Always in touch

Boeing wants to make high speed, inflight internet access a reality for the flying public and believes people will pay $35 a trip for the privilege.

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By  David Ingham Published  November 25, 2002

|~||~||~|Boeing’s prediction that the Middle East will need 640 new airplanes between now and 2021 certainly looks impressive. But whilst Boeing says airplane sales globally will be worth $1.8 trillion between now and 2021, it is also predicting that related services revenues will be worth $3.1 trillion.

That explains the recent acquisition of Jeppesen, a supplier of route information and flight planning services, and Boeing’s decision to provide ‘value added’ leasing services, where it leases planes to customers for a fee that includes all maintenance and service. Marty Bentrott, Boeing vice president of customer support, describes it as, “leasing, with an added element.”

Boeing’s most ambitious services move yet, however, could be its broadband in-flight entertainment offering, Connexion by Boeing. Using a global network of satellites, Connexion will allow passengers to surf the internet at broadband speeds from the comfort of their seat. Stanley Deal, director of commercial sales for Connexion, predicts that the service could be generating $3 billion of high margin revenue annually for Boeing within ten years.

The way it works is that Boeing first of all provides airlines with the kit required to deploy Connexion. The cost of this, according to Deal, will be well below the $2-3 million per plane that airlines currently spend on installing in-flight entertainment.

Once up and running, Boeing will provide on-going maintenance in return for a share of subscription revenues. Boeing has a price for unlimited access of $35 per passenger, per journey in mind.

How that is split between Boeing and the airline wasn’t revealed. Deal claims though that airlines will see a return on their initial investment within two years.

The $35 figure was arrived at after research involving four major airlines. 60% of passengers surveyed, Deal claims, expressed their desire to pay a fixed price for access, rather than being charged by the minute. Whilst $35 may seem a little steep, Deal uses the argument that a captive audience will pay for what it likes.

“We think there’s great value at $35,” he says. “Business travellers will initially be dominant but we think that leisure travellers will come on board as they start to see the value.”

As well as setting the price for Connexion, Boeing also intends to retain control of the branding and the way the interface is presented. “It’s a service that’s going to become ubiquitous across many airlines so there needs to be consistency and familiarity,” explains Deal.

Airlines will still have some input, however. They will be able to display their own logos on screen alongside the Connexion by Boeing branding and include some of their own proprietary content. “There will be co-branding on the face,” says Deal. “If, for example, it’s British Airways, it would present itself on your laptop as ‘British Airways presents Connexion by Boeing.’”
As for how Connexion is presented to the user, Deal concedes that Boeing’s thinking has evolved over the last two years. Initially, the company saw the potential for advertising and e-commerce revenues, and so was looking at packing Connexion with content so that users would be less inclined to surf other Web sites.

Now, the company is tilting towards making Connexion a ‘light’ service, restricting its proprietary content to such essentials as news, weather and stock quotes, plus some of the individual airline’s own content. “We’re not going to be an AOL,” says Deal. “Making a large investment in trying to aggregate and replicate content doesn’t make sense.”

Before Boeing can have Connexion up and running, there is the small matter of regulatory approval to be dealt with. Deal confirmed that the authorities of every single country over which a plane with Connexion flies has to approve the service.

He doesn’t seem too perturbed at the prospect of this, however. “It’s a formidable job, but a manageable job,” he says. “It is a leader/follower process; you get one or two majors [on board] and the rest start to fall behind. In parallel, we’re working with the ITU [International Telecommunications Union.]”

BA and Lufthansa plan trials of Connexion in Q1, 2003 and permission has already been obtained from all ‘over-fly’ countries involved in those trials. Formal launch of Connexion is scheduled for Q4, 2004.

However, guess what? Boeing faces competition in the form of satellite communications company, Inmarsat, and Tenzing Communications, 30% owned by Airbus.

Inmarsat’s Swift64 provides internet access at 64 kbits/s, the equivalent of ISDN performance, considerably more modest than Connexion, but it is apparently relatively easy to install. Inmarsat claims that 70% of long haul, wide-body jets in use already have the required antennas and communications infrastructure in place. If that is the case, all that needs to be done is to install a terminal linking the antenna with the plane’s communications system and wire up each seat.

Tenzing’s system allows access to a small number of Web pages stored on an on-board server that is updated every fifteen minutes. Tenzing says it is working with Hughes Global Services to develop a high speed, realtime system similar to Connexion by Boeing.

What now remains to be seen is whether enough people will pay $35 per trip for Connexion to make it worth the airlines’ while. All eyes will now be on BA and Lufthansa’s trials next year.||**||

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