Boeing to End Its Service for Using Internet Aloft
Maybe it was the Internet bubble in the sky or perhaps it was just that the business plan could not fly. — Boeing announced on Thursday that it planned to scrap its in-flight Internet service, saying there was not enough demand.
Context & Ripple Effects
Boeing's Connexion service was a technically admired product with a hollow funnel: as Om Malik noted the day before the announcement in Boeing Boeing .... Gone, early adopters raved about Skyping and working mid-flight, yet the service failed to convert that enthusiasm into mass-market demand. The BBC and AFP both carried the shutdown news on the same day, a sign of how closely the aviation and telecom worlds were watching the experiment.
The decision matters because Connexion was the flagship test of whether passengers would pay real money for broadband at altitude — and its stated cause, insufficient demand rather than technology failure, is the datum every airline, satellite operator and equipment vendor now has to price against.
First-order effects
- Airlines that fitted their fleets with Connexion hardware are left with installed equipment serving a discontinued service, while the business travelers who praised its mid-flight productivity lose the only mature broadband option aloft.
- Boeing exits the passenger-connectivity business entirely, freeing capital but conceding the category it pioneered.
Second-order effects
- Rival providers of airborne connectivity inherit an unserved base of equipped aircraft and paying early-adopter customers, making airline partnerships cheaper to win than they were when Boeing held the flagship contracts.
- Airlines weighing connectivity deals gain hard pricing leverage: with Boeing citing thin demand, carriers can argue for revenue-share terms instead of upfront equipment investment.
Third-order effects
- If the pattern holds, in-flight connectivity consolidates around whoever can carry the cost of dedicated aviation infrastructure through a slow-demand ramp — a burden satellite and telecom operators may bear better than an airframer.
- Regulators and airlines now have a cautionary data point for the adjacent debate over voice services in the cabin, where demand assumptions are similarly unproven.
The trend: Aviation connectivity is learning the lesson common to infrastructure businesses: technical excellence and rave reviews do not substitute for a mass-market willingness to pay, and first movers without patient capital exit before the demand curve arrives.