WiFi in the Sky Means Big Bucks for Airlines

June 12, 2008 — -- Airlines can't afford to spend money on much of anything beyond fuel these days, but that's not stopping them from pouring cash into the technology that will let passengers surf the web at 36,000 feet. Most of the systems they're playing with are still being tested, but once running they could generate big money for an industry that desperately needs it.

We've heard this before -- the industry has been promising to bring the internet to commercial flights for at least four years now. But the effort's gaining momentum with at least four airlines planning to roll out in-flight internet access before long, and research suggests it could be a cash cow. Multimedia Intelligence says sales of in-flight digital broadband likely will exceed $1 billion by 2012.

Two technologies have emerged so far, and with that kind of money to be made, several players are jockeying for position in what promises to be a big game.

Air-to-ground (ATG) uses frequencies to transmit signals from ground stations to aircraft in something of a WiFi in the sky. It uses existing infrastructure -- cell towers -- and so is relatively cheap to set up, but at 3-Mbps (buffering... buffering...) throughput per plane, the connections are slow.

Satellite systems transmit signals using a data transceiver/router, satellite antenna, and 802.11b access points. The big advantage over ATG is its availability -- it works anywhere, including over water -- and it is considered by some to be more robust with a data rate of about 30 Mbps per plane (think low-end DSL). But it costs more for airlines to set up, which is a big consideration for an industry that's hemorrhaging cash.

The Illinois firm Aircell will outfit American Airlines' transcontinental 767 fleet with its air-to-ground product, and Virgin Atlantic has signed on as well. Southwest is testing a satellite system by the California company Row 44 , and Alaska Airlines is looking at it, too. JetBlue just announced it's pumping up its LiveTV operation by buying Verizon's Airfone network. (Yes, Airfone, the guys who brought us those clunky seat-back credit-card phones you've never actually seen anyone use.)

On the international side, Lufthansa has teamed up with T-Mobile, satellite operator SES Global and signal processing equipment maker ViaSat to offer a satellite based service. It hopes the experience is more fruitful than its ill-fated 2004 deal with Boeing's Connexion service, which crashed and burned when Boeing shut it down two years later.

For those worried about endless hours of coach class chatter, fear not. U.S. carriers don't plan to allow in-flight voice calls, though several foreign airlines are toying with the idea. (BTW, we've tried the service Air France is testing on European flights and can say it needs some work).

There hasn't been much news about how airlines plan to charge for these services. But with money tight these days, don't expect to get something for nothing like you do with JetBlue's DirecTV service. And that brings up another good point: These services cost money to test, install and operate. If the industry's cash crunch gets much worse, in-flight broadband might be mothballed before it even gets off the ground.