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8/18/2006
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Turning Off the Collaboration Spigot at 30,000 Feet

By the end of the year, business travelers will no longer be able to use their laptops at 30,000 feet for live collaboration sessions.  

No, this has nothing to do with the new security restrictions.  Yesterday, Boeing announced it will shut down Connexion by Boeing, its in-flight Internet service by year's end.  [In June, Verizon Airfone, née Airphone (and later GTE Airphone) announced will shut down its phone service on commercial airlines, also by the end of the year.]  Yesterday's announcement was upsetting to many people, particularly road warriors who use the service more extensively than others.Basex chief analyst Jonathan Spira is one of those who is upset by the announcement.  "Especially on flights that occurred largely during the business day, I found FlyNet [Lufthansa's brand for the Connexion by Boeing service] extremely valuable.  It allowed me to remain productive in real time, placing calls via voice-over-IP, sending and receiving e-mail, and catching up on news."

Unfortunately, it seems that enthusiasm for the service wasn't matched by the number of paying customers.  In announcing the program in 2000, Boeing predicted that in-flight Internet service would be a $70 billion market over ten years.  But even with 12 airlines and 156 aircraft connected, annual revenue for the service has been estimated to be ca. $25 million at the most.  

It's still not clear what will happen to the service's assets, and whether someone will pick up the pieces.  Negotiations had taken place with commercial satellite operators, including SES Global, a supplier of satellite capacity for Connexion, but no deal was forthcoming.  

There is still a business model for in-flight Internet service; it's just that Boeing's model didn't work.  In fact, Airbus has announced plans to provide such a service with the delivery of the first A380 aircraft to Singapore Airlines later this year.  The service, OnAir, is a joint venture of Airbus and SITA, a provider of IT and communications services specializing in the air transport industry.

Since Boeing isn't turning the system off for at least four months, it is still possible that someone will figure out a way to continue offering the service with a more profitable business model.  In a survey published by Boeing earlier this year, 92% of Connexion customers said that would recommend the service to others and 83% said the availability of Internet would impact their flying plans.  This is something the airlines should take note of, given the very competitive market for the business traveler.

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