Will Gogo face competitive disadvantage if it doesn’t reengineer system?

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Now that the FAA has cleared a path for airlines to enable passenger use of electronic devices during all phases of flight, inflight Wi-Fi provider Gogo’s current inability to provide Internet to passengers below 10,000ft isn’t sitting well with some high profile airline industry pundits.

Gogo’s air-to-ground (ATG)-based connectivity system, which is fitted to 2,000-plus aircraft in the commercial US fleet, connects to a network of cell towers on the ground. As such, its service is not optimized for use below 10,000ft. “We’re currently looking at whether a reengineering of the system is worth adding what amounts to an additional 15 to 20 minutes of connectivity during the flight,” says Gogo spokesman Steve Nolan. “The certification we have is approved for the entire duration of the flight, so it’s not an FAA thing, it’s an engineering thing and we’re looking into it.”

Gogo’s signal currently faces horizon or above, so a reengineering of the system would involve reconfiguring a network of cell towers across the United States, a laborious and costly task. Nolan admits that the issue for Gogo “is not a simple fix” and, if it happens, “it’s not going to happen as fast as the [PED] decision was made”. He adds: “I think there is a little bit of misinformation out there. I’ve seen a lot of stories, and a lot of talk from reporters that say we can’t offer connectivity below 10,000ft. It’s not that our current system can’t do it; it’s not engineered to do it today.”

What that means is that for the foreseeable future, Delta Air Lines, which has received FAA approval to permit the gate-to-gate use of PEDs – and other Gogo customers that are seeking FAA approval to do the same – will not be able to offer Internet to passengers until 10,000ft. Passengers, will, however, be able to ultimately stream entertainment to their PEDs during taxi, takeoff and landing. “We are definitely looking at adding – as part of our world map – Gogo Vision [wireless IFE] products, cached on the plane, below 10,000ft. That is definitely part of the roadmap,” says Nolan.

Some industry observers believe that a wireless entertainment-only option below 10,000ft will put Gogo at a competitive disadvantage to rivals whose satellite-supported connectivity systems do not face the same limitation, including Global Eagle’s Row 44 unit (which provides Ku connectivity to Southwest Airlines), Panasonic Avionics (which provides Ku to United Airlines) and JetBlue subsidiary LiveTV (which is poised to offer Ka to both JetBlue and United). A source tellsRunway Girl Network that some Gogo airline clients have started grumbling.

Understandably, Gogo’s competitors in the satellite space are seizing the opportunity to proclaim the virtues of being able to connect below 10,000ft. Global Eagle chief technology officer John Guidon notes, “Number one, it extends – by 20 minutes or more – the available window for people to make use of our service offering, which includes not just connectivity but also entertainment.

“There might have been people, particularly on short flights, that would have not bothered to have gotten involved in the inflight connectivity and entertainment, but given the longer window, they will, and that’s good. Also, I think that in the case where travellers experience delays, or where there are ATC holds, that is going to affect travel plans, so passengers can start notifying people earlier.”

Because remedying its inability to connect passengers below 10,000ft doesn’t top Gogo’s list of priorities, Gogo has come under heavy criticism from widely-quoted travel analyst – and regular Gogo user – Henry Harteveldt, who made his discontent known yesterday on Twitter. “Gogo is a classic example of a company that makes its problems the consumer’s problem,” says Harteveldt adding that the fact Gogo hasn’t confirmed it will offer connectivity below 10,000ft “shows weakness in Gogo product and management”.

Popular business travel columnist Joe Brancatelli chimed in on Twitter, saying: “Gogo ATG cannot work below 10,000ft. Gogo knew it. Airlines knew it. It’s why [the company] is [a] bad investment.”

Responding to Harteveldt and Brancatelli’s rather pointed comments about Gogo on Twitter, aviation journalist Jason Rabinowitz provided a moment of levity, quipping, “Maybe they’d prefer the US to be more like the rest of the world, where Wi-Fi either doesn’t exist or costs $1/MB?”

In a follow-up interview with Runway Girl Network, Brancatelli noted the irony of the fact the first two airlines to receive FAA approval to permit passengers’ gate-to-gate use of PEDs – Delta and JetBlue – can’t yet offer Wi-Fi under 10,000ft, as Delta is a Gogo customer and JetBlue hasn’t yet launched its LiveTV Ka connectivity solution.

“Do I think Gogo is at a competitive disadvantage today? No. I don’t think it’s that big a deal today, tomorrow, next week, next month, but would I rather be in bed with Row 44 right now, maybe. That’s a symptom not a problem,” he says, adding, “Let’s see what JetBlue does.” Runway Girl Network understands that the LiveTV system being installed on JetBlue aircraft has been certified for all phases of flight.

Brancatelli’s larger concern is Gogo’s – and other inflight connectivity providers’ – business models. “I’m less worried about the under 10,000ft [limitation], than the bigger model. Nobody has convinced me that people will pay for Internet in the sky. The airlines don’t want to pay for it and the customer expects it for free. That is the sum total of my argument. Show me the business case of people buying this. That’s where they fall down. Gogo is in the air six years now, and their uptake is not even 6%, it’s lower than it was in the beginning [when free promos were common].”

TMF Associates consultant Tim Farrar notes that Gogo’s business advantage is that its ATG offering “is sunk cost” if the company doesn’t upgrade. Satellite capacity costs, on the other hand, “never end”, he says. Payment by the airline for the true cost of connectivity “is the other way to underwrite a sustainable business”, adds Farrar. “But if [an] airline is doing that, why do you need a middleman?”

Offering Ku-band connectivity both domestically and on international flights is part of Gogo’s technology path. American Airlines’ new Airbus A320 family aircraft and Boeing 737s are expected to be fitted with Ku-band satellite connectivity, to augment the latest generation ‘ATG-4’ service on board. Additionally, Gogo is working to launch Ku connectivity on Delta’s long-haul international fleet. So, whilst the company may be inhibited on ATG only-equipped domestic aircraft, it will be able to support connectivity below 10,000ft on Ku-equipped aircraft (taking off or landing in the United States).

However, one consideration that nobody seems to be discussing yet is the fact that whilst the FAA requires passengers to put their mobile phones in ‘Airplane Mode’, disabling cellular service during all phases of flight, many passengers simply won’t take this step, and flight attendants certainly won’t be checking each phone to ensure they do. Consequently, some passengers’ phones will continue to transmit via their own cellular providers as the wheels lift off, and until the aircraft reaches a certain threshold. So it’s likely we’ll see passengers use their phones until they don’t work, and then seek to connect to the Internet.

This begs the question – if passengers ignore the Airplane Mode rule, and wait to connect to onboard Wi-Fi until absolutely necessary, will the FAA’s decision to permit the gate-to-gate use of PEDs substantially change the game for any of the inflight connectivity and wireless IFE providers? Time will tell.

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