Market research company In-Stat has published a new report on the up-take of in-flight internet users and the numbers are, well, interesting. The company is very bullish on the technology, suggesting that by 2015 it should cross the $1.5Bn annual revenue mark. The company also suggests that in-flight wifi is no longer "a competitive differentiator, it is now simply viewed in the US market as a competitive requirement."
The strange thing about this last claim, however, is that the number of folks actually using the service is still incredibly low. Yes, the take rate has increased from 4% to 7% year over year according to their stats. That is a reasonably significant jump percentage-wise. But it still isn’t a ton of users.
And, more significantly, it is hard to comprehend how a senior analyst at the research company can claim that a product used by such a small percentage of customers is anything close to a competitive requirement. There are 90%+ of the passengers who apparently do not care at all about in-flight wifi as they aren’t using it. It is also not clear from the teaser part of the report how many of the users were willing to pay for the service versus using it for free.
Yes, in-flight internet will eventually be a compelling product and it will be a competitive requirement for airlines. That day is coming. It just isn’t here yet, despite reports such as this one.
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The uptake is still low for 2 reasons. The per-flight cost is relatively high, and availability is still inconsistent enough to deter purchase of a monthly subscription. And electric outlets aren’t pervasive on aircraft.
Usage rises drastically when there are promotions making it free for passengers. I think that’s really how to drive usage. Maybe it can be a new Amex benefit.
I’m just shocked that there aren’t more business travelers who take advantage of this. My company is more than happy to let me expense the $34.95 monthly pass…if that subscription allows me to bill even a couple additional hours to clients in a month (it usually allows me to do even more work), it’s totally worth it for the company to pay for it. I can’t believe that more business travelers don’t do the same thing…I would think there would be enough people doing this to at least get the usage number into the double-digits…
I am surprised by this being so low. I am Platinum on USAir and am seriously considering switching to Delta in 2012 mainly due to the availability of wifi on every plane compared to USAir’s low number of flights that offer this.
I’m not all that surprised that it is so low. For folks who can bill the time the numbers skew a bit in favor of it making sense but most folks aren’t in that position or can bill even without the connectivity most of the time. I have billed hundreds of hours of flight time without being online. The numbers also do suggest that the primary devices in use are tablets and phones, not laptops, supporting the suggestions that the users are leisure travelers, not business folks. And, of course, there is the issue where as the number of users grows the performance suffers pretty badly.
I’m not at all surprised by the numbers; I’m mostly shocked that someone believes they suggest that the product is a competitive necessity.
Yeah, honestly, it’s too expensive. People have the ability to bring plenty of entertainment with them now. If they dropped the price, it would be huge.
In E-, I can’t even open my laptop, so it makes it hard to use the wifi everywhere but UA E+, and the C and F on all airlines.
With the increase of iPad’s and iTouches, and Android devices – small devices that are easy to handle even in E-, I would imagine usage will go up.
Not sure why it’s surprising though – It’s a feature that’s a competitive necessity because people “feel” like they need it before the fact, only to not purchase it when push comes to shove. Similar methodology could be used to describe many features of computers, or automobiles for that matter, with features that may be necessary to remain class competitive (on paper), but still being relegated to something that isn’t necessarily used to justify that aforementioned reality.
Maybe, Keven, but unless someone can show some stats demonstrating a significant number of customers actually booking towards carriers offering the service in a sufficient manner to actually drive revenue then it is hard to believe that it is a competitive necessity. Even if it is like the auto accessories or computer specs that you’re making the analogy to, if there isn’t a demonstrable show of bookings towards those carriers then it still isn’t compelling as I see it. And I don’t think that a 7% take rate is anywhere close to demonstrating that people are booking in that direction. The load factors on the carriers not offering the service are just as high as for those who are and the yields don’t seem to be suffering either.
To me this smacks of an analyst coming up with a theory and then announcing it to the world with no relevant data to back it up. That sort of thing drives me crazy.
I’ve used inflight wifi 10 times in my life. I have paid for it once. Every other time I have found a promo code. Why pay for that slow crud? BTW Do the ethernet plugs on air-phones in seats work? I feel like they would if you made a data call. Wired on a plane?