Air Canada does not see offering fleet-wide Wi-Fi in near term; continues premium economy studies

Canada’s largest carrier Air Canada has concluded no perfect solution exists for equipping its 205 mainline aircraft with inflight connectivity since it cannot tap a single service provider to offer comprehensive coverage for its global network footprint.

Air Canada currently offers Gogo’s air-to-ground (ATG) connectivity solution on a small number of Airbus A319 narrowbodies operating between Eastern Canada and California, charging $9.95 for Wi-Fi enabled laptops and $7.95 for handheld devices.

But expanding Wi-Fi beyond its current limited scope is proving to be a challenge for the carrier. Company COO Ben Smith recently told analysts the airline “would need to come up with an agreement with a Canadian provider to offer that service in domestic Canada which is not available today”.

In 2009, a firm called SkySurf Canada acquired the country’s ATG spectrum license. After lengthy negotiations, SkySurf inked a deal with Gogo whereby SkySurf was to roll out an ATG network in Canada. But developing the network has taken far longer than anticipated.

Remarking that Wi-Fi expansion is something Air Canada continues to study closely, Smith says the airline’s preference is to “have one solution for North America and international as opposed to two, and what is available today does not give us the perfect solution. So we’re going to have to continue to work through and see what does fit our needs”.

Queried if Air Canada would expand Wi-Fi across a broader portion of its fleet during the next year or two, Smith stated it is definitely not something that will occur in the near term. But he did assure that Wi-Fi expansion is a possibility over the medium term.

At present, Air Canada does not face competitive pressure on its home turf to fit its aircraft with inflight connectivity as rival WestJet has not adopted a solution. The latter carrier is, however, reportedly close to settling on its strategy for future inflight entertainment offerings. Canadian publication The Financial Post recently reported that WestJet aims to develop a wireless IFE system enabling passengers to stream content from an onboard server to their own devices. It said the decision is driven in part by WestJet’s current satellite provider switching to a new system that is shrinking the coverage area of its current LiveTV offering.

Air Canada continues to see value in embedded IFE. About six years ago the carrier selected Thales as the hardware provider for its IFE system; the carrier currently offers more than 600 hours of on-demand entertainment including movies, television, music and satellite radio. In May of this year Air Canada doubled its in-flight movie programming to 150 film selections. At the time Air Canada and Thales struck their landmark IFE pact, the manufacturer’s TopSeries offering allowed the carrier to remove cumbersome electronic devices beneath passenger seats. The evolution in the hardware allowed Air Canada to offer IFE on smaller aircraft including its 73-93-seat Embraer E-175s/190s.

Yet even though Air Canada would like a single inflight connectivity solution for its full fleet, the carrier is willing to offer different IFE systems. Despite its relationship with Thales, Air Canada has selected Panasonic to provide embedded IFE for its 38 Boeing 787s scheduled for delivery beginning in 2014. Air Canada declined to comment, saying simply that it will discuss plans for its 787 fleet at an appropriate time.

PREMIUM ECONOMY EVALUATIONS CONTINUE

Publicly, Air Canada seems unfazed by WestJet’s decision to offer three rows of premium economy seating on its 737 narrowbodies by year-end, even as the larger carrier risks its smaller rival siphoning off passengers willing to trade-up for more room.

Management at Air Canada told analysts that in some ways WestJet’s move to offer premium economy was somewhat expected. Company CEO Calin Rovinescu remarked the new product is a logical step as WestJet acquires many aspects of a “so-called conventional carrier”, including forging codeshare pacts and bolstering its frequent flyer programme.

As WestJet moves quickly to usher in its premium economy offering Air Canada continues its evaluations of a similar product. Rovinescu highlighted that the carrier would incur significant reconfiguration costs as many of its aircraft are configured with “J Class”, Executive Class seating.

But the carrier appears to recognise the growing prevalence of offering a differentiated economy product. Air Canada’s major Star Alliance partner United was a pioneer when it introduced its Economy Plus offering more than a decade ago, and United’s legacy US rivals American and Delta have followed suite. Rovinescu remarked that Air Canada’s study of a premium economy is extensive, “especially as we introduce the 787”.

The carrier is not offering any definitive timeframe regarding when it could render a decision about moving forward with a premium economy product. However, Rovinescu acknowledged that Air Canada’s premium passengers are “a key ingredient to our business. So we are not going to let the time pass before we respond [with premium economy], if we feel we need to respond on all of our fleet types”.