By Chris Reiter
The prospects of surfing the Internet and receiving e-mail at 35,000
feet took a knock on Thursday as Boeing Co. said it will wind down its
service for offering Internet access on board planes.
Although the market may get a boost with newcomers LiveTV LLC and
AirCell Inc. developing offerings, cost pressures on airlines make it
unlikely that on-board Internet access will be widely available soon.
"We've been looking for ways to connect the cabin, but it has to make
sense financially," said Billy Sanez, a spokesman for American
Airlines. "It's going to be a bit until we see something feasible."
Upgrading an airplane for Internet service is a complex task, and with
fuel prices high, airlines are more focused on keeping costs down
rather than offering new, expensive perks.
"It's kind of like rewiring your office," said airline consultant
Robert Mann. "It creates a lot of downtime and it's very expensive."
The least disruptive option is to have the technology for providing
Internet access built into new planes, but "very few of the large U.S.
carriers are in a position to be buying new airplanes," he said.
After six years, Boeing said on Thursday it would shut down its
loss-making Connexion unit, which allowed airlines to provide
high-speed Internet service to passengers. The satellite-based
service, for which Boeing failed to find a buyer, was too costly, and
few airlines signed on.
The company said it would take charges of up to $320 million to wind
down the service, which analysts estimate attracted just over 1,000
users a day and cost as much as $150 million a year to run.
Boeing becomes the second large company to withdraw from the in-flight
communications market in recent months. In June, Verizon
Communications Inc. said it was canceling its on-board phone service
by the end of the year.
Hoping to revive the market, AirCell and LiveTV, a unit of low-cost
carrier JetBlue Airways Corp., are planning new in-flight Internet
offerings after winning licenses to operate air-to-ground
communications services in June.
AirCell, which paid $31.3 million for one of the network licenses,
plans to launch its service by the end of 2007, Chief Executive Jack
Blumenstein said on Thursday.
AirCell's service, which would turn planes into flying "hotspots," is
based on cellular technology, giving it an edge over satellite-based
Connexion because the equipment is cheaper and lighter, Blumenstein
For example, AirCell's cellular antenna is about the size of a deck of
cards and weighs less than half a pound (0.2 kg), while Connexion
equipment was bulkier and weighed hundreds of pounds, he said. This
makes it possible to offer the service for under $10 per flight.
LiveTV, which paid $7 million for a smaller-capacity network, is
working on a business plan on how to use the acquired frequency,
JetBlue spokesman Bryan Baldwin said.
The airline is not committed to taking its unit's service, if and when
it does get up and running.
"Just because LiveTV would come out with a product doesn't
automatically mean that JetBlue would get it," Baldwin said.
Stronger demand for such services appears to be from overseas
airlines. British carrier Virgin Atlantic Airways said this month it
planned to offer an in-flight text service, which will respond to
Lufthansa, one of Connexion's staunchest backers, said it was on the
lookout for a new partner.
"Lufthansa remains hopeful that new providers will emerge in the
coming months to provide this valuable service to our customers," the
German airline said in a statement.
Since May 2004, Lufthansa has been offering FlyNet, an in-flight
Internet service provided by Connexion, free of charge for its
long-haul business class customers.
Copyright 2006 Reuters Limited.
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