Will American Airlines Make Inflight Internet Free?

In 2012 I wrote that once bandwidth increases substantially for inflight internet, it would eventually become free (included in ticket price). I predicted that would happen within 10 years. People thought I was nuts, but it makes perfect economic sense so seemed inevitable once bandwidth limitations were overcome.

Since then JetBlue added free internet, others have added it on a more limited basis too, and Southwest, Delta, and Alaska have introduced free inflight messaging. Delta has been trialing free inflight internet.

There’s now a rumor that American Airlines — which aggressively added high speed internet to its domestic fleet — will add free internet as well.

It should come as no surprise to readers that American is consdering this. I laid out how American thinks about charging for inflight wifi based on internal comments from senior executives last fall.

  • It wasn’t possible to offer useful internet free when bandwidth was constrained. You have to allocate internet access as a scarce resource, and do this by charging for it. (That was my original argument seven years ago.)

  • Satellite internet is expensive (“an expenditure of hundreds of millions of dollars”) so they don’t want to give it away without charge.

  • They’re doing live TV and streaming content, and they hoped that would be enough.

  • However what other airlines do and customer expectations could force them to give it away to passengers.

As American Airlines Robert Isom told a group of employees in October, despite Delta talking about giving away internet free, American’s “model that we have is that we will be charging for wifi. As we go forward of course we’ll be conscious of the marketplace and make sure we do the right thing.”

I’ve argued that offering inflight internet without extra charge is not something that costs hundreds of millions to give away free, it’s something that you make more money selling as part of a bundle (the way cable tv sells channels in a bundle, where there’s a high fixed cost but very little marginal cost to provide the service to an additional consumer). In this case internet gets bundled with the airline ticket.

It doesn’t surprise me to see Delta, out of the majors, leading here because their strategy is to earn a revenue premium by offering a marginally better product rather than taking United President Scott Kirby’s view that the schedule is the product and the goal is keeping up with the joneses. (It’s no wonder that United’s inflight internet experience makes the airline a non-starter for me).

Of course American Airlines could just follow their playbook from inflight texting: make a big announcement that they planned to offer it for free, and not actually do it.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Does anyone think that free wifi in its self will make travelers switch ?

  2. @ghostrider5408

    I wouldn’t take a connecting flight over nonstop to get free wifi. But I would choose a delta connection over united connection if everything else was about the same (~ +/- $10).

  3. @ghostrider5408 – even Scott Kirby discovered that lack of wifi caused customers to choose other airlines, which is why US Airways finally installed it — they knew they’d lose money selling it, but they were losing ticket sales not having it.

    Indeed, I avoid United because I can’t count on functional internet.

  4. The airlines can put a limit for free data usage to ensure fair usage and can charge users beyond that. Bundling it with tickets is not a good idea as many may not use internet/wifi in the air but will be bearing the costs for those who actively use.

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