Wednesday, February 17, 2016
American considers change to in-flight Internet service in pursuit of faster speeds
As more and more passengers fire up their smartphones and tablets to watch videos or play games while they fly, American Airlines is looking at new technologies to boost WiFi speeds on its planes, even if it means ditching its longtime in-flight Internet provider.
American notified its current provider Gogo this month that it intends to switch to a competitor offering faster wireless speeds on about 200 of its Boeing 737s. But Gogo, the country’s largest in-flight wireless provider, isn’t letting the business go without a fight.
On Friday, the Fort Worth-based airline filed a lawsuit in Tarrant County District Court seeking a ruling on a disputed clause in its 2012 agreement with Gogo. American argues the clause allows it to switch carriers before the contract expires if a competitor offers a system that “materially improves” on what Gogo offers.
“We continually evaluate the in-flight connectivity service we provide customers to ensure it’s meeting their needs and wants,” American spokesman Casey Norton said. “We’ve notified Gogo of a competitor’s offering and we will evaluate all our options.”
If the judge sides with American, Gogo will have the option to make a competing bid, something the company indicated it intends to do.
“American is a valued customer of ours,” a Gogo spokesman said in a statement. “We look forward to resolving the disagreement regarding contract interpretation that led to this declaratory judgment action.”
Gogo currently provides Internet connectivity to more than 9,000 commercial aircraft. It’s stock dropped 27.4 percent on Tuesday, the first day of trading after the lawsuit was filed.
The company’s service is largely based on older ground-to-air technology that offers limited bandwidth and speeds, something competitors have started to eclipse in recent years with satellite-based technology.
American indicated it intends to switch to ViaSat, a satellite-based provider currently used by United, JetBlue and Virgin America.
Gogo also offers satellite-based services using its 2Ku system, though the technology isn’t currently in use on any American jets. The company said it plans to include the 2Ku system in any bid to retain its American contract.
In addition to higher Internet speeds, companies like ViaSat use a different business model than Gogo, which charges customers fees ranging from $10 to $30 and splits the proceeds with the airline.
By comparison, newer satellite-based Wi-Fi providers are paid as vendors by the airline, which then controls the price customers pay.