Free In-Flight Wi-Fi Takes Off After a Slow Taxi

Delta Air Lines threw down the gauntlet to other air transport operators when it said in January that it would roll out free in-flight Wi-Fi across its fleet, becoming the first major U.S. network carrier to do so.

The move to free in-flight connectivity (IFC) has been long anticipated but slow to materialize, largely because of the high cost of installing and running the systems on aircraft. While some airlines such as JetBlue Airways have offered free Wi-Fi for years, the trend has yet to catch on in a meaningful way.

Delta's move is expected to catalyze growth in the number of airlines offering some form of free Wi-Fi to passengers. However, industry experts do not anticipate a stampede to an all-free model. Rather, the amount of bandwidth an airline gives away for free, and to whom, will very much depend on its individual business model, branding, and budget.

"Delta and others have been querying the industry on how to make [free Wi-Fi] work for some time, and we've been expecting this model to shift faster than it really has," says Steve Hadden, vice president of Services and Connectivity at Honeywell Aerospace.

Don Buchman, vice president and general manager of Commercial Aviation at Viasat – Delta's chosen satellite-based Wi-Fi provider for its move to a free IFC model – agrees the shift has taken more time than anticipated.

"The market took a little bit longer to evolve, but I'm not surprised by Delta's decision," says Buchman. "I think the rest of the industry is moving now, and you're already seeing a lot of different models starting to emerge."

Delta's free Wi-Fi is tied to its loyalty program, with complimentary access provided to existing SkyMiles customers and to passengers who join SkyMiles on the ground or in the air. Delta is also working in partnership with sponsor T-Mobile, which already provided free in-flight Wi-Fi access to some of its customers on connected flights operated by Delta, American Airlines, Alaska Airlines, and United Airlines.

JetBlue Airways – another Viasat customer that has offered free in-flight Wi-Fi for a decade – does not tie free access to its loyalty program, instead striking a partnership with Amazon. Meanwhile, Scandinavian carrier SAS provides free Wi-Fi to its premium passengers but charges a fee for economy-class customers.

"Others are doing limited [free Wi-Fi]. So American is doing a limited 15-30 minutes free, watch this sponsored ad and then it's paid after that," says Buchman. "Others have been doing free messaging or free social. You can really slice it and dice it however you want and for whatever your brand is trying to do."

He adds: "We've been betting on high demand, and high demand means you have to get the engagement up beyond the 5 to 10 percent that are willing to pay. That's our whole market thesis – we think high demand is going to be there, [so] we invest in supporting that demand. If you have high engagement you have to have enough bandwidth in the right spots to support it, because if you drive high demand and you run out of bandwidth, that's a fail case."

Delta began offering free Wi-Fi on more than 500 domestic aircraft on February 1, and aims to offer the service on more than 700 Viasat-equipped aircraft by the end of this year. It also plans to bring free Wi-Fi to its international and regional aircraft by the end of 2024. The carrier's regional jets are currently equipped with Intelsat's air-to-ground IFC service (formerly Gogo's solution before Intelsat acquired Gogo's commercial aviation business in December 2020). Its international fleet carries Intelsat's Ku-band satellite system.

Delta has not disclosed which system will power the free Wi-Fi on its regional or international aircraft, although Buchman says Viasat's "intention is to go on their international fleet."

Intelsat's senior vice president of Commercial Aviation, Dave Bijur, believes Intelsat could have clinched a deal with Delta on free Wi-Fi had it acquired Gogo earlier.

In 2019, Gogo was not in a position to help Delta with its plan to offer free Wi-Fi, says Bijur.

"Gogo was a middle man and was purchasing capacity from SES, Eutelsat and Intelsat, and selling it to Delta, so we had no way to make a commitment on behalf of those big satellite companies." If Intelsat had acquired Gogo sooner, he laments, "the whole thing would've turned out differently."

Adds Bijur: "One of the great virtues of the transaction by Intelsat to acquire Commercial Aviation from Gogo was that it gave a nice outlet to Intelsat and it also saved the situation Gogo was in, which was untenable in the sense of purchasing capacity from one company, repackaging it and selling it to another. Today, if you look at Intelsat, Viasat, and Inmarsat, we're all vertically-integrated. We're doing deals with airlines all three of us, and we all have our own networks."

Some of Intelsat's airline customers do offer complimentary IFC. It has been working with Japan Airlines, which began using Gogo's Ku-band system in 2014, to roll out free Wi-Fi access to its domestic passengers. To support the additional demand, Intelsat partnered with Japanese satellite operator JSAT to secure extra capacity over Japan. For the future, it is investing in software-defined satellite technology, which Bijur says will bring down the cost of IFC and increase its functionality.

"I think the cost of in-flight connectivity is coming down precipitously," he explains. "One [reason for that] is we continue to invest in new satellites and new technology that goes on the aircraft. At Intelsat, we have a fleet of 54 satellites and we're constantly replacing them. The benefit of that strategy is that by replacing a satellite or two every year, you're taking advantage of new technology and you're never connected to a single price point."

Intelsat's four new software-defined satellites will represent a step change in cost and functionality, asserts Bijur, adding: "Everybody wants to watch Netflix on the plane and we need to make that happen. That's why we're investing in all these new satellites."

Mike Pigott, executive vice president of Connectivity at Anuvu (formerly Global Eagle Entertainment), is of the opinion that more airlines would provide free Wi-Fi if they were in a position to do so. However, different business models and customer segments mean that an all-free model is not possible across the board.

"We believe the airlines, if they could, would go free but not all of them do it, for their own business reasons," says Pigott. "There's a large diversity of airlines in the market, and those airlines want to have differentiated passenger experiences. One of the very first airlines that we provided connectivity service with was Norwegian Air Shuttle, which offered a free product to its passengers way back in 2011. They wanted that experience for their passengers, and Delta is looking at that today, which is a great furtherance of the business and of the industry."

