Survey: In-flight WiFi can influence airfare purchases

WiFi is starting to take off at 10,000 feet in the air, as well as earn the adulation of travelers. According to a survey of business travelers conducted by the Wi-Fi Alliance and Wakefield Research, 76% would choose an airline based on the availability of in-flight WiFi, and 55% would voluntarily shift their flight by one day to have the service. As a relatively new territory, however, consumer willingness to pay for the privilege of in-flight WiFi is less clear cut.

A number of factors are driving travelers’ desire for in-flight WiFi. According to the poll, 40% of business travelers view work trips as stressful, and 64% are “on the clock” even in flight. Considering these two factors, 82% said in-flight WiFi would help them stay on top of projects, thus avoiding taking red eye flights, which 50% regularly did to avoid missing normal business hours.

Of the WiFi Alliance’s respondents who had not yet used in-flight WiFi, 95% thought it would make them more productive, 87% anticipated using it to check email and 63% said it would be useful to log on to work-related systems, such as sales and reporting tools. Outside of working, travelers are or would use the service for checking personal email, Web browsing, streaming music or videos, shopping online, playing video games and accessing social networking applications, the survey found.

The WiFi Alliance is a global non-profit organization made up of hundreds of WiFi zealots, so the results are unsurprisingly favorable to the technology. Still, airlines are slowly recognizing the demand for connected fights. To date more than 500 planes have in-flight WiFi. Most recently, American Airlines extended its WiFi service to more than 100 of its MD-80 aircrafts and plans to bring the total to 150 by the end of the year. The airline began installing Aircell’s Gogo WiFi service in August of last year and has plans to outfit nearly half of its fleet over the next two years. Aircell is also in use by Virgin America and AirTran Airways, as well as Delta, which has hotspots on more than 225 jets. Southwest Airlines too announced plans to rollout WiFi provided by Row 44, also in trials with Alaska Airlines, to its entire fleet beginning in the first quarter of 2010.

Row 44 owns FCC-approved satellites that it connects to the planes it powers, while Aircell’s Gogo service draws on ground-to-air gear over the 3 MHz spectrum. Aircell sets a price control on its service, to make it equitable across all airlines. The company is still trialing lower-priced plans, but the service runs $12.95 for flights longer than three hours, $9.95 for those 90 minutes to three hours and $5.95 for flights shorter than 90 minutes. Row 44 customer Southwest said it is still determining pricing for its service and will test several different price points for its service. In its deployments to date, passengers pay between $2 and $12 depending on the length of the flight and the device that passenger is powering up.

Kelly Davis-Felner, marketing director at the Wi-Fi Alliance compared the in-flight WiFi market to hotels, which almost all offer some degree of WiFi by now. Like the hotel industry, there are a number of business models popping up as well. While 71% of the WiFi Alliance’s respondents said they would rather have a flight with WiFi than one with a meal, it could come down to which service is offered free. According to a recent Wall Street Journal report, in-flight WiFi usage drops off significantly when consumers are asked to pay – even as little as $1. Battery drain and a lack of power ports is another challenge airlines face.

“People will pay for [WiFi], but a piece of the economic equation that’s getting overlooked is the benefits that it could provide,” Davis-Felner said. “Airlines will definitely provide it as a perk to elite travels without a doubt. The things we’ve seen in the terrestrial world are people pay for it in some places and contexts and not in others. There’s a viable customer base in the air as well.”

She expects that WiFi might become a loyalty play, something airlines can offer to their frequent travelers. Particularly in markets where consumers have several choices of airlines, free service will be a way to differentiate their airline, Davis-Felner said. As such, she doesn’t expect it to become a significant revenue generator for the airlines, but rather an important value play, especially considering that it’s easy for the airlines to recapture the cost of adding WiFi to their planes, a process costing in the $100,000 range, she said.