Qantas Walks Away From Inflight Internet on Its Longest Routes

Inflight Entertainment, Qantas
Qantas Pulls Internet

It didn’t make huge news, but last week when Qantas announced it had decided to stop offering internet onboard on its A380 fleet after a trial run, it caught my eye. After all, with airlines racing to install internet across the globe, this seems to fly in the face of general industry practice. Is this smart or simply short-sighted?

Qantas Pulls Internet

The airline installed wifi on a handful of A380s and offered it on flights from Australia to London and to the US from March through November. After the test concluded, Qantas decided it wasn’t worth it. Apparently, about 5 percent of travelers used the service and that wasn’t enough.

Qantas said:

Right now, our customers are telling us that access to the Internet on the ground is more important than in the air. We are continuing to invest in upgrading Wi-Fi technology across our domestic and international lounge network. We will continue to evaluate demand for Wi-Fi options onboard.

Wifi in lounges? That’s an absolute requirement. I’m not sure what kind of upgrading the airline is doing, but that should be a given to have functioning internet there. That should have nothing to do with the decision to offer it onboard flights that take 15 hours or more.

The 5 percent usage rate (with prices going from about A$13 to A$40) is low, but it’s not absurdly low compared to what others have seen. But the whole point of wifi is that in an increasingly connected world, people will start demanding this more and more. If Qantas has already put the antennas on some airplanes, it’s already done the hard part. So is this just the airline thinking short term and not really realizing that it needs wifi in the long run? Quite possibly.

But Qantas thinks that it’s special compared to other airlines.

Most of our A380 services operate at night and so another dampener on demand was the fact people preferred to sleep than surf the Web

It is true that Qantas has a lot of night flying, but come on. It’s not like these airplanes just sit around all day waiting for the sun to set.

The flights from LA to Australia and from Australia to London leave late in the evening and arrive early morning. But they’re still more than 15 hours long. People don’t sleep for 15 hours. Besides, the return flights leave in the early afternoon to LA . Yes, they go overnight, but there is still plenty of time during the day. From London, it’s an evening departure but you basically fly through an entire day with two overnights.

I suppose the point is that anytime you have really long flights, people will be looking for distractions. Maybe they aren’t looking for internet as much yet, but that will change over time. We’ve already seen it change domestically as more people have come to expect it on their flights.

Will this move hurt Qantas? It could. Delta is getting ready to put wifi on its international aircraft, and that will compete on the LA run. United is doing the same. Going over to London, its new partner Emirates is doing wifi as is Singapore. I believe Cathay is working on a test too.

So Qantas risks being the odd man out. Maybe those people with no self control who hate being connected will prefer Qantas, but for the rest, this could be a short-sighted decision. Then again, if Qantas starts seeing demand go downhill, I’d bet it reconsiders this move. But you can’t just flip a switch and have internet right away. It takes time, and that could hurt.

28 comments on “Qantas Walks Away From Inflight Internet on Its Longest Routes

  1. How much does Internet in flight cost the airline to provide, particularly when flying over places which are either sea or have very little population ?
    How much does Qantas make as revenue from passengers who use Internet ?
    If these 2 numbers give a huge financial loss, it says to me that while some people might make a fuss, the demand just isn’t there yet.
    Putting Internet on long haul aircraft requires capital investment. If the return on the investment is negative, better to wait a year or two until the return on investment is worthwhile

    Airlines in the 1990s spent a fortune on putting seatback phones in their aircraft. Furthermore, passengers were exhorted at length to surprise someone by making a phonecall at 38,000 feet – unfortunately everyone regarded those phones as too expensive and those phones just weren’t used.

    1. David – I don’t think anyone is suggesting the demand is there yet from any airline. I think instead they’re arguing that it’s going to be a necessity and the lead time is so long that they needed to start now. Satellite internet is not cheap, though as with everything, costs are expected to come down over time.

  2. I remember my first transatlantic flight from Detroit to Brussels way back in 1971
    there really was nothing to do unless you brought some reading material along or
    slept. No inflight movies on this plane, you just stared at the back of a seat, somehow I survived. Times certainly change.

  3. One question I have is just how usable was the internet? I’ve been on a couple of Norwegian Air flights with free wifi, and it has been horrible. –If I had paid money for it, I would have been demanding a refund.

    1. Perhaps it was horrible exactly because it was free? If they charged a nominal fee, fewer people would use it and those who do would receive more of the limited bandwidth.

