Interesting article in the WSJ today on wifi pricing, usage and trends for airlines that have wifi enabled. What I find interesting is going to be watching how this market develops. I’ve only used wifi on a plane once, on a long overseas flight–it was terrific, even at $14.95. These days, I”d probably not pay more than $10 for a cross-country flight though, and this would definitely require a power adapter in the seat.
Points in the article that grabbed my eye:
- Virgin America is getting 12-15% conversion, on a high proportion of cross-country flights and its hubs of tech-centric places like SF, Seattle, and NY.
- Airlines need about 8-10% paid usage (presumably at their mini-bar like prices) for 5 year profitability.
- Users appear quite elastic, as one exec is quoted as saying ‘even when we charge $1, and we did try $1, we see a drop off in people willing to pay.’ (This surprises me, as I’d expect you’d have a lot of business users who can expense this signing up.)
I think it will be interesting to watch how pricing — subscriptions, ad-based, per per minute, etc.–evolves in this market. Also, will it be free? My guess is that over time this just gets bundled into the ticket prices, but we’ll see.
Very cool scenario, of course, but it will be fascinating to see where this market ends up.