Pigott notes that Norwegian's free Wi-Fi was not a streaming service when it launched, whereas Delta's will be. This, he says, is the biggest differentiator in what Delta is offering to the market today. Norwegian still provides free basic Wi-Fi but the airline says that if passengers want faster speeds, they must upgrade to the high-speed Wi-Fi option.

In terms of monetizing IFC, the obvious strategy is to charge for it. But as expectations of free Wi-Fi grow, airlines must find other ways of covering their costs.

"If an airline opts to go for free passenger Wi-Fi, they can monetize it with an enhanced service, a higher-performing service, things like that," says Pigott. "You can also monetize it with having some level of advertising prior to or during your access to the service, or through time-based free passes. We think all of those are good opportunities for an airline to balance the desire to enhance their passenger experience with [their business] model."

Monetization is vital because as Aditya Chatterjee, senior vice president Aero Market Solutions at SES, observes: "Free to the passengers is not free from us." He says there is scope for bringing in sponsors and scope for advertisements. But while adverts work well as gap fillers during real-time shows on flights with IPTV, for instance, they are not appropriate for all applications.

Airlines and their IFC providers must also ensure that they prepare for differing bandwidth requirements on specific routes, to ensure the right amount of capacity is available when demand is expected to be higher, such as on morning flights carrying large numbers of business travelers.

"It depends on your capability to provide time-based capacity to the number of aircraft which are operational, and that technology is now being built in the smart satellites," says Chatterjee. "If you really look at it, MEO [Medium-Earth Orbit] constellations are tailor-made to provide [that technology]."

SES, which already provides Ku-band satellite services to airlines via several ISPs, is also building a combined MEO and Geostationary Orbit (GEO) Ka-band service.

"We are saying MEO is very important to us, and we are saying IFC is very important to us. What we're not saying is we will only use MEO for IFC because we believe GEO is a very big point in this network," says Chatterjee, adding that SES plans to offer a "predominantly GEO" network but will overlay it with MEO when GEO is not available.

Multi-orbit satellite services for IFC are as popular a topic as free Wi-Fi, with new entrants offering Low-Earth Orbit (LEO)-based services poised to enter the market. OneWeb, SpaceX, and Telesat all aim to begin serving the aviation sector with LEO satellites over the next couple of years.

Ben Griffin, vice president of Mobility Services at OneWeb – which aims to start commercial aviation services in early 2024 – believes that when it comes to widespread free IFC, alternative procurement strategies will play more of a role than changes to the cost structure of satellites.

"The catalyst behind free IFC is more likely to be alternative models at the procurement end, i.e sponsorship, branding, those sorts of things," says Griffin. "I know that's been spoken about for many years without any real detail, but I think that's where it will come about, rather than a lowering of infrastructure costs. That will play a part as well but in itself, without investment purely on the airline side, I think there has to be another investor in that environment."

In Delta's case, the U.S. carrier is "a leader not just in IFC but in passenger experience, and invests heavily in that," says Griffin, and its pivot to free Wi-Fi is a reflection of that. He expects to see a number of other major airlines move toward free Wi-Fi using the same model of investing heavily in the service at their own cost.

For airlines with smaller budgets than Delta, however, it will be "very difficult to follow suit" given the high cost of satellite-based IFC, according to Daniel Welch, co-founder and Senior Research Consultant at Valour Consultancy.

"I think the way to look at Wi-Fi is that it's almost like a cost of goods sold," says Welch. "It's a way of sustaining market share. It's another factor that should hopefully drive ticket sales over the course of the lifetime of a passenger. I think that's the way to consider it."

SpaceX Finds its Niche With Portal-Free IFC

When Hawaiian Airlines announced in April 2022 that it would provide complimentary high-speed onboard internet access to passengers, through an agreement with SpaceX to install its Starlink LEO satellite-based in-flight connectivity solution on transpacific aircraft, the carrier said it had waited until technology caught up with its desire to offer "fast, seamless and free Wi-Fi."

Nine months later, Latvia-based Air Baltic boasted that it would become "the first airline in Europe to launch high-speed, unlimited and free-of-charge satellite internet" across its Airbus A220-300 fleet, by equipping the aircraft with the Starlink system. Air Baltic chief executive Martin Gauss said he was "glad to have found the right connectivity provider…that fits our needs and meets our wishes."

Both carriers aim to introduce their free Wi-Fi services later this year, subject to certification.

Daniel Welch, co-founder and senior research consultant at Valour Consultancy, believes that SpaceX will find its niche with airlines that want a "portal-less experience, so their passengers can have access for free."

Indeed, Hawaiian said on announcing its agreement with SpaceX that "connecting to the internet will be seamless when guests walk on board, without registration pages or payment portals."

However, Welch does not think this strategy will work for everyone.

"There are airlines that don't necessarily want a portal-less experience because they’ve got their wares to sell. They've got things they want the passenger to see, whether that be retail, IFE or advertising – that all goes out the window," he says.

Not all airlines will opt for LEO-only IFC, either. SpaceX's rival in the LEO IFC segment, OneWeb, is taking a different approach by offering both a standalone LEO service and teaming up with GEO satellite providers to offer a multi-orbit LEO/GEO solution.

Last August, OneWeb entered a partnership with Intelsat to provide airlines with a hybrid GEO/LEO service. Alaska Airlines recently announced that it would install the multi-orbit system on its regional jet fleet. However, the carrier does not plan to offer free Wi-Fi to its passengers and will charge a flat rate of $8 to use the service, as it does on its mainline Intelsat-equipped aircraft. VS