Several carriers and in-flight WiFi companies are promoting their “Internet in a plane” service. Even Google is getting onboard (pun intended) by sponsoring free WiFi over the holiday travel season within airports and has inked a deal with Virgin American to provide free WiFi on their flights. Of course, Google has deep pockets and makes money when people use the Internet. The deal has the added benefit that they get to advertise with new Chrome browser. But besides Google, can anyone really afford in-flight WiFi?

As reported by Portolio.com, it costs between $100K to $250K to equip just one plane with the equipment needed for in-flight WiFi. To equip an entire airline of hundreds of planes requires more upfront cash than these in-flight WiFi startup companies have and can possibly raise. (Brother, can you spare a quarter billion?)

The biggest problem is that users have been conditioned to expect the Internet for free. (I often joke that “Internet” is Latin for free.) They don’t even want to pay $1 for this service. And even if they would pay $10 per session, a huge sum for most bargain travelers, it would require 10k to 25k customers on a single plane just to pay for the equipment costs for that plane. This does not even include the cost of maintaining the system over time.

It will require years just to get the upfront costs back. How can these in-flight WiFi companies really afford this? But more importantly, is this just too soon for this service? Should we wait for equipment costs to come down more as users become more connected? I am sure that there are other ways to invest this quarter billion that can get a higher and faster return for their investors and a better social return for the world.

Tags: Add new tag, free, Google, travel, WiFi

This entry was posted on Monday, November 23rd, 2009 at 1:55 pm and is filed under Business Lessons, travel. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.