End of In-Air Broadband Leaves Some in Lurch

Aug. 20, 2006 — -- Boeing's decision to pull the plug on the broadband Internet service it provides on some commercial and private flights and ships in partnership with the carriers is perplexing to the airlines and to passengers who have used it -- perplexing, because it works.

As someone who has used the service, it passes an important test: It is easy to access and it is fast. But it didn't pass the test of Boeing's bottom line.

Boeing said it was scrapping the service, called "Connexion by Boeing," because there was not enough demand.

"People just aren't using it like we expected," said company spokesman John Dern.

Boeing announced in June it was seeking a partner to help bear the costs, or a buyer for the service. But there apparently were no takers. Boeing won't say how much this all cost, but is expected, according to industry analysts, to write off a hefty $300 million.

Boeing originally predicted when it announced the service in 2000 that high-speed Internet service aboard commercial flights would be worth $70 billion over 10 years. But so far, only 150 aircraft on 12 airlines have offered it.

The cost is modest: $9.95 to connect for one hour, $26.95 for unlimited use. I've been on flights where passengers worked the entire flight, used the Internet to surf the Web or used the Internet connection for phone calls.

But Boeing's Dern said, "The market for the service just didn't develop."

One problem is that after 9/11, U.S. airlines didn't have the cash to make the investment of more than $200,000 per airplane to start the service. That was a tremendous setback for Boeing. The United States is still the biggest airline market in the world.

The business plan called for Boeing to provide the service, sharing revenues with the airlines. Internet access begins through an on-board server, which transmits the data to a satellite. The signal then goes to an operations center on the ground and then back up to the airplane via satellite. The technological success, however, seems to have been ahead of customer demand.

Lufthansa began the service, which it branded as "FlyNet." Eighty per cent of its long-haul planes are equipped.

"We will provide the service at least until the end of the year," Lufthansa spokeswoman Jennifer Urbaniak said.

Singapore Airlines also is heavily invested in the service. U.S. spokesman James Boyd said the airline is seeking a way to continue the service.

But it is unclear if anyone will step forward before Boeing turns off the satellites. Airbus has developed a high-speed Internet product in a joint venture called OnAir. It will now become a crucial part of marketing the Airbus superjumbo A-380.

Industry analysts say despite this setback, there is a future for high-speed Internet service aboard commercial flights. It may be, they say, that the Boeing business plan was simply flawed.

In the meantime, I will miss it.