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8/3/2005
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U.S. Airlines Are Laggards On Wireless

Many international carriers offer Internet access, a service not yet offered by domestic carriers. But United plans Wi-Fi for next year, and others are showing interest.

While U.S. business travelers are enjoying the convenience of Wi-Fi at coffeehouses and hotels, they still can't get Internet access while flying—even though there's a readily available service. International airlines are increasingly adopting Connexion by Boeing, an in-flight Internet service that uses satellites and Wi-Fi, but Boeing Co. hasn't yet signed on any U.S. airlines.

Yet there are signs of interest in Internet access among the money-strapped domestic carriers. United Airlines says it will offer Wi-Fi on its flights sometime next year, and Boeing says it's in discussions with a number of U.S. airlines about its service. And carriers have been conducting research on Internet access. "We can't say exactly when it will come, but we're having conversations with many of the carriers," says David Friedman, VP of marketing and sales for Connexion. "Internet connectivity will be a foregone conclusion on airplanes."

Connexion this week was awarded certification from Intel for its service to work with Centrino-based laptops, and the two companies said they'll collaborate on enhancing and promoting in-flight Wi-Fi. Earlier this month, Boeing selected Yahoo to serve as the exclusive search engine for Connexion and launched four channels of global, Web-based TV streams for the service.

Connexion also is beefing up coverage over the Pacific Ocean with the launch of a new satellite by one of its partners, plans to introduce prepaid Internet-access cards for flights, and is working to simplify the service's fee structure.

Twelve overseas carriers offer Connexion on 70 aircraft flying 100 routes. Some 13 U.S. markets are on one end or the other of at least one of those routes. But that traction hasn't been enough to entice domestic carriers.

Continental Airlines is taking a cautious approach to Internet access. There are two hang-ups, CIO Ron Anderson-Lehman says. It's an expensive investment—with some reports tagging the price of Connexion's service at about $500,000 per aircraft—and the required equipment adds drag to the aircraft and presents a potential fuel drain at a time of sky-high fuel costs. "I think it would be of interest if it brought additional revenue to the airline," Anderson-Lehman says. "But in this climate, where you've got two major U.S. airlines in bankruptcy, two more flirting with bankruptcy, and other airlines pulling pillows and pretzels off of planes I just don't know why we would do it."

Reticence among airlines wasn't always the case. American, Delta, and United were original investors in Connexion, but all three pulled their financial support in the wake of the Sept. 11, 2001, terrorist attacks. Verizon Communications, meanwhile, has had only modest success with its JetConnect service—in which E-mail and instant messaging are provided using the connection to its seat-back Airfones and software from Tenzing—and is phasing the service out this summer as it begins work on a wireless high-speed service.

United in June became the first U.S. carrier to get Federal Aviation Administration approval to put wireless networks on planes, and it's working with Verizon to install Wi-Fi equipment on 97 Boeing 757s, or nearly 20% of its mainline fleet. The airline plans to introduce service in 2006, once the Federal Communications Commission auctions off the related bandwidth to one or more service providers.

Meanwhile, American is getting a picture of a strong customer base for such a service: A recent survey indicates that 97% of passengers carry at least one electronic device, while 65% of business travelers have their laptops on flights.

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