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Time to look at dropping inflight WiFi rates

Posted by Paul Makishima, Globe Assistant Sunday Editor  March 28, 2012 10:34 AM

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I flew Virgin America between Boston and San Francisco last week and heard some significant grumbling among passengers, particularly but not exclusively the graphic tee set, about the price of the carrier's WiFi, which runs $4.95 for flights less than an hour and a half, $9.95 for trips up to three hours, and $12.95 for longer ones, like mine.

Apparently, the folks on my flights were representative of the way many travelers feel. The Wall Street Journal's Middle Seat blog chatted with representatives of In-Stat, a research and consulting firm, about WiFi use aboard planes.

"People are beginning to expect you to have Wi-Fi everywhere. It's just whether they are willing to pay for it," said In-Stat senior analyst Amy Cravens.

In-Stat research shows that people place the value for in-flight Wi-Fi at about $2 to $5 per session, rather than the typical $10 and up. "Value perceptions are not aligned with current pricing," Ms. Cravens said.

Right now, about 1,700 US planes are outfitted with WiFi. This includes the entire fleets of Virgin America, AirTran, and all of Delta's domestic service. And a signficant portion of American and Southwest Airlines jets also offer the service.

Most carriers share the same pricing structure and that's because they get their WiFi from Gogo, which sets prices. The notable exception is Southwest, which contracts with Row 44 Inc. and retains control over rates: currently $5 per flight.

Internet use in the sky is on the rise. In-Stat told the Middle Seat that 4 percent of passengers logged on at the end of 2010, but the firm expects that number to hit 10 percent by the end of this year. Healthy but not surging.

It's pretty clear that if airlines want that number to take off rates will need to fall.

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