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Southwest CEO admits the airline’s first attempt at in-flight Wi-Fi was subpar

@denschaal

Jan 24, 2013 10:58 am

Skift Take

Some Southwest passengers have long complained about the spottiness of its Wi-Fi, and now CEO Kelly concedes that the reliability of Row 44 Wi-Fi service hadn’t been up to the airline’s standards. Nothing more frustrating for business travelers than funky Wi-Fi.

— Dennis Schaal

Turnkey Analytics to Track Your Competitors

 / Row 44

Southwest Airlines believes it has its Row 44 Wi-Fi reliability problems resolved, and expects to begin marketing it in earnest this year. / Row 44


Now that Southwest Airlines has Wi-Fi and TV from Row 44 installed on 400 aircraft, Southwest CEO Gary Kelly concedes the airline’s Wi-Fi reliability “was not where we wanted it to be in prior years.”

Hence, Kelly says, Southwest didn’t put much marketing into the service.

Asked to comment on Kelly’s stance, Robbie Hyman, a Row 44 spokesperson, agreed that there indeed had been a problem, saying:

Reliability is a key metric for Southwest, and they were indeed an early adopter of satellite-based technology for inflight WiFi. The drop in reliability a while back was linked to an issue with a a first-generation component on our system.

 

We addressed the issue by having a new component developed and upgraded by a new supplier, which we then replaced, and that turned out to be the right fix to enhance reliability and ultimately the passenger experience.

But, Kelly claims the Row 44 service is 98% reliable today, which he characterized as “not too bad.”

Kelly said Southwest earned about $5 million in Wi-Fi fees in 2012, and plans to ramp up its marketing, emphasizing Live TV from Row 44 with increased offerings, and looming video on demand.

Without offering any specific statistics, Kelly, speaking during a conference call about Southwest’s fourth quarter earnings, said the Wi-Fi take-rate is “better” on long-haul flights than on short haul flights, which is below expectations.

In other tidbits from the Southwest earnings discussion:

  • Officials said they expect its new pay-at-the gate boarding option in positions A1 to A15 will likely be purchased by one passenger, or less than one person, per flight. That could mean “tens of millions of dollars” in revenue in 2013, CFO Tammy Romo said, but that pales in comparison with around $100 million in revenue garnered from Business Select Fares and close to $200 million from EarlyBird check-in last year.
  • Kelly said “we don’t have any plans to charge for bags [first- and second-checked bags] at this time.” The airline believes it picked up around 2% market share, largely because of its Bags Fly Free policy, and this accounts for about $1 billiion in annual revenue gains.
  • Kelly argued that Southwest has “an enormous opportunity” and is “very different from our competitors” because of the prospect of increasing the ranks in Rapid Rewards loyalty program, growing the airline’s customer base, and adding destinations.

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