The tipping point for free in-flight Wi-Fi: a $1171 bill on Singapore Airlines for Jeremy Gutsche
The tipping point
Jeremy Gutsche has had to pay $1171 for using Wi-Fi on his Singapore Airlines flight from London to Singapore. That’s worth over two years of high-speed internet connection fee in Jeremy’s hometown Toronto. Charging for Wi-Fi is possibly the biggest risk airline brands face in the next decade.
Moreover, if we take into account Emirates’ announcement earlier this month that they will be providing free in-flight wi-fi to all passengers, we believe that the tipping point for free in-flight Wi-Fi is here.
— Jeremy Gutsche (@jeremygutsche) November 13, 2014
Singapore Airlines is one of the best airline brands. It doesn’t deserve to taint its impeccable brand image by Wi-Fi overage charges. Yes, it was a mistake by the passenger. Yes, he perhaps didn’t read the fine print, and surely forgot to turn off data on his mobile for the duration of the flight. But should he be made to pay over $1000 for his internet usage? Legally, yes. Ethically, probably not.
A brand like Singapore Airlines knows that to win hearts, you’ve got to go beyond the obvious. In this case, they haven’t.
The case for free in-flight wi-fi
The existing in-flight Wi-Fi business model is broken. Airlines can’t make money with just over 5% of passengers paying for it. In-flight Wi-Fi providers like OnAir and Gogo often sell data at cost, or even below cost, to entice airlines to come on-board, and try to make money off phone calls. The passenger, who, after paying for such a service, expects something decent, is stuck with what is equivalent of an “Edge” service on his phone. This is a lose-lose-lose proposition that is not sustainable in the long term.
Every Starbucks has free Wi-Fi. So do top hotels now. Yes, it costs airlines more to provide connectivity, but that doesn’t mean consumers would happily pay for something they are used to getting for free. Emirates sees free onboard Wi-Fi as future standard. jetBlue’s CIO told me at the recent SITA summit in Brussels, that he wants us to watch NetFlix for free on board! They already offer free in-flight Wi-Fi.
However, both Emirates and jetBlue are exceptions. Most airlines charge for in-flight Wi-Fi, and end up ruining the brand experience for their customers, rather than enhancing it. They over-promise, and under-deliver.
Time to think differently
Airlines and providers need to re-think their in-flight Wi-Fi offerings. Providing Wi-Fi as a good-to-have alongside 1000 movies, will not work. Charging for it just because they can, will not work. Expecting people to pay for internet speeds from the last decade, will not work. Maintaining status quo, will not work.
First, airlines need to decide whether it’s a service they are willing to offer to enhance the overall experience, or an ancillary revenue source. The likes of Emirates, jetBlue and Norwegian seem to have made the former choice. Saudia will soon be providing real-time customer service through a dedicated team servicing passengers using in-flight Wi-Fi. Most others are still confused on how to get in-flight Wi-Fi to drive revenues with paltry adoption rates.
There are certainly creative ways to drive revenues by providing free in-flight Wi-Fi to all passengers. Since airlines have a captive audience, they can use the “walled garden” approach to attract advertisers — from landing page branding, to earning a commission on selling of merchandise. Delta Air Lines already has a partnership with Amazon that provides free access to the site. The airline, in return, profits from the relationship.
There’s a genuine concern that is often raised: what if too many people start using it? Yes, it would slow things down indeed. That’s where airlines need to set the right expectations. Don’t promise customers the speeds they expect at home. And they would understand.
We believe that the Jeremy Gutsche incident is a watershed moment for the industry. Instead of holding fort, and quoting terms and conditions, the industry needs to wake up and smell the coffee. Let’s hope that next time Jeremy flies long-haul, he is greeted with free in-flight Wi-Fi.