While Gogo has been in the news lately as a result of a lawsuit filed by American Airlines, executives said this week on the company’s earning call that it still anticipates its market penetration to grow due to increased flyer demand for internet bandwidth.
“Consumer demand is really constrained by bandwidth on our networks right now, but every indication we have is that as you bring more bