Telecom, Media and Finance Associates is predicting that it will not be possible to make a commercial success of the in-flight Internet service offered by Connexion-by-Boeing on airlines such as Lufthansa and Singapore Airlines, and that the service will ultimately be shut down.
Tim Farrar, author of the research, commented, “The Connexion-by-Boeing service has only attracted just over 1000 users per day in total across the 125 commercial aircraft on which it is installed, but by our estimate it costs as much as $150M per year to run. Even if usage of the service grows further, at least 1000 aircraft would need to be fitted out for the business just to break even. The service has won plaudits from users, but in our view there simply isn’t enough demand from passengers to make Connexion a commercial success. There is a long history of failures in aeronautical passenger communications businesses, and the recently announced shutdown of Verizon Airfone is just the latest example. Satellite phones have been installed on commercial aircraft for over a decade, but still attract less than five minutes of usage per aircraft per day on average.
“It is conceivable that the Connexion network could be converted to military and government uses, but we do not believe that the commercial passenger service can realistically be maintained. Airlines using the service already incur a substantial penalty in fuel costs for the weight and drag of the Connexion equipment and are unlikely to subsidize the service still further. While some of these limitations do not apply to new proposed in-flight cell phone services, we believe backers of those systems will need to re-evaluate whether their business projections are simply too optimistic. Even when surveys indicate that passengers are potentially interested in new aeronautical communications services, the reality is that relatively few of them tend to use these services in practice.”