Aircell said today that it has installed its branded Gogo Inflight Internet service on its 1,000th aircraft, a Delta Air Lines DC-9 that will fly today from Detroit.
This is a landmark in inflight Wi Fi service by Aircell, which is by far the industry leader. Congratulations to Aircell. So far, airlines that have installed the system on domestic aircraft are American, Virgin America, Delta, AirTran, US Airways, United, Air Canada and Alaska.
But I have a few questions, which will be pursued here in the near future.
--Is this in fact a viable business? Aircell and individual airlines that have installed the ground-based system insist that it is, but no one has yet shown me any evidence that more than a small percentage of passengers on any given flight actually have been opting to pay the $9-$12 on average that a connection costs. Airlines, Aircell and third-party marketing interests have been offering copious discounts and frequent promotions for the service, but eventually the numbers have to add up to more than the current average of about 7 percent "take rate," that is, passengers who pay.
--Aircell has been impressively funded by venture capital. But who is actually paying -- Aircell or the airlines themselves -- to have the Aircell Gogo system installed on those airplanes? Aircell has told me that it costs an average of $100,000 per plane to install the system, and has said that in the initial growth phase it was subsidizing airlines. But I haven't yet got a straight answer about who's paying for how much of the installation-per-plane costs.
--Companies that supply inflight Wi Fi -- primarily Aircell in the U.S., and primarily OnAir, a satellite-based system, in Europe -- have found that passengers who do use the service mostly use it for e-mail and texting. The fuller range of Internet-browsing functions seems to be less in demand. If that is true, do limited systems like the one Continental Airlines is looking at, which will essentially just provide e-mail connections as part of the inflight-entertainment hookup, make more market sense?
As I said, questions that so far have not been answered.
Meanwhile, Aircell rolls along. Aircell's Gogo is now available on more than 3,800 flights daily, up from just 2,100 at this time last year. Roughly one-third of all mainline domestic aircraft now have the service.
Two weeks ago, incidentally, Aircell rebranded its Internet service for the business aviation market, formerly called Aircell High Speed Internet, as Gogo Biz Inflight Internet.
Aircell markets this system as being compact and lightweight enough to be used on almost any business aircraft. The system has been adopted by major business and private aircraft manufacturers including Cessna Aircraft Company, Dassault Falcon Jet, and Hawker Beechcraft, as well as major fractional and charter operators including Clay Lacy Aviation, Flight Options, XOJET and NetJets.