    2. Two years ago (and maybe last year as well) Delta had free Wifi in December, thanks to Google. I used it then along with many other passengers on a full 757, and it wasn’t bad. Certainly good enough for email, news, wikipedia and the like.
      The speed must depend partially on how the airline implements it and perhaps geographic location as well.

  4. What is the cost to the airline for adding wi-fi? I mean once you have the sunk costs for the hardware it can’t be that bad, can it? The thing that I think keeps most people from doing wi-fi on board is the price.

    When traveling for work I have to think of accounting and what’s going to happen when I submit an expense report. I’ve basically been told that wi-fi isn’t approved for domestic flights because the expense is too high for the amount of time in the air. Flying from the mid-west we don’t have the long LA to NYC flights and my flights are usually max 3 hours. Now a 15 hour flight to Sydney is a different story. That one I could probably get past the accounting gatekeepers because the cost would be greatly offset by the added productivity. Additionally, any expense under $25 really isn’t too heavily scrutinized so where the airline prices the wi-fi does make a huge difference.

    1. A – After the installation costs, it becomes more of a cost around bandwidth, so that’s a variable cost. But there are still some costs involved depending upon the service arrangement with the various wifi providers.

  5. I used to use the internet on Lufthansa flights from SFO to MUC all the time. It was reasonably speedy and not so expensive. And yeah, though I slept for most of the flight to Germany, there were still a few hours to work. and the flight back was all online, great for catching up on email.

  6. Flying for me is a break from the routine. No grass to cut, snow to shovel, or e-mails to return. Catch up on some interesting technical journals and carry along some light reading. Eat whatever is served and then lean back on the reclining chair for some shut-eye. Intermittent wifi and “edited” movies aren’t attractions for me.

    1. Agreed. I can live without internet for a day or two. The window is the best form of entertainment. Food is a close second (provided its actually good :)

  7. How much fueldoes it cost to drag the antenna through the air and carry the server in the plane for 15 hours? Is that more than the revenue? Is that more than the competitive advantage?

    1. You have to pay to rent the satellite time to backhaul the internet traffic. I wouldn’t be surprised if Qantas is leaving the equipment on the planes until their next heavier maintenance, just disabling the equipment.

      The other question is how many onboard WiFi access points does it take to provide access to a plane as large as a A380? I’d expect four to eight…

  8. Few thoughts on this….

    Qantas put wifi on a few planes as a trial, and now it’s time to decide whether or not to roll this out to the entire fleet. Based on the trial data, they’ve decided not to. Yes, I suppose they could keep the existing installations going, but then they’d get slammed for product inconsistency when people show up expecting a wifi-enabled plane and there’s an equipment swap.

    The passenger mix may also be partly to blame. Business travellers are more likely than tourists to use in-flight wifi, and if you follow Australian Business Traveller it seems a lot of premium traffic has left Qantas for Cathay, Singapore, Emirates, etc. to Europe. I suspect many of those economy A380 seats are filled with tourists or students. In contrast, Lufthansa’s transatlantic flights probably have a lot more business travellers and thus higher wifi utilization.

    Also, I know nothing about the communications industry, but I imagine putting up satellites is rather pricey. Ultimately, that cost is passed on to the customer (i.e. the airline) who would factor it into their pricing. There are a lot more planes flying over the north Atlantic than the south Pacific, meaning a lot more potential users to share the fixed costs. I suspect the business case is a lot stronger for JFK-LHR or IAD-FRA than it is for LAX-BNE, for example.

    Finally, I have always really enjoyed my Qantas flights, both domestic and international, even in economy. They have good IFE, nice meals, etc. People are probably less likely to use wifi if they’re already entertained. On the other hand, if I’m flying UA’s coach SFO-SYD (which I’ve suffered through several times) with the single projector screen, no legroom, and high school cafeteria quality food, I’d be much more inclined to pay for a distraction.

  9. @ed kelty and @Bobber: I agree with you in theory, but not everybody relies on connectivity for narcissistic reasons.

    I have my “off the grid” vacation time and am appreciative for it. However other trips I stay in touch – and being available remotely gives me more flexibility to travel for personal reasons. I enjoy the fact that sometimes I can “work from anywhere” – and having reliable internet on long hauls adds to my arsenal – even if I would only use it rarely.

    Just because it’s not necessary for one person doesn’t mean it’s not valuable for another, so blanket statements don’t really serve a purpose other than to posit one’s own on board activities…

  10. Sane decision. They’re already losing money, no need to throw good money after bad. Yes, Wi-Fi it’s a deal breaker for some (a subset of 5%), but I’m probably in the majority when I say that I’d rather QF use that money on meals and IFE.

