Posted on: Sunday, March 21, 2004

Boeing to launch Internet service

By Melissa Allison
Chicago Tribune

More than two years after Boeing Co.'s plans evaporated for providing Internet access on jetliners, the company is climbing back into the market.

In late April it plans to launch Connexion by Boeing, a high-speed Internet service, aboard six Lufthansa jets. By early 2006, the German carrier expects to have roughly 80 aircraft using the service.

That deal and others represent a comeback for Connexion, which before Sept. 11 had letters of intent from American Airlines, United Airlines and Delta Air Lines committing 1,500 aircraft for launch by early 2002.

Those agreements fell apart as airline travel plummeted. By last spring Connexion was flying on just two commercial airplanes, both for trial runs.

Yet Boeing and others say the time is right for a renewed push, as business travel strengthens and airlines seek to differentiate themselves from their no-frills rivals.

"We hope to gain additional passengers from the competition," said Burkard Wigger, manager for Lufthansa's FlyNet project.

For nearly $30, passengers on long-range flights will have unlimited Internet access, reached through a series of satellites. Fliers also have the option of paying $9.95 for 30 minutes of access, plus 25 cents a minute thereafter.

Lufthansa will receive a portion of the revenues. Neither Boeing nor Lufthansa would disclose the terms.

Boeing also has deals to install Connexion aboard roughly 40 more planes at three other airlines — Scandinavian Airlines System, Japan Airlines and All Nippon Airways. And the Chicago-based aerospace giant has letters of intent from Singapore Airlines, China Airlines and a business jet customer.

Connexion has yet to lure back U.S. airlines, but experts say it won't be long before competition forces the U.S. carriers to offer Internet access aboard their flights.

"U.S. airlines that don't have high-speed Internet access will end up losing business to foreign-flag carriers that do," predicts Henry Harteveldt, an airline and travel industry analyst for Forrester Research in San Francisco.

Kent Craver, manager of on-board product marketing for Continental, said customers like the e-mail capability, which was installed aboard roughly 300 planes in 2003.

But they also want Internet access, he said. "The tough thing is to find a product that has a good balance of cost and benefit."

Industry insiders say it costs $500,000 to $1 million to equip an airplane with Connexion. Boeing would not disclose installation costs.

Craver said Continental is still determining whether Boeing's service is "worth the cost associated, and whether customers will even pay to use it."