wi-flight nears take-off

The airlines play catch-up yet again: not long after Continental and AA announced ("AAnnounced?") in-flight internet service, Delta followed suit.

Some people ask why airlines are adding in-flight wi-fi service ("wi-flight?") while cutting other perks and raising prices in the name of soaring fuel costs.

I think those are separate, unrelated issues. I expect the airlines see wi-flight as a mild yet long-awaited perk that will yield little or no revenue. Let's work through this together:

It's not as though airlines can offer the internet service as a loss-leader, hoping to make up the money on tickets. At least not this year. Slim chance wi-fi will woo back customers alienated by high fares and new fees.

That said, I think wi-flight will pay for itself:

• The fixed costs of the equipment should be fairly low, once amortized over a product lifespan that I would expect to be several years
• The variable costs of the data service to the airlines should be low as well. Depending on the how the airlines structure the contracts with their internet service providers, this may even be a fixed cost instead of a variable cost.
• Low fixed and variable costs permit the airlines to keep the service fees low, as well. (Delta expects roughly $10 to $13 per flight.)

If I am correct in that wi-flight will pay for itself by user fees only -- that is, the airlines aren't padding ticket prices so that everyone is unknowingly chipping in for the service -- then this works out. If you use wi-flight and get a new travel perk; otherwise you're no worse off than you were before. Given the state of the airline industry that's as good as one can expect.

Eventually, all this will be moot: I expect, over time, the airlines will declare wi-flight "free" for all passengers and just bury the fee in the ticket price.

Time will tell.

"The Latest Hot Spot Is on the Plane"
http://online.wsj.com/article/SB121788491128311271.html

"Delta to Offer Wi-Fi on U.S. Flights"
http://www.nytimes.com/2008/08/06/technology/06delta.html