Blog Post

Aircell Gets $176 Million for In-flight Broadband

Aircell, the Itasca, Ill. company behind the wildly hyped GoGo in-flight broadband, has raised $176 million in funds from an undisclosed group of investors. (Don’t worry — we asked, but they wouldn’t tell us who invested in the company.) The funds will be used for network expansion, among other things.

GoGo, which is currently available on more than 700 commercial aircraft, and has commitments from a total of nine airlines, needs to build out its network aggressively if it wants hype to meet match reality. As it has grown, GoGo’s connection quality has declined as the strain on its network has gone up because of increased usage.

In many ways, the hype around GoGo has met reality. The uptake of the service is pretty low at present. Some say it might be as low as six users per flight. I think the pricing has something to do with the reason why many travelers are not so keen on paying for in-flight broadband just yet. The low uptake might be the reason why Aircell is figuring out a way to sell the service to the carriers itself for more backend functions. The good news — if you can call it that — is that the competing Row44 service (on Southwest) is actually worse off.

7 Responses to “Aircell Gets $176 Million for In-flight Broadband”

  1. I think, they should charge $1/Hr or the 2nd option, which OM has given would be great. But Technically in some ways, the other option might be risky(Hidden Charges). For domestic, they should put $10 or less for WiFi access, but for international, they should have to do something about it.

  2. Assuming you’re right that their network is strained even with low usage then they NEED to keep price high in order to prevent so much demand that they would fail utterly. It also suggests that, assuming their cost model works at all, they will be able to drop price over time to attract more users. Much as I enjoy the bliss of a FEW disconnected hours when I’m on a flight – it sounds like those days are over.

    Anyone want to invest in a remote island with RF jamming equipment? I think there’s money to be made with resorts that are off the grid…

  3. Aircell so needs to be able to push an integrated subscription model for businesses–which means partnering with Boingo, iPass, and others. Aircell has a per-airline flat monthly rate ($50), which is probably only worthwhile at the moment on Delta for dedicated Delta flyers.

    The trouble is that if Aircell can offer a flat-rate wholesale price across its network to aggregators and business VARs, then this reduces flyer loyalty to airlines, which might be what’s holding up such deals.

    If you flew a few days a month and your company could kick in a less-than-3G rate for unlimited in-flight Internet, and you found it on most of your flights, then it might have a big uptick.

  4. I think you’re right that price definitely has something to do with it. I flew Delta over the holidays when GoGo was offering a holiday promotion for free in-flight WiFi. During the flight, a passenger and I discussed how had it not been free for us to try, we might not have used it because free in flight entertainment is enough, especially for short flights. I think if it comes down to $5-8 (I believe it’s currently at $12.95 per flight), adoption will increase dramatically.

    • Miles

      My suggestion is — for every hour used, they should charge $1. So that way you can essentially pay for what you use and not get too worried about signing away $12.95 for 3 hours at best. They can sell pre-paid cards on ground and essentially use that as a way to drive more usage.

      • The hourly rate is a neat idea. They’d have to run the numbers to see if that is economically viable or more optimal than a flat rate. The other thing to consider is that I imagine they are going to be gunning for monthly or annual subscriptions for heavy travelers. Maybe they start there?