Pricing Opportunity: In-Flight Internet Access

In-flight internet access is a great opportunity for airlines to create new revenue from passengers that put a high value on connectivity.

In-flight internet access via wifi is becoming more readily available. Every time I hear it discussed the same thing comes up “but it’s going to be a total ripoff! The airlines are going to charge a fortune for it when it should be free”.

Adding wifi capability is going to cost airlines a lot of money. They can’t use the same equipment we use in our homes and offices. Their equipment will be specially designed, tested, certified and installed. The up-front cost to the airline will be enormous.

The ongoing costs are also considerable. To maintain coverage the aircraft would have to use cellular (expensive) or satellite (extremely expensive) data.

Ultimately these significant costs have to be passed down to the traveler. The question is which travelers? If inflight wifi is free then it really means that the cost is added to the ticket price and shared by all travelers. Or in-flight access could be an add-on charged only to the people that want it.

If you absolutely needed in-flight internet access on every flight the idea of the cost being shared equally between all passengers would appeal. The cost of your access would be subsidized by all passengers that didn’t use it and it would cost you less.

But when you didn’t need access, or if you were traveling with your family, you would resent knowing that each ticket carried a premium to cover the cost of internet access your family wasn’t using.

The best solution for everyone is to charge for use. And it shouldn’t be as simple as Access/No Access. There should be more options because if you just need to answer a few urgent emails you don’t want to be subsidizing the person that is trying to stream a movie or download apps.

Overall this is a great opportunity and a new revenue stream for airlines. It is quite different from Hotel/In-Room internet access because, in the case of the airlines, the passenger has no alternatives and there is no precedent or realistic expectation the service will be free.

Hopefully airlines will use sophisticated pricing strategies that provides profitable internet access to those passengers that want it without raising ticket prices for those that don't.