Starting early next year, travellers on some Lufthansa flights in Europe will be able to surf the web using airborne Wi-Fi that promises speeds and coverage that trounce existing offerings.
The network, which will use Inmarsat's satellites and Deutsche Telekom towers on the ground, aims to let business travellers check the news and vacationers chat with friends as they jet across one of the world's most crowded airspaces. While existing inflight Wi-Fi services rely on satellites or terrestrial infrastructure but not both, Inmarsat and Telekom say their hybrid approach offers seamless service at a lower cost.
The partnership is one of at least three ventures aiming to help European airlines catch up with their US counterparts. While travellers can surf the internet on about 75 per cent of flights in the US, according to airline rating site Routehappy, only a handful of airlines in Europe offer the service.
"Globally, the penetration rate for onboard Wi-Fi is in the 3 per cent range," said Brian Pemberton, vice-president and general manager at satellite network provider Iridium Communications "People are kind of scratching their heads. Can the airlines make money with it? It remains to be seen."
Inmarsat and Deutsche Telekom say airlines can if they use Wi-Fi as a way to increase customer loyalty. Two other companies are also making this pitch to airlines in Europe: ViaSat, which provides Wi-Fi to US carrier JetBlue Airways, and Panasonic, which serves United Airlines.
ViaSat plans to wade into the European airline Wi-Fi business after it launches new satellites in 2017 and 2019, and could offer service once the first satellite goes online, CEO Rich Baldridge said. Panasonic, which currently offers Wi-Fi using rented satellite space, plans to launch its own device to increase coverage, said David Bruner, vice-president of global communications service.
While the Inmarsat-Deutsche Telekom offering will provide faster connections than existing inflight Wi-Fi, ViaSat says its service will be even faster. Inmarsat counters that cost will be more important than speed. It's preparing to subsidise the installation of equipment on planes, saying the service will catch on in Europe only if airlines offer it free of charge.
"Wi-Fi on board will be free, and telcos and airlines will offer it as an add-on in five to 10 years' time in order to gain passenger loyalty," Rupert Pearce, Inmarsat's CEO, said in an interview.
Pearce estimates the global market for airline Wi-Fi coverage will be $4 billion to $5 billion a year by the end of the decade. He wants to leverage Inmarsat's relationships with airlines - more than 90 per cent of commercial airplanes worldwide use the company's satellite-linked safety services - to gain a foothold.
