In-flight networks are still on the minds of airplane manufacturers like Boeing and Airbus as well as airlines like United and American, but do we really need them? Boeing is estimating $5 billion in annual revenue by the end of the decade from in-flight Internet services, but this Fool thinks $5 million is more like it.
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Today The Wall Street Journal reported that Boeing (NYSE: BA) is getting closer to a deal with AMR Corp's (NYSE: AMR) American Airlines, UAL Corp's (NYSE: UAL) United Airlines, and Delta Air Lines (NYSE: DAL), and the only question I have is why Delta is not owned by a company called DAL Corp! But seriously, I've heard enough about the mushrooming demand for instantaneous always-on connections. Who needs it, really? Boeing is estimating $5 billion in annual revenue by the end of the decade from in-flight digital services like email and Web access, but are there enough workaholics out there to support such sky-high expectations? Over the weekend, I flew to Chicago and it was the first flight I've taken in a long while where I didn't want to land. Why? I miss the solace of two hours with nothing better to do than read. I have no screaming kids at home, no house under repair, and no significant time-consuming obligations outside of work -- other than a voracious desire to play golf 24/7. Yet I still have too little reading time. Airtime is reading time. It's down time, and turning the friendly skies into flying cubicles is not what the air traveler wants. Sure, there are thousands, maybe even millions of worker bees who jaunt around the globe and need access to a network, but how many of them can stay awake at 38,000 feet to accomplish anything anyway? I rarely see a laptop open on a flight and when I do see one, solitaire is commonly on the screen. Business travelers, especially the on-the-road-five-days-a-week travelers, like the down time air travel provides. Do they really want to be in the office when they're in the air? It's not like you have room to bend your elbows to get your arms in typing mode either. Some of the airlines are starting to offer more leg room (I actually crossed my legs on my American flight to Chicago), but how many are willing to widen the seats to first class-like accommodations as well? Airplanes are probably the least conducive environments to get work done. You can't spread out any papers. Just look at your desk, could you do that on an airplane? According to the Journal article, early projections that had more than 500 planes equipped with these state-of-the-art capabilities by mid-2002 have been trimmed down to 60 or so planes in test mode by 2002. "Surveys repeatedly show many business travelers 'would change airlines to fly with [Internet] capabilities,'" says Scott Carson, who heads up Connexion, Boeing's satellite-based linking system. Yeah, we'd also change airlines for better food, more comfortable seats, and on-time departures, but that seems to be too much to ask for. The airlines are behind these new offerings because just like wireless service providers, they smell incremental revenue. At $15 to $25 an hour for an in-flight online connection and over 45 million U.S. business travelers taking 200 million business trips annually, the additional revenues could add up, but when was the last time you saw someone using that GTE Airphone to call someone other than to say, "Guess where I'm calling from?" These services are more novelty than necessity. In-flight online access may prove handy in last-minute business needs, but this Fool questions how valuable it will be to Boeing or its main and only rival, Airbus. As for the airlines, as long as they can get Boeing to harbor the brunt of the financing risk by supplying the equipment, it's worth a try. I only hope Boeing used a pencil rather than a pen when scribbling that $5 billion projection into its five-year budget. Todd Lebor read an entire Fortune magazine on his most recent flight, but is still one issue behind. Todd doesn't own any of the companies mentioned above, but his holdings can be found online, along with the Fool's complete disclosure policy.
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