To be the airline that American wants to be, they need to offer a high quality product and they need to do it consistently. In other words they need to offer the same high quality product every time.
They’re making huge investments — in planes, lounges, meals, and routes — to live up to their potential as the world’s largest airline that’s also preferred by their customers. That’s a recipe for profitability. And in many ways it’s a big, positive surprise for American Airlines flyers who were nervous about the merger with US Airways.
One area where they once led, but have lagged behind in recent years, is inflight internet. Fortunately American Airlines wants to improve internet speeds onboard. That’s fantastic. It was one of the five priorities I outlined for the airline now that they completed customer-facing integration of US Airways and American.
They exercised a contract right they have with Gogo to start the clock terminating their contract for about 200 aircraft. This allows American to seek a bid from a competing provider (so far disclosed as Viasat) while also obtaining a bid for better service from their current provider, Gogo.
US Airways didn’t announce the introduction of inflight internet until March 2012 but they rolled it out quickly including to regional jets. They knew they were’t going to make money offering internet, but they acknowledged they were finally losing ticket sales because customers were booking away onto other airlines who offered the service. We know what it takes to get the airline’s leadership to move on this issue, it seems, and fast, reliable internet does matter to at least the lucrative subset of business travelers.
But it would be bad for both customers and the airline to add a new internet provider.
Already American has two different internet providers — one for domestic aircraft and another for international. Faster speeds are good, and customers should be mostly indifferent as to whom the provider of that fast internet is. If American wanted to retrofit their whole fleet with Viasat’s faster offering that would be great. But sticking Viasat into 200 planes while the rest of the domestic fleet is Gogo internet (and the international fleet is neither) is a bad idea.
Another Internet Provider Creates an Even More Hodge Podge Fleet Than American Has Today
As the world’s largest airline, combining both American Airlines and US Airways, American has been bringing together two different cultures and different fleets. It’s a challenge to create a common product, and for the most part they’ve done a good job with it.
There’s a tremendous amount of work still to do. Two years into the merger very few legacy US Airways aircraft have ‘Main Cabin Extra’ extra legroom coach seating. As a result I avoid legacy US Airways planes whenever I can. If my upgrade isn’t going to clear, I want to at least have those extra few inches of legroom in back.
American Airlines Airbus A319 Economy
American put a very similar business class seat in their Boeing 777-300ERs to what US Airways had been installing in their Airbus A330s for years.
American 777-300ER Business Class
American put a custom seat into their retrofit 777-200s and 787-8s. But that project fell behind and they’re even suing seat maker Zodiac over it.
American 787 Business class
They’re going to get a new business class seat for the rest of their 777-200s and their 787-9s.
Their 767 has a different seat, and some 757s may get a different lie flat seat for transatlantic too. Plus American still flies too many angled business seats, mostly on unreconfigured 777-200s.
American 767 Business Class
Fortunately both US Airways and American Airlines had new business class products that were fully flat with all aisle access. And both US Airways and American Airlines had Gogo as their internet provider. That was a head start.
The struggle now that there’s a single airline is to offer a single product, not to offer a different product depending on the aircraft you happen to get. Internet is a part of that — for consistent experience and for consistent access plan.
Another Internet Provider is Inconvenient for Customers
I pay for a monthly Gogo subscription. My flat $50 a month pays for all of the Gogo I use on American Airlines flights. It doesn’t get me international coverage, but as long as I’m not flying an interntional-configured plane on a domestic route or a regional jet without internet (most of the legacy US Airways planes do have it), I can be confident my plane will have internet and that I can use it for no extra charge.
Add a new internet provider and that’s another account I need to sign up for. I won’t know in advance what aircraft I’ll get, so what provider I’ll have for the flight – whether it’s one I’m already paying a monthly unlimited fee for, or whether it’s one I’ll have to buy internet anew for.
On a connecting itinerary I may get internet bundled for one segment, and may have to buy it separately for the next segment.
Does my monthly subscription still make sense? Do I need a monthly subscription for each provider? Will I get Viasat 737s consistently enough or Gogo 737s that I can still to just one? Or do I need to spend time buying one-off internet each time (which makes the internet much, much more expensive)?
How many internet subscriptions will my finance department at work reimburse?
American needs to provide its customers with a seamless experience not just on a single trip, but across trips as well, for customers that choose to fly them every week. That means offering the same quality product each time, accessed in the same way.
Another Internet Provider is Bad Business, Gives Up Your Advantage of Customer Lock-in
Since I pay a monthly fee for unlimited internet, there’s a built-in cost advantage to flying American. If American and Southwest are the same price, the Southwest trip is going to be more expensive for me since I’ll spend about $30 more in internet. With American I won’t, since I’ve already paid a single fee for internet for the month.
Just as my American AAdvantage elite benefits create a lock-in, making American both more comfortable and a better deal for me than flying Delta, a single monthly internet plan creates lock-in because it means each time I choose to fly American it’s cheaper than flying a competing carrier.
Adding a new internet provider for a subfleet of 200 planes, rather than going with all Viasat or all Gogo, means that I may have to buy internet when I fly American and there’s no more cost advantage over Southwest based on my precommitment to monthly service.
American Airlines should underestimate the value to their business of monthly internet customers, a product which only makes sense when the vast majority of the fleet is serviced by a single provider that makes that monthly service possible.
Delta is able to offer both faster speeds and customer lock-in through a single provider (in this case, also Gogo). Why would American want to be any less strategic?
Only a blogger and Gogo apologist would campaign for standardized slow, often unusable Gogo over selective but faster and superior Viasat.
Amen!
This could also be a posturing move to get Gogo to lower their rates to them or signal that they’re not locked in. This is actually a very strategic thing to do when you’re a big player in the market, by not letting a single vendor get a stranglehold on you. That’s why many large airlines have both Boeing and Airbus equipment. The lack of commonality costs something, but it also puts the other vendor on notice that they have to compete for every deal, and nothing will be handed to them.
I don’t think anyone wants the mess that UA created, with multiple Internet providers, even sometimes different ones over the same fleet type (e.g., 757-300), and not even similar pricing plans (on one you must pay by the hour, on another by the flight).
However, if they did, they could streamline this somehow by shielding the provider info from the customer. Hotel chains provide free Internet to certain or all guests, regardless of who the underlying provider is. There’s no reason AA or any airline couldn’t front end the system and sell their own annual or monthly pass on their airline and negotiate a pass-through fee to pay the actual provider. They’d win some, and they’d lose some for sure, but it can be done.
@Dom – status quo Gogo is not in the cards. American wants to upgrade. I want them to upgrade with a consistent product, whether that’s gogo or viasat [and gogo’s 2ku is neither unusable nor slow… the reason American’s current gogo service is so slow is because AA was one of the first adopters and until now – unlike Virgin America and Delta – they’ve been unwilling to spend to upgrade hte technology]