Boeing's plan for in-flight Internet finally gets airborne

SEATTLE -- Delayed after post-Sept. 11 airline turmoil and bumped by its original U.S. patrons, Boeing Co.'s Internet service for commercial airplanes is finally getting airborne.

The launch of Connexion by Boeing on Lufthansa this spring comes nearly two years later than originally intended, after hard times in the airline industry forced the company to jettison its original business plan.

The system also is being offered at a time people expect fast, easy and reliable Internet access nearly everywhere, from coffee shops to hotel rooms. So the stakes are high and any glitches potentially perilous, analysts say.

"I think Boeing is at the cutting edge of what is probably going to be the next breakthrough in in-flight amenities," said aviation consultant Mike Boyd. "It may get to a point where for business travelers, they won't go on an airline that doesn't have it."

But, he warns, it could just as easily fail if it isn't perfect on the first try.

"If you're going to offer it, you better offer it at every seat, and it better work flawlessly," Boyd said.

Airlines can choose to offer Connexion with either wireless or wired connections; so far, Connexion spokesman Sean Griffin said all the airlines have chosen wireless because it's easier to install and doesn't weigh as much.

To get on the system, a user will need a wireless-capable laptop. Users can sign up for the system beforehand at Connexion's Web site or access a Web site in-flight to set up an account and start payment.

Scott Carson, Boeing's senior vice president in charge of Connexion, said the company has been working for the past year to address glitches that plagued some test flights, even delaying the launch by about a month for improvements.

He now expects the service to be ready at the end of April.

Connexion's launch follows that of rival Tenzing Communications, which has for months been offering e-mail and text-messaging -- but not Web browsing -- on about 800 U.S. and overseas airplanes.

Seattle-based Connexion, a unit of Chicago-based Boeing, was formed with high hopes in the spring of 2000. Just 18 months later, the Sept. 11, 2001, terrorist attacks devastated the U.S. airline industry.

The company soon lost the support of the three U.S. airlines -- American, Delta and United -- that had originally signed on as partners. Scrapped was a plan to install the service on 1,500 planes and begin service in mid-2002.

"We went through an interesting discussion late that year (about) what would it take for us to survive -- and whether we should," Carson recalled.

Boeing executives ultimately agreed to let Connexion stay in business, but with a much smaller staff. And instead of focusing on U.S. commercial airlines, the company shifted to military customers and private business jets. Both sectors grew more interested in being connected in-flight after Sept. 11, Carson said.

Today, Carson says Connexion is on seven planes that fly U.S. government and military officials, and it has 14 business jet customers.

The company continued to try to sell the service to commercial carriers, but it looked to Asia and Europe. Besides Lufthansa, Connexion will eventually be available on British Airways, All Nippon Airways, China Airlines and Singapore Airlines.

Boeing's service will cost from $9.95 for 30 minutes to $29.95 for full access on flights longer than six hours. At that price, analysts say, the company may interest business travelers but is unlikely to secure leisure travelers -- especially those cramped in the middle seat in coach, where just opening a laptop can be difficult.

"This is a business- and first-class thing -- and conceivably someone who's in premium economy and desperate," said Richard Aboulafia, an aerospace analyst with Teal Group.

But analysts say the company may only need to attract business travelers, who typically pay the most for intercontinental flights where the system is expected to have the best chance of success.

In test flights between Frankfurt and Washington, Lufthansa said it has drawn 50 to 80 users on flights with around 360 passengers.

Lufthansa will initially offer the service on flights longer than eight hours. Burkard Wigger, project manager for Lufthansa's FlyNet program, said the company has not yet decided whether it will be worthwhile on shorter flights. It will be installed on Boeing and Airbus jets.

Wigger said Lufthansa hopes the service will be enticing enough to attract passengers to its planes -- and away from other carriers.

Analysts say that competitive edge may prove the best selling point.

"The key is, 'Will people get on your plane as opposed to someone else's plane because you have it?" said Cai von Rumohr, an analyst with SG Cowen.

But Tenzing, backed by Boeing rival Airbus, doesn't seem to have elicited that sort of response. The service, which currently mostly runs off telephones installed in airplane seatbacks, has been criticized as cumbersome.

Tenzing vice president Alex McGowan said the company plans to launch a second, speedier version of its service by early next year that will either run through Ethernet connections or a wireless network. The cost will range from about $5 for in-flight instant messaging to $25 for full Internet access.

McGowan concedes there have been problems with Tenzing but says the system still has plenty of devotees. He would not provide specific usage numbers.

For its part, Connexion is now projecting to break even in 2007 -- two years after the company once said it hoped to be profitable. Boeing will not say how much money the unit is losing now.

Aboulafia said one reason Connexion may have made it this far is because it's been realistic about how successful such a venture can be.

"There's a percentage of the population that will pay $30 for relatively free and clear Web access," Aboulafia said. "It's not big, but their ambitions aren't that big. That's probably why it survived."