In-Flight Calling Takes Off, Sputters, Descends In U.S., Climbs In Europe

As the $70 billion market once envisioned for Boeing's in-flight Internet service slips away, U.S. air passengers are finding the likelihood of any immediate air-to-ground connections are slipping away, too.

In-flight calling hit some turbulence this week when Boeing announced Monday that it is evaluating its unprofitable Connexion service " including possible termination. Couple that with Verizon's decision to end its Airfone in-flight service by the end of the year and U.S. passengers are likely to have no ground to air personal communications, at least in the near-term.

Further stalling in-flight calling, the FCC has so far withheld permission for mobile phone service.

Connexion got high marks from airlines and individual users for its satellite-to-plane service and major airlines around the world rushed to install the service on international flights. Airlines using Connexion ranged from Lufthansa and Japan Airlines to many smaller airlines. A partnership with UTStarcom enabled passengers to make mobile phone calls. Boeing also launched a maritime service that serves the shipping and cruising business.

Meanwhile, Europe's OnAir service moved Tuesday to dispel any idea that in-flight telephoning is a poor business. "OnAir's proposition is different from Connexion by Boeing's," said OnAir CEO George Cooper in an e-mail. "The two companies have taken a fundamentally different approach to developing passenger communication services."

OnAir, a partnership of Boeing competitor AirBus and air transport infrastructure provider SITA, is beginning to deploy its service in Europe. Passengers will be able to use smart phones and Blackberry-type PDAs to access e-mail and use in-flight entertainment systems.

"Our initial objective is to introduce GSM and GPRS services in Western Europe in 2007, followed by data services on long range aircraft in 2008," said Cooper.

"Western Europe is the real target for us," said Charlie Pryor, OnAir spokesman. "We're aiming at people with mobile phones."

Verizon had outfitted more than 1,000 planes with its Airfone service, which will be discontinued and its equipment removed. The void could be filled by JetBlue Airways and AirCell, a partnership planning to offer in-flight service in the future. The partnership recently won licenses in an FCC auction, although they haven't yet spelled out details of any in-flight service.

In its announcement, Boeing noted that it "has pursued the (Connexion) business vigorously, developing tehnology that has worked well and evolved into a useful product. However, the market for the service has not developed satisfactorily."

Boeing added that its evaluation process will address various changes including "a sale, partnering arrangement or termination of service." As the Connexion service was being launched, Boeing observed that analysts predicted the potential market it was addressing could be worth $70 billion.