American Airlines Goes All in on Satellite Connectivity
American Airlines is turning on live television and using a satellite-focused in-flight connectivity model as the centerpiece of its new passenger experience strategy. By the end of 2019, the Texas-based operator of Airbus, Boeing and Embraer jets will have equipped the majority of its fleet with satellite-based connectivity, while featuring live-streaming television on nearly all of its in-service aircraft.
American said it currently has 100 aircraft equipped with Gogo 2Ku and free live television across its Airbus A319s and A320s. Beginning in 2019, the airline will add free live television to its aircraft that are equipped with Viasat. All American aircraft feature in-flight internet from Gogo, ViaSat and Panasonic.
Keeping multiple service providers and a focus on high-speed internet connectivity that can enable streaming is a major focus for American. Kurt Stache — the SVP for marketing and sales at American Airlines — told reporters at the 2018 International Aviation Forecast Summit how American is taking a flexible approach to hosting multiple service providers on board its aircraft.
“By April of next year, every mainline fleet will have satellite-based Wi-Fi,” he said. “Everything but the regional jets will be satellite-based. Our widebodies are mostly Panasonic, and we split the narrow body between Gogo and ViaSat.”
The airline is equipping its entire Boeing 737 MAX fleet, a model type for which it has 100 aircraft on order. One fleet of aircraft the carrier has not made a decision on yet is the Boeing 787s it will start receiving next year.
Stache sees value in keeping a multi-provider strategy for the fleet, which comprises 950 aircraft and growing, according to its latest financial report.
“Between ViaSat and 2Ku, they’re both producing really good results. We don’t see any differences,” said Stache.
“Given the size of our fleet, it’s probably not a bad thing to have multiple providers,” he added. “We landed in a really good spot with both ViaSat and Gogo. Panasonic has been [on board] longer, but now with the narrow bodies, we think having two providers is a good thing. ViaSat is larger percentage of narrow body than Gogo.”
A New Business Model?
Another major change that American is making within its in-flight internet strategy is the business model it is using with its internet service provider Gogo. The majority of commercial airlines globally use among three different business models for providing passenger access to internet.
An example is wholesale model where the airline pays the internet service provider (ISP) to provide access to internet services for passengers with a custom user interface.
This wholesale model is either charged with tiered access to certain internet services and speed levels.
American is transitioning to a new model that Stache describes as the airline-pricing model.
“The model is changing. Until now, it’s been a commissioned-based model, so Gogo provides the service and we generate the revenue,” said Stache. “Now we’re going to what we call an airline pricing model, so we will pay the cost. We pay Gogo for every connection and then we set the pricing.”
American has been seeing a steady increase of the use of its in-flight internet by passengers, according to Stache. One of the primary reasons the airline is focused on using satellite versus air-to-ground connectivity is the increased availability of bandwidth from satellite networks.
“We’re seeing more and more take rates. Overall, the pricing will come down. A lot of the pricing in the past was because the pipe was so narrow, it could quickly overload,” said Stache. “The beauty about satellite-based is you don’t have that issue, you have bandwidth for everyone on the airplane so we expect take rates to improve.”