Scandinavian Airlines System (SAS) and Boeing business unit Connexion by Boeing announced Wednesday that SAS has signed an agreement to equip 11 of its long-haul aircraft with wireless technology that lets passengers access Connexion's Internet service. The installation of Wi-Fi equipment will begin in 2004 with the routes and aircraft models to be determined. Financial terms of the agreement were not disclosed, but the deal includes an option for expansion of the service to additional planes.
Despite the need to upgrade airplanes, to train crews and to consider the weight of the equipment and its impact on plane takeoffs, the biggest issue for airlines is profitability, according to Connexion spokesman Terrance Scott. Wi-Fi's growing popularity seems to indicate that passengers will pony up for the service.
"A passenger's willingness to pay for the service and whether an airline can implement it profitably are the chief concerns," Scott said. "However, input from our own market research shows that, more and more, the service is a discriminator and a way to bring high-yield passengers--mainly business travelers--on board."
Wireless local area networks using Wi-Fi technology have exploded in popularity, with equipment shipments reaching 19.5 million units in 2002, up more than twofold from the previous year, according to research firm Gartner. What remains unclear is how companies and service providers expect to make money off the service because, with the market still relatively young, a successful and profitable business model has not yet been found.
Connexion is still determining the price and method of payment for the service, but it is leaning toward a price of around $30 to $35 per flight and is examining whether air miles can be a suitable payment option.
"The Nordic region is one of the world's most IT-dense areas, and the ability to communicate easily from the air was high on our passengers' list of priorities," Jens Willumsen, with SAS' Market & Product Management unit, said in a release. "We have long understood the benefits of wireless technology, and since it is now making progress, it was an even more natural choice."
Connexion has performed tests of its service with other airlines, such as Lufthansa and British Airways, and plans to formally launch the service in early 2004.it will make the service available starting in 2004 on its fleet of about 80 long-haul aircraft, and Japan Airlines and British Airways have signed letters of intent to work on a service agreement with Connexion.