From 2017, Lufthansa is offering airborne Wi-Fi to all travelers in their European flights enabling them to surf the web in high speed defeating the existing offerings.
Immersat PLC’s satellites as well as the ground towers of Deutsche Telekom AG will be used for this and plans to let the travels use this WiFi while traveling across the world’s most crowded airspace. The hybrid approach offers seamless service at a lower cost when compared to the existing inflight Wi-Fi services which rely on satellites. Compared to the 75% Internet enabled flights in U.S., only a handful of airlines offer the service in Europe currently.
$5 Billion Market
Pearce estimates the global market for airline Wi-Fi coverage will be $4 billion to $5 billion a year by the end of the decade. He wants to leverage Inmarsat’s relationships with airlines — more than 90 percent of commercial airplanes worldwide use the company’s satellite-linked safety services — to gain a foothold.
To try to speed adoption, Inmarsat and Deutsche Telekom brought Deutsche Lufthansa AG on board by subsidizing the $250 million cost of installing equipment on its European fleet, Pearce said. GoGo Inc., which provides satellite service to a number of U.S. carriers, has taken a similar approach, sharing revenue with partner carriers once the upfront cost, which it covers, is amortized.
Low-cost carrier EasyJet Plc said it’s talking to providers including Inmarsat, and is ready to offer Wi-Fi soon.
Wi-Fi providers have to obtain permission in 28 EU member states, Switzerland, Norway, and other neighboring countries to avoid gaps in coverage.
Inmarsat said its satellites should cover some of the gaps in Deutsche Telekom’s network, which has permission to build towers in 20 European countries. The satellite-based system isn’t as fast as some of the newer entrants to the market: Internet access tops out at 3G mobile-network speeds, which are better suited to sending e-mail or using mobile chat services than downloading movies.
©2016 Bloomberg L.P.