Connections in high places

American, Aircell partner to provide in-flight broadband service

By Janet Forgrieve, Special to the Rocky

Originally published 08:00 p.m., July 6, 2008
Updated 11:43 p.m., July 6, 2008

Passengers boarding a handful of American Airlines' flights this summer could be logged on and checking e-mail before the "Fasten Seatbelt" light goes off.

Aircell LLC, which has facilities in Louisville, has partnered with American to sell its in-flight broadband service dubbed Gogo, allowing passengers on select flights to check e-mail and surf the Web on their PDAs, laptops and smart phones as soon as the plane hits 10,000 feet. It's a service fliers say they want and airlines hope will win additional revenue to help them through the current cash crunch.

American tested Gogo on a couple of flights in June and later this summer will launch the service on 15 of its B767-200s on flights from New York to San Francisco, Los Angeles and Miami, said American spokeswoman Laura Tolar. After three to six months, American will evaluate the demand and performance and determine whether to expand broadband to additional flights, she said.

Virgin America is adding the service on all the planes in its small fleet.

Aircell believes the demand is there among travelers seeking to stay connected with the office or surf the Web for entertainment, said Dave Bijur, director of airline solutions.

Market taking off

In a recent report, technology research firm Multi-Media Intelligence predicted that the market for in-flight broadband will grow to $936 million by 2012, and earlier this year 45 percent of leisure travelers surveyed told Forrester Research they would pay $10 to use in-flight connectivity on trips of four hours or longer.

Passengers opting to use Gogo will pay a flat fee of $12.95 on flights of three hours or longer and $9.95 for shorter trips.

"These can be pretty long flights - sometimes they can be six hours," Bijur said. "That's a long time to be disconnected, so we figured this would be a really great place to launch the service."

Aircell launched in 1991, with the intention of providing in-flight voice service on business jets. A few years later, demand changed from voice to data, and Aircell began to focus on creating a lightweight way to provide Internet service on planes, Bijur said.

In 2006, Aircell paid $31.3 million for the exclusive license to provide air-to-ground broadband access on domestic flights. While virtually all the work to provide service to commercial airliners is done from Aircell's Itasca, Ill., facility, employees in Louisville are working to capture another segment of the aviation market - private planes.

Aircell expects to have its general aviation deals with private-plane owners up and running in the third quarter of this year. Its equipment is offered to all private-plane manufacturers, owners and dealers and can be installed at the factory or retrofitted later, the company says.

Lightweight advantage

Installation on both private and commercial planes is quick and easy and can be done overnight, Bijur said. The equipment consists of an antenna mounted underneath the plane and several small wireless access points in the cabin, with signals provided by a series of 92 cell towers across the country.

While Aircell's license from the Federal Communications Commission expires in 10 years, renewals are typically automatic unless the company violates terms of its license, the company says.

Bijur said other providers can compete by offering air-to-space broadband, using satellites instead of cell towers. But Aircell sees Gogo as the best option for most because it's lightweight, a key selling point for airlines struggling to cope with higher fuel costs.

"We could not yet find a cost-effective and lightweight way to do that," he said. "Nobody is to market with that product yet."

Both Aircell and American are tight-lipped when it comes to financial details of the deal, and neither is talking about revenue projections or upfront costs to install the equipment and launch the service, which Aircell expects to see on hundreds of flights by the end of this year and thousands in 2009. Both will share in the revenue.

"It's a money-maker," Bijur said. "In the history of in-flight entertainment, there have really been no commercial offerings that have generated money for airlines. This carries with it a pay-for-play expectation - when you go to an airport or a hotel, you expect to pay for connection. There's every reason to think people will pay for and love Gogo."

Company facts

* Company: Aircell LLC

Headquarters: Louisville and Itasca, Ill.

Started: 1991

Employees: 253, about 70 in Colorado

Business: air-to-ground in-flight broadband service for commercial and general aviation planes

* 2006: Aircell paid $31.3 million for exclusive rights to offer its Gogo broadband service in the United States.

Revenue: privately held, doesn't release