US carriers JetBlue Airways and United Airlines are slowly leaking clues of their respective approaches to generating ancillary revenue with inflight connectivity, with both carriers appearing to be leaning towards a hybrid strategy of offering passengers complimentary access for some content, and an upsell to a more premium level of Internet browsing.
JetBlue CEO Dave Barger told analysts during the carrier’s recent third quarter earnings call that “as we begin rolling out inflight broadband, customers will enjoy free baseline connectivity with the option to upgrade to a paid premium service”.
The carrier is working with subsidiary LiveTV and ViaSat to offer passengers Ka-band satellite-supported high-speed inflight Internet beginning in the first quarter of 2013, which is slip from an original target date of year-end 2012. JetBlue has previously stated that connectivity will be free of charge to passengers until the first 30 aircraft are equipped. Previously, LiveTV told the APEX Editor’s Blog the carrier should make a decision about paid access after installations are complete on those aircraft.
It is not clear if the upgrade to a premium service would be available when JetBlue rolls out its connectivity offering in early 2013. Asked to clarify the timing of the upgrade’s availability, JetBlue said it was still too early to comment on the specifics of the product offering.
Regardless of the timing, JetBlue appears ready to monetise its onboard connectivity to bolster its suite of ancillary products and the revenue it gleans from those offerings. The planned upsells could help the carrier offset some revenue it may be losing on the ancillary side from management’s decisions to decrease its attention on certain non-ticket revenue generators. Carrier chief commercial officer Robin Hayes recently stated that JetBlue examined certain non-ticket revenue offerings that “we just decided that we didn’t want to continue with, or we wanted to look at it differently”.
Some of those items include eliminating simulator rentals to third parties as JetBlue became busy with its own training. Another event affecting overall ancillary revenue was LiveTV’s loss of AirTran as a customer after the carrier’s new owner Southwest opted to discontinue XM Satellite Radio offered on AirTran’s fleet supplied LiveTV.
US major carrier United is also looking for ways to monetise its connectivity offering as its fleet becomes equipped with the Panasonic eXConnect Ku-powered connectivity suite and the Ka-band solution offered by LiveTV. The eXConnect solution will be featured on the carrier’s boeing 747s, 757s, 767s, 777s, 787s and Airbus A319s and A320s. Additionally, LiveTv is supplying Ka-band connectivity for 200 domestic aircraft in the legacy Continental fleet. United and Continental merged in 2010, and now operate under the United brand.
United CEO Jeff Smisek recently remarked that installation to support satellite connectivity was complete on the first aircraft, and the carrier expects the jet to “be up and flying with Wi-Fi in November”. The carrier confirmed that aircraft will be fitted with the eXConnect product.
Delving a bit into the carrier’s plans in building the satellite-supported connectivity product Smisek declared United was “taking a different commercial approach to Wi-Fi”.
“We own the hardware, purchase the bandwidth, and more importantly, own and control the portal that customers use to access the internet inflight,” says Smisek. “Ownership and control will allow us to develop a comprehensive and dynamic pricing model for Wi-Fi and onboard streaming video, grant complimentary access to sites of our choosing and establish a wide array of commercial agreements.”
Presently United also works with Gogo, featuring the company’s air-to-ground inflight connectivity product on its Boeing 757 aircraft that operate the carrier’s p.s. “Premimu Service” transcontinental flights from New York to Los Angeles and San Francisco. Gogo offers its solution through a company-branded portal, and recently instituted pricing changes in the New York-Los Angeles and San Francisco markets to conserve bandwidth. United competitor Virgin America also operates those routes and offers Gogo connectivity to its passengers.
By controlling the portal used in its satellite connectivity offerings as it rolls out satellite-supported connectivity, United believes it can increase “the long-term opportunities for and value of onboard Wi-Fi to United”, says Smisek. He cautioned it will take time equip United’s 700 strong fleet, but the airline anticipates completing installations on 300 aircraft by the end of 2013.
Both JetBlue and United believe that satellite-based connectivity will allow for passengers to experience heightened speed and reliability, and offer a competitive advantage to today’s current offerings. JetBlue’s chief Barger declares: “Our Ka-band product will be a competitive advantage, particularly as we expand our presence in business-focused markets.”