For years, I was frustrated by JetBlue’s failure to follow others and put wifi on its airplanes. What took so long? Well, after a false start, the effort didn’t begin until the airline felt it could provide a superior product. It seemed like JetBlue was losing out, but what never quite hit me until a panel discussion at the Phoenix Aviation Symposium earlier this month is just how powerful that advantage now is for JetBlue. It can do things that others can’t, and customers don’t have to pay a dime.
When wifi became a big deal, the default was to install Gogo’s air-to-ground system. It was easy and quick to install, which was important. Plus, Gogo was aggressive with pricing and made it easy for airlines to commit. Today we have Gogo on the domestic fleets of Alaska, American, Delta, and Virgin America (United has it on some airplanes) with varying levels of speed but none overly impressive.
JetBlue, meanwhile, messed around with some pretty awful ideas. Anyone remember BetaBlue? That was JetBlue’s attempt to provide a free service, but it was useless for anything but email. That failed miserably, and JetBlue looked at other options. While the airline refused to commit, other airlines were aggressively rolling out Gogo. At the time, it seemed like an insurmountable lead.
As time went on, people started using inflight internet more and more. Gogo quickly ran into a capacity problem. Part of the solution was to offer upgraded systems, but those didn’t alleviate the problem entirely. The quick fix was out of Econ 101: raise the prices to reduce demand. And that’s a lot of what we see today. On my Virgin America flight from Boston to LA recently, I couldn’t believe wifi on that flight was running $39.95. A day pass was $49.95. That’s incredibly high, but it does the job and squashes demand.
Now, Gogo is pitching satellite-based systems which are promising but aren’t simple to install. It takes a big commitment to go down that road. And it takes time. Now JetBlue finds itself in a much better position.
The airline has somewhat quietly installed its fast satellite-based wifi system on more than 80 percent of its Airbus fleet. That will be done soon, and the Embraers will follow. This system is really fast, and so far, JetBlue is offering it for free. (You can pay for an even faster version if you want.)
It seemed to me that this was just another cost that JetBlue would absorb as part of its product offering, but that’s far from the case. JetBlue is actually finding that having fast wifi is a huge advantage.
At the Phoenix Aviation Symposium, one of my favorite conferences, Marty St George, EVP – Commercial and Planning at the airline, made an obvious point that I had completely missed.
Just because [wifi is] free to customers doesn’t mean it’s free. We’re recovering our broadband costs and more with partnerships. If I’m on a product that doesn’t have the bandwidth, I can’t do partnerships. We feel very very excited about the product.
Those partnerships are working. It showed promise earlier this year when JetBlue announced a content partnership with The Wall Street Journal. But that was nothing compared to the recent announcement of a partnership between JetBlue and Amazon.
If you’re an Amazon Prime member and you fly JetBlue, you’ll be able to watch all your Prime videos or listen to Prime music for free, just as you would at home. People who aren’t Prime members will be able to purchase content to stream through Amazon. And undoubtedly, Amazon is paying a pretty penny for this privilege. JetBlue makes money (or at least breaks even), travelers get a tremendous experience, and Amazon presumably converts a lot of travelers into heavier users of the service. That’s fantastic for everyone… except for those airlines who can’t offer the same thing.
Bandwidth has been such an issue that airlines with Gogo have jumped at the opportunity to provide cached content to traveler on an onboard server. You can stream what the airline keeps on that box, but you can’t pick from the infinite universe that it Amazon. And much of that canned content is going to cost you to watch. That’s not the case on JetBlue.
You can see how this becomes such a powerful advantage for JetBlue, especially since competitors are unable to match for now. There are likely all kinds of online services that would be interested in taking a chunk out of their marketing budgets to spend them on airplanes, but it requires the ability to stream. If Amazon sees value, that’s a very good sign that there is real value there.
While JetBlue was slow to get wifi onboard, it has now built quite the formidable advantage. And it’s going to take years for others to catch up.
