And while there's no love lost between passengers and the major carriers' unconventional way of increasing total consumer flying costs by adding separate baggage fees, there's one a-la-carte fee the public may be willing to pay for: a fee for internet access on airplanes.
Delta Air Lines (NYSE: DAL) announced it will start offering broadband internet service on domestic flights as early as October, The Washington Post reported Wednesday. Other airlines, including Continental (NYSE: CAL), Southwest (NYSE: LUV), and Virgin America are planning or testing internet services. (Delta will merge with Northwest Airlines (NYSE: NWA), pending U.S. Justice Department approval.)
Analysts generally credit JetBlue (NASDAQ: JBLU) with raising coach class amenity standards for flights in the United States when it introduced satellite TV and other services on its flights.
Delta's service will cost a $9.95 flat fee for flights lasting three hours or less and $12.95 for flights longer than three hours.
Public seen receptive to Wi-Fi fee
Stock analyst and frequent flier C. Leonard Bauer says Internet fees would be "a lucrative revenue stream" for the airlines, and ironically one that will probably be popular with the public.
"An internet service fee would amount to a sizable amount of cash for airlines. At $10 a passenger with, say, 100 of 180 or 190 passengers accessing the service, that's an extra $1000 per flight, which is significant," Bauer said. "And this is one fee that the public will not react negatively to, in my view." Bauer added that he does not have a rating on nor own shares in any airline.
Moreover, while Bauer cautioned against over-optimism regarding the revenue stream's implications -- this is not as big a development for carriers as, for example, the advent of the jet engine -- he does see internet access as a growing revenue stream.
"The public will use and really like in-flight internet service. We've become very used to being connected, with the ability to communicate, as well used to taking advantage of flying time for business tasks," Bauer said. "It also represents another option besides reading or watching a movie during flights. For a person like me, it will be e-mail city, a big help."
Mike Boyd, aviation consultant, also sees more dollars in the sky for airlines for connectivity. "If they charge for it, they are going to make millions and millions of dollars," Boyd told The Post Wednesday.
Delta's plan will enable the use of laptops, smartphones, PDAs, i.e. Web access, e-mail, and messaging, in the air. Cell phone use on airplanes is prohibited by two federal agencies: the Federal Aviation Administration and the Federal Communications Commission.
Airline Sector & Travel Analysis: A welcomed additional service. Here's hoping the other major carriers are able to add internet service "with all deliberate speed," to borrow a U.S. Supreme Court phrase. Moreover, a roughly $10 fee for three hours internet service represents fair value, given the tasks that could be completed during the time span.
What's your opinion of a $10 fee for Internet service on flights? Is it worth it? Would you take advantage of the service? Let us know what you think.
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Reader Comments (Page 1 of 1)
8-09-2008 @ 8:31AM
Seymour said...
Wi-Fi saving the airlines? Don't count on it. All they have to do to satisfy customers is to SATISFY CUSTOMERS!!! Stop nickel and diming passengers to death. Just charge a fair rate to fly, give 'em something to snack on, and stop charging for luggage, pillows, beverages, etc. The first airline that does this will take off like a rocket. The others will then follow suit. Simple, eh?
8-09-2008 @ 8:48AM
Carol said...
I could care less about Wi Fi but I do care about cleanliness, good service and a good movie.
8-09-2008 @ 8:50AM
Bill West said...
Wi-Fi...yeah for 10 bucks per flight...if it were free it might be a perk...but what about the non-business traveller? Adding fees to the bills for those taking a family vacation would make me think about alternate plans..what's next on the airlines..pay toilets?
8-09-2008 @ 9:43AM
BARRY said...
I can do without the internet for 3 hours maybe even more. Hard to believe, but I can. The option is a good idea for those with $10 to burn. If airlines really want to satisfy customers, they need to recognize that we know everything is going up. Stop nickle and diming us to death. How much to get from point A to point B? Luggage fees, surcharges, and othe baloney just makes it all worse. Feel free to eliminate food and drink. I can survive a few hours without that, too.
8-09-2008 @ 9:42AM
Susi said...
I think it's a great way for the airlines to make money. I can't stand taking a long flight with just watching TV, listening to music, reading...I like to have options. I think it's wrong to charge us for everything but the airlines is a business and they need to come up with creative ways of making money and keeping customers satisfied. I'l pay but my husband will just sleep :)
8-09-2008 @ 9:42AM
Catman said...
I'd probably pay for this on longer flights. I'd suggest the airlines put a yearly fee in place as well for the internet service as to keep flyers using the same airline all year long.
I do hate the nickle and diming however. Rather pay one price for the ticket instead of having to whip out the credit card at the counter for the extra bag and then again on the plane for internet.
8-09-2008 @ 9:43AM
john said...
I do think it will be substantial and might in the end help the other people who don't use internet get the lower fees down. I think many travelers are on the job,and most do have laptops and being able to work on planes is quite substantial and willalso increase the sales in ticekts knowing they can finally work on the plane, not just in the terminals. I for one would use it, and it's a great time killer.
8-09-2008 @ 9:44AM
chuck said...
Number one rule for any business...forget the gags, gimmics and other BS...concentrate on the CUSTOMER....
8-09-2008 @ 11:07AM
J Man said...
The airline industry, the energy industry, the medical industry are all examples of the down side of capitalism. We need to institute stonger regulations, better oversite, and police the industries. The price/performance ratios are all out of whack. The deregulation of the power companies has led to rampart corruption and higher costs. The reasons why are primarily based on the business models. Reduce costs, increase revenues, and solicit investors. Mergers and acquisitions provide a vehicle to grab short term profits as well.
8-10-2008 @ 4:46PM
Derrick said...
I keep hearing about "Taking care of the customers." How can you expect any airline to take care of the customers, if the airline doesn't take care of its employees first? Southwest has a good business model. They take care of their employees, which in turn, take care of the customers. (That's just a personal soap box.)
However, I think the "ala carte" method is a good strategy. There are passengers that don't need a pillow, blanket, drink, food, movie, or Internet. They just want a guaranteed seat to get from point A to point B. Why should they have to pay the same ticket price as everyone else? When you go to a movie theater, you pay for a movie ticket. If you want food or drink, you pay for that, too. Let's not forget that airlines are just modes of transportation, like a bus or taxi. The days of luxury are long gone. Think about it.