Boeing Drops In-Flight Wi-Fi
Boeing will phase out its Connexion by Boeing service, leaving what it once considered a promising market for in-flight Internet access.
Connexion offers broadband Internet access via Wi-Fi, using a satellite connection to the Internet, that costs about $10 to $30 per flight on commercial airlines. It also offers high-speed Internet access on executive jets and ships.
Connexion is offered on some commercial flights in Europe and Asia but was never adopted by a major U.S. carrier. First conceived in 2000, the service was approved by the Federal Aviation Administration in May 2002 as the nation's airlines were reeling from a travel slump that followed the September 11, 2001, terrorist attacks.
Lack of Interest Blamed
"Regrettably, the market for this service has not materialized as had been expected," Boeing said Thursday in a written statement attributed to Jim McNerney, CEO, president and chair. The company will work with customers on an orderly phase-out of Connexion, Boeing said.
The aerospace giant's foray into broadband has been expensive. In its financial results for this year's second quarter, Boeing said it expects to take a pre-tax charge of $320 million, or $0.26 per share, spread over the remainder of 2006.
Boeing talked to potential buyers or partners for the service beginning in June but wasn't able to reach an agreement with any of them, spokesman John Dern said. The company is no longer trying to sell Connexion, he said. The private-jet and maritime offerings will be phased out along with the commercial-airliner service.
The broadband system, which gave passengers with Wi-Fi-equipped devices full access to the Internet, worked well, Dern said.
"This was not a technology issue. It was a market issue," he said.
On an average flight, only a few passengers were using it, and even they weren't using it very much, Dern said. "We were seeing penetration numbers that were in the low single digits, and that was after the service had been out there for more than two years."
Alternatives May Emerge
Gartner analyst Ken Dulaney, who has used the service, said it wasn't advertised well. And in business and first-class cabins, many passengers on night flights sleep instead of working, he pointed out.
Airlines that offer Connexion, such as Lufthansa and All Nippon Airways, could be left in a bind, he said. Despite what Boeing says, Dulaney thinks the assets will be sold.
"Somebody will buy it for a fire-sale price and keep it going," Dulaney predicted. Boeing took a financial beating because it took on the high cost of building the system in the first place, he said.
The next trend for in-flight communications may be cellular, with new technologies emerging to make it feasible. But that would put a burden on passengers to carry the right type of device, because airlines wouldn't pay to put every cellular technology on board each plane, Dulaney said.