Pay-to-play Wi-Fi access has helped to make Starbucks (Nasdaq: SBUX ) a popular destination. Can it do the same for airlines? Many carriers are betting that it will.
The New York Times reports that all big carriers save for Continental Airlines (NYSE: CAL ) are investing in in-flight wireless access as a revenue enhancer. Of course, airlines have talked about this for years now. What makes the Times story different is that contractors are retrofitting aircraft as I write, and for $100,000 per plane in the case of AMR's (NYSE: AMR ) American Airlines.
Southwest Airlines (NYSE: LUV ) may be spending even more than that with Row44, the Times reports. The company's satellite-delivered in-flight service offers broadband access and live TV delivered over Internet Protocol (IP). Call it the cruising altitude version of Verizon's (NYSE: VZ ) and AT&T's (NYSE: T ) fast-growing cable replacement services.
Skeptics wonder if passengers will pay for Wi-Fi, yet executives are apparently eager for access. A poll released on Tuesday and sponsored by the Wi-Fi Alliance, a trade group, says that more than three-quarters of travelers surveyed would choose a carrier based on whether it offered in-flight Wi-Fi service, and more than half would wait a day to travel if it meant being able to connect in the air.
Those are impressive numbers, to be sure. But I wonder if the relatively small sample size -- 480 frequent business travelers, including 150 who used in-flight Wi-Fi during travel the week of Aug. 11-18 -- skew the results. Would most business travelers pay $12.95 to get on the Web while in the air? That's debatable, I think. So-called "take rates" reported by carriers offering in-flight Wi-Fi suggest that fewer than 10% of passengers choose to pay for the service when given the choice, the Times reports.
Carriers need as many revenue-generating ideas as they can get, and, over the long haul, Wi-Fi access seems to be as good as any. But given the cost, time, and existing data, the short-term benefits of wireless access may prove to be as ephemeral as the connections themselves.
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