NEW YORK, NY – As airlines find more to like in the technology that brings Internet connectivity into the cabin, they are still searching for ways to get reluctant passengers to pay for it.

"Customers want to be connected and they want it to be free," Doug Murri, senior manager of technologies for flight operations at Southwest Airlines, told a recent World Airline Entertainment Assn. (WAEA) workshop on connectivity issues.

With laptops already prevalent and Internet-capable "smart phones" rapidly closing the popularity gap with them, airline managers are still determining how to market Internet services in the cabin and what to offer. Getting the formula wrong could be expensive.

But, apparently, having Wi-Fi on board is becoming an imperative. American Airlines started the trend among U.S. carriers in January 2008 by offering connectivity through Aircell's belly-mounted antenna system for direct air-to-ground transmissions. Virgin America, AirTran and Delta/Northwest have achieved connectivity at 35,000 ft. and four other North American carriers, including United and Air Canada, have signed up for the company's Gogo Internet service, says Aircell Senior Vice President Fran Phillips. American, AirTran, Delta/Northwest and Virgin America have a combined 445 aircraft in service with Gogo, she says.

Southwest is famous for not following the pack, but it is within weeks of deciding whether it needs to be connected, too. It has joined Alaskan Airlines in testing Row 44's Ku-band satellite system on four 737-700s. Row 44 has not received Federal Communications Commission approval for regular operations, but Murri expects that to come soon.

Even as he praised Row 44's performance, though, Murri says Southwest also has talked with Aircell.

The choice of service providers has a lot to do with where airlines fly. Aircell's national network of ground stations looks like a terrestrial cell phone network, with the greatest concentration of towers in densely populated regions - those with the most air traffic. While its cell coverage does reach across much of the Gulf of Mexico and along the East and West Coasts, it cannot provide services over water, which satellites can.

Transatlantic services were what Lufthansa was after when it became the first carrier to install satellite antennas for Wi-Fi passenger connectivity. But that effort lost headway when its service provider, Connexion by Boeing, went out of business in 2003. Now, Peter Lewalter, head of Lufthansa's competence center for cabin interior and inflight entertainment, says the carrier is "very, very close" to signing a new deal for Ku-band services using the Connexion antennas. He declined to name the new vendor.

Lewalter praises Boeing for pioneering Wi-Fi services in airline cabins before innovations like the iPhone were on the market, technical standards were set or regulators were paying any attention to the implications of passenger demand for Internet connectivity. But Boeing could not find a revenue stream to support Connexion and by the time it pulled the plug on the four-year effort, analysts estimated it spent $800 million-1 billion.

Individual airlines are not making gambles of that magnitude. But retrofitting fleets of 150-500 or more aircraft at minimum costs topping an estimated $100,000 each is still a big financial exposure, especially if the passage of time proves that another type of connectivity technology is better.

So extensive passenger surveys are underway as carriers try to discover which applications will be in demand - social networking, downloadable music, movies, simple e-mail, etc. Airlines also are trying to determine a business model for providing "value-added" services, such as online shopping, and they are investigating dependable verification processes for credit cards.

But first they have to figure out how to charge for services. With Wi-Fi connectivity common in coffee shops, hotel lobbies and airports, the fear is that passengers will expect it to be free on airplanes.

At the moment, however, the bigger issues are informing passengers of options and ensuring systems work. "If you have customers on the airplane using the product and they're not getting through, they'll tend not to want to use it in the future," says John Tiliacos, managing director of American Airlines onboard products. He is not convinced that Internet services will outweigh ticket price, schedule and loyalty programs.

"Customers don't choose to go with American because we offer connectivity or because we offer [inflight entertainment]," he says. Still, he thinks it "is very cool" when passengers discover that such services are available.

Carriers are using their web sites, Wi-Fi symbology in airports and other promotional campaigns to spread the word. Delta/Northwest offers prizes for flight attendants who get the most usage from passengers. "Once you get people to try it, your repeat business is significant," says Mike Henny, manager of onboard media for Delta/Northwest.

Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved. From http://www.aviationweek.com. By Michael Mecham.
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