  11. Remember Qantas is giving up all but SYD-LHR in Europe to connex via DXB with EK so a lot of long haul for them is leaving and for long haul to N.America and service up to Asia, they just don’t think it’s worth it. Do Asian business travelers work on the plane as American business travelers do, or to they want to relax and enjoy the first/business class travel experience?

    If the demand wasn’t there why loose money on it in case people might want to use it sometime.

    1. David SF – The only thing Qantas is giving up is Frankfurt and that wasn’t on an A380 anyway. It will keep flying to London but it just changes the stopover point to Dubai. So there isn’t much changing in that regard.

  12. “It is true that Qantas has a lot of night flying, but come on. It?s not like these airplanes just sit around all day waiting for the sun to set.”

    Actually, they DO sometimes sit around all day waiting for the sun to set. Certain key routes (example: SYD-LAX) are nighttime operations and in LAX QF flights arrive in the morning and depart in the late evening. Take a look at the LAX hardstand mid-afternoon and tell us that the airplanes don’t sit around waiting for the sun to set. ;)

  13. I think having online access on a plane is not necessary. I don’t know if Delta, GOGO or any of the others have ever released figures but I am sure the uptake must be low. I would not pay for it myself, and would not get it past accounting when submitting expenses. Many places now also tell you that hotel wifi is no longer something you can expense.

  14. One day a textbook will be written on how to sink an airline and the primary case study will be Qantas. Yes, Arcanum many business travellers are abandoning Qantas for Emirates and Cathay. Why are they abandoning an airline that used to be in the top ten in the world? Because the current management have lost sight of their customers. And this is a decision that shows just that. Qantas used to be a leader and now its becoming a late follower.

    Yes, only 5% used it today. Maybe 2013 it would be 10% and in 2014 20%. I fly multiple times on the MEL/SYD-LAX and return. Increasingly wanting net connectivity during that time is not a vanity- it is a reality of the connected world we live in. Younger people will start to fork out the $40 that Qantas is asking for joining business people who do want to check in during the flight.

    The trial will show under utilisation because I think many customers were not expecting wifi on board. I think if we knew we would have it, we would plan our work to accomodate it. But my experience was you didn’t know if your plane was going to have wifi or if it was going to be activated (it was not live on one of my planes which had installed earlier this year). When I have used it, I found the speeds good.

    I also remember the Wall Street Journal calculated last December that only 3% of passengers on commercial flights with WiFi actually opt to pay for it so 5% is not bad!

    Of greater concern is what Qantas competition is doing. At this stage, the competition on the Pacific runs do not have wifi. Virgin Australia are rolling out wifi on all domestic services.I am not sure about their international 777s. As noted, United have yet to go beyond a single TV screen in coach class on their appalling Pacific service!
    On the Europe via Middle East runs, where Qantas has been losing business hand over fist, Qatar Airlines is aggressively moving ahead with wifi. Etihad have promised all planes will have net access by end of 2014 and Emirates have it on all flights to and from Australia.
    In Asia, Air Asia, Malaysian and Singapore are rolling out wifi on all planes. Cathay are a little slower.
    Oh and Cranky, yes all QF Lounges have free wifi. Bring it onto their planes and they throw down the competitive gauntlet.
    I think my response is a blog post in itself!

    1. Inflight internet has been around for years, and no carrier, and most (all?) providers, have yet been able to make much of anything work. Boeing even shut down their own attempt. The take rates are microscopic, and the growth rates are anemic, to the point that it’s understandable that many carriers, and even some providers, are just giving up. By the time the demand grows enough to even begin to cover the costs of the technology, there will be new technology. I think the reality is people *like* to be on the internet, but at any price at a penny or above, they don’t *need* to be on the internet.

  15. We flew from MEL to LAX in August with Qantas and there was a card in the seat pocket explaining the wi-fi. I can’t remember the cost but I know at the time I thought it was expensive. Hubby tried to access it but it was really really slow so he gave up. Not sure if it was offered on the return flight.

  16. This is the company whose management won’t consider the B777, and grounded its whole operations because of aircrew stress. And don’t mention the fiasco of the business class seats recently. Not to mention that their strategy for getting the international division back to profit is to NOT invest in new aeroplanes, while all their competitors are moving to more economical plant.

    What else would you expect them to do in regard to wifi?

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Cranky Flier