Wi-Fi taking off on Virgin

Airline gets passengers online

by Marc Graser

From VARIETY Magazine.

In-flight entertainment's about to take off in a new direction.

Virgin America this week flipped the switch on a Wi-Fi service it will offer on all its planes by the middle of next year, letting passengers surf the Internet, email and send instant messages using a laptop computer or mobile device such as an iPhone or BlackBerry. Voice calls are not permitted.

Other airlines, including American and Delta, plan to roll out full Internet access on their planes next year, while JetBlue, Southwest and Alaska Airlines are testing similar technology.

Offering will instantly change the lives of business travelers, eliminating the brief respite they've had from their gadgets while on planes.

The Wi-Fi in the sky is also expected to have several major implications for Hollywood as well.

Airline passengers could become a greater source of revenue for operators of entertainment websites, with travelers logging onto those sites to watch a movie, TV show or Web series; download music; or play a game.

An uptick in traffic from bored fliers will enable those sites to collect more coin from advertisers.

Sites like YouTube are counting on it, with the company having paired up with Virgin America to promote the launch of the Wi-Fi service over the weekend during its YouTube Live event in San Francisco.

Chris Di Cesare, YouTube's head of marketing, called the launch of Wi-Fi at 35,000 feet "game-changing for the YouTube community," giving video creators access to a captive audience.

Yet Wi-Fi could impact the studios' bottom lines in a negative way.

If enough travelers pay the $10-$13 fee (depending on the length of the flight) to log online, they may be less likely to shell out the $2-$8 to watch a TV show or movie from a seatback or ceiling-mounted screen.

And with passengers able to view entertainment online, airlines don't necessarily have to buy movies and TV shows anymore. They can just collect the connectivity fee charged to give passengers access to the Web and allow them to find whatever they want to entertain themselves.

For example, Wi-Fi would suddenly enable an airline like Southwest, which never offered entertainment aboard its planes, to suddenly have an inflight entertainment system. And US Airways, which eliminated its onboard entertainment this fall due to cutbacks, will have it back again, should it deploy Wi-Fi.

So the advent of Wi-Fi service could reduce the $240 million that studios earn from film and TV sales to airlines each year.

But that kind of negative financial impact won't be felt for some time.

On a recent flight over San Francisco, emailing, instant messaging and visiting websites was a quick and simple process using Virgin America's system, operated by Gogo and Aircell.

Yet watching any kind of TV show or movie on Hulu.com or trailer on QuickTime brought back unwelcome memories of frustratingly jittery video streams from nearly a decade ago that paused more often than played.

The reason is bandwidth. Video quality varies depending on how many passengers are logged onto the Wi-Fi service and gives preference to those requiring less bandwidth for sending emails or surfing sites.

Thus airlines won't turn off their seatback screens anytime soon.

Wi-Fi is being sold as a convenience mostly for business travelers, and airlines like Virgin America will continue to use their in-flight entertainment systems to stand out from their rivals.

"Business travelers are certainly a key customer, especially given that we already offer power outlets at every seat," said Virgin America spokeswoman Abby Lunardini. "However, we really have a good mix of business and leisure travel and hope that Wi-Fi access will also be a draw for leisure travelers who may want to rent a car, Google map or just generally surf the Web en route to their destination."

Besides, relying solely on Wi-Fi as an entertainment provider will cost the airlines too much in lost revenue.

While airlines are expected to earn as much as $936 million from Wi-Fi services in 2012, according to research firm MultiMedia Intelligence, they'll also be able to generate as much as $913 million from in-flight video broadcasts.