British Airways’ owner IAG has finally decided on its wifi supplier, not only for British Airways, but also for Aer Lingus and Iberia. To read that news, click here.
To show off the new wifi technology, IAG took journalists on-board the GoGo test laboratory aircraft for a flight of around an hour above San Jose international airport.
While on board, I spoke with IAG Chief Executive Willie Walsh about the decision to choose GoGo, and about the decisions that have yet to be made with regard to pricing of the onboard wifi.
Why has it taken so long to make this decision?
It was more than one decision. First of all, we decided we had to have connectivity, and then having decided that connectivity was essential, it was a matter of picking the right technology. We’re satisfied we’ve done that now.
I’ve told you before that I think that some other carriers that got panicked into making the decision have old technology that they are going to have to replace, because if your customers want to do streaming and your system doesn’t allow it, then you are forced into a choice of ripping it out and fitting another one, or making do with what you’ve got and disappointing people.
If you are going to put technology on top of the plane, you want to make sure what you’re connecting is there permanently and is going to work. So rather than choosing technology that would be overtaken we wanted to make sure we had the right technology which will work for our customers. So to answer the question “Why so long?”, I’d say I’m delighted that we waited for the 2Ku technology. The antennae on top of the aircraft is much smaller than the others and that’s important for the operating cost. You add anything to an aircraft, you add weight and so you burn more fuel, and if you add anything to the outside you cause more aerodynamic drag which burns more fuel, but the GoGo system is a lot more efficient than the alternatives which were like a bubble on the top of the aircraft where there are moving parts which move to track the satellites. This system doesn’t work in that way.
So you think this is the best?
This is the fastest you can get on an aircraft. It’s like being sitting at home in terms of the experience. You can have everyone on board using multiple devices and you get similar speeds than at home. There’s nothing more frustrating being told as a customer that it’s there and you’re sitting there waiting for the screen to refresh – it becomes more irritating than not having it. We felt some of the early technology wasn’t something you could offer your customers saying “It will work and work consistently”. And given the global scale we have, we needed to be guaranteed having connectivity wherever you are. You need it to work if you’re flying over Africa, for instance.
So what about the roll out?
We will retrofit this to all of our existing long haul aircraft and it will come fitted with new aircraft delivered to the IAG airlines. It will get fitted when we have a C-check. We are not going to take an aircraft out of service just to fit the wifi, so we are better off waiting and doing it as part of the scheduled C-check on the aircraft, and that’ll be what determines the timeline. It’s the same with cabin upgrades, you wait for that time.
The first one to be fitted out will be the B747-400. It won’t be fitted to all the B747s – it will be fitted to the 18 B747s that have been retrofitted with the new cabins, all of the B777-200s, the B777-300s, the A380s and the B787s. As far as new deliveries are concerned, the B787-10 will definitely come with it, and some of the B787-9s will. Not the ones for this year that are being delivered – they will be retrofitted. But I think deliveries from next year should be. All the of A350s from the end of 2017 and into 2018 will come with it.
What about Aer Lingus and Iberia?
This will be retrofitted on the Aer Lingus fleet as well, the A330s and the B757s, but the timings are being worked out both with GoGo and our maintenance people. The Iberia A330s and some of the A340s will also be fitted
So when will we know the pricing for the customer?
Well we’re working on it. There’s a lot of debate internally. When you’re adding anything that adds a lot of cost, trying to offset that cost is the challenge. Our view is if you are in a hotel, an ability to stream things like Amazon and Netflix is a service you would pay for. In a hotel you might get a basic service but you wouldn’t get streaming. So the pricing structure is whether we give the basic as part of the service, which might include email, but if you want to watch live TV then there would be a charge, but what that charge is we haven’t determined. Personally I would expect for streaming there would be a charge. My own view is that customers will expect some part of it free, but we’ll do customer research. We may differentiate between the cabins in the aircraft or we may differentiate with the frequent flyers, similar to how hotels have offered free wifi to their top tier members.
There is a view within the business that you can have a revenue stream from this, not necessarily from the customers using it but from other ways – we can do deals with people to make some money. We’re debating that. On balance we see this as a cost rather than a revenue opportunity. Our CFO Enrique Dupuy de Lôme would say this is all about cost while for Robert Boyle, our Director of Strategy, this is opportunity and revenue. I’m on the cost side of the argument, but you could see things like giving partners access to it, showing adverts, that sort of thing.
What about making calls over the internet?
People can make Skype calls using the system, but it’s subject of a lot of debate among customers. Most people don’t want voice communication. You can control parts of this. We’ve always had phones on aircraft, satellite ones, and people don’t use them. If they wanted to talk they’ve always been able to. The demand is very small. If you make it free then it might encourage people to use it but I don’t think people want that. It’s the same on trains, most people don’t want to be sitting next to people chatting away. There are things you can do to restrict it.
We have it on the A318 from London City to New York, for instance, and there we can turn the voice part of it off. That decision was following debates with customers and research. We haven’t updated the reserach recently, but when that service came into effect – 85 per cent of customers said “Please do not allow voice communication”. It wasn’t “I don’t want it”, it was “Please do not allow it.” So we switch off the voice but you can use text and email. So it could be something like that, but consumer demands change, so what I would say about it today might change in a year’s time. But personally I think allowing limited voice communication is not something that makes sense, particularly if it’s a flight through the night and someone in the cabin is having an argument on their phone.
Is this the beginning of the end for IFE?
Over time people will bring their own entertainment with them. Is the day of the hard wired IFE a thing of the past? Well it’s there in the present but in the future I would expected people to bring their own entertainment. Maybe you could choose what you want to see, continue watching something you’ve been watching on the ground, so people will move that way. You can have servers on the aircraft where you’re downloading the inflight entertainment from the servers rather than direct from the satellite
Would that make it less expensive?
It’s all expensive, but we’re driven to a large extent by what our customers want from us.
What about short-haul?
We’re close to a decision on that as well. Again it’s a case of having something that gives us connectivity across our short haul fleet. Part of our network is medium-haul, so getting something that works across all or most of our short haul network is the issue there.