Delta Air Lines CEO says free in-flight Wi-Fi could take years

ajc photo

ajc photo

Delta Air Lines CEO Ed Bastian said he wants to eventually make in-flight Wi-Fi free, but it could be two to three years before that happens.

That’s partly because the technology is not yet up to par, Bastian said.

"I don't think our customers should have to pay for Wi-Fi in the air," Bastian said. But, "the first thing we need to do is we need to get the technical capability to be able to offer not just free Wi-Fi, but Wi-Fi that works as well in the sky as on the ground, in terms of bandwidth and streaming capacity."

Bastian made his comments in a wide-ranging conversation on Wednesday with reporters and editors at The Atlanta Journal-Constitution. He said the airline in recent years has significantly cut flight delays, improved baggage handling and paid out billions in profit sharing to employees.

He offered additional details about the future of in-flight Wi-Fi, a technology that for years has been a bugaboo for airlines and frequent travelers who pay as much as $19 a day for the service, only to encounter problems like slow data speeds and struggles with logging on.

VIDEO: More on Delta and free Wi-Fi

Delta Executive Says The Airline Will Offer Free Wi-Fi

When Atlanta-based Delta first launched in-flight Wi-Fi provided by Gogo ten years ago, it used an air-to-ground tower system. But now, that system's bandwidth isn't sufficient for broad use by passengers for things like video streaming.

“People’s expectations of what they want to do (online) has changed,” said Tim Farrar, a satellite communications consultant in Menlo Park, Calif. “A lot more people want to stream Netflix than there were a few years ago. So it’s a constant battle to keep up.”

And if a passenger who pays for in-flight Wi-Fi service is unhappy with the service, it’s “a big issue” for Delta, Farrar said.

That’s because the people who pay for in-flight Wi-Fi are more likely to be frequent business travelers — a crucial and highly profitable part of Delta’s customer base. The airline calls them “high value customers,” and “you want to do everything you can to keep them happy,” Farrar said.

In the last few years, Delta has rolled out satellite-based Wi-Fi on many of its planes with more bandwidth.

“The satellite technology is still not all the way there yet,” Bastian said. “Three to five years from now, there’s no question that technology will be out there in satellite.”

Last winter, Delta’s in-flight Wi-Fi service was spotty due to a glitch with the antennae when planes were sprayed with deicing fluid. The company replaced all of the antennae. Customer satisfaction with Wi-Fi has improved this year, Bastian said.

But, he added, “this winter is our big test to make sure the antenna works.” If it does, “we’ll be in a great position to bring the price points down.”

Gogo spokeswoman Meredith Payette said “our technology is always improving… Delta’s promise of free Wi-Fi is a great thing for Gogo.”

JetBlue Airways, a smaller carrier that launched service to Atlanta last year, already offers free Wi-Fi sponsored by Amazon from a different provider. Southwest offers free Wi-Fi to its A-List Preferred customers.

And Delta already offers free in-flight messaging, which uses a small amount of data and is a cost covered by Delta through payment to Gogo. But giving away full Wi-Fi service will require figuring out how to cover the more substantial cost of that service.

“For every megabit you send, it costs you money, and at the moment the cost of those megabits is pretty high,” Farrar said. Offering the ability to stream Netflix and access the internet with unlimited usage might incur a cost of $3 to $7 a session, he said.

With some airlines “pretty reluctant to offer you a free packet of peanuts or a free soda nowadays, then you can see why a lot of them will be reluctant to incur those costs to offer you free internet,” Farrar said.

Delta, for its part, still offers free in-flight sodas and snacks. But it does charge coach customers for other things like checked baggage, extra legroom and in-flight meals.

Farrar thinks Delta may first offer free in-flight Wi-Fi to its elite-level frequent fliers and first class and business passengers.

“Will they want to incur those costs for people that fly in the back of the plane and fly once a year and are mostly concerned about the cost to fly from point A to point B? Probably not,” he said.

Gogo made the initial investment for in-flight Wi-Fi infrastructure, which cost “a couple hundred million dollars,” Bastian said. As a result, Gogo collects the fees for the service from passengers, with Delta getting 20 percent cut of the revenue.

Bastian said under a free Wi-Fi scenario, “We would work out a new arrangement” that could involve revenue from advertising or content. “We’ll figure out a way to make the economics work.”

Meanwhile, Gogo has been struggling financially, losing money and pursuing strategic options.

That's something that Delta is "watching pretty closely," Farrar said. Earlier this year, Delta announced an alliance on in-flight connectivity with companies including Gogo, Airbus and Sprint.

“Delta is absolutely critical to Gogo as a customer,” Farrar said. “Neither of them can progress the service without the other helping out.”