the passenger load. They want to ensure their brand’s reputation is maintained if all passengers were to get online simultaneously.
So the question airlines must ask is: does their in-flight ISP have enough bandwidth to handle hundreds or even thousands of passengers accessing their network at any given time—even in hub cities where passengers expect gate-to-gate internet service. For Viasat, the answer is yes. The company operates the highest capacity fleet of communications satellites for IFC use over North America. And with passenger usage and demand on the rise, the company has plans to bring nearly eight times the capacity of its current fleet to market, starting in 2021. The capacity is expected to be flexible and dynamic to meet end-user demand.
Additionally, the capacity needs to be affordable. For Viasat, they design, build and own their satellites for maximum capacity, which is a huge advantage over other ISPs that are held to strict contracts or potential price gouging placed on them by third party wholesale satellite operators with less efficient satellites. For Viasat, they can offer flexible pricing plans, and work within sponsorship models because the price of their bandwidth is not controlled by a third party wholesaler.
With free in-flight Wi-Fi becoming an expectation, not a ‘nice to have,’ airlines are exploring, testing and/or rolling-out various business models to meet brand needs. JetBlue and Qantas both offer fully free in-flight Wi-Fi service leveraging Viasat’s service; American Airlines is starting with sponsored access programs; SAS, EL AL Israel Airlines and others are offering free internet services to premier customers and other airlines, like Delta, are trialing free programs to see if it makes sense for their business.
With all this activity, the reality of free Wi-Fi on commercial flights feels a lot more encouraging than years past.