Aircell, the parent of in-flight WiFi provider Gogo has raised $35 million in its latest big round of funding. The funding comes as the fast-growing company, which has now raised more than $500 million, is plotting an expansion into in-flight content in order to diversify its revenue. CEO Michael Small says that later this year the company will begin to offer customers access to a library of movies in-flight. Other content, including live gaming, may follow.
Small says that WiFi access fees will continue to be Aircell’s primary source of revenue but that content has enough potential to be a “significant” revenue source that the company has hired a number of executives from internet companies to develop the offering. He declined to identify which content partners the company was working with.
As for the company’s main business, Small says it’s taking off. Gogo now provides in-flight WiFi on 1,100 of the 3,000 commercial aircraft in the U.S. through deals with American Airlines, United, Delta, and U.S. Airways, among others, up from 700 a year ago. Small says that while the company initially fronted the cost to put WiFi equipment on airplanes, airlines are now paying to outfit their jets because the business model has been “proven.”
Gogo and the airline share the $4.95 to $12.95 passengers typically pay to access in-flight WiFi, and Small says that this year “it is quite clear that we will achieve penetration and revenue levels that will make this profitable for all involved.” The company also provides in-flight Wi-Fi on 6,000 business jets, a business that Small says is already “very profitable.”
Gogo’s main U.S.-based rival, Row 44, raised $37 million in its own funding round in September, which it said it would use to expand abroad. Small says Gogo also plans to expand internationally, noting that “if nothing else (there’s) the opportunity to serve international fleets of U.S. airlines.”
Gogo’s new funding comes from private equity firms Ripplewood Holdings, Blumenstein/Thorne Information Partners and entities associated with investor Oakleigh Thorne. Aircell had most recently raised $176 million in a funding round a year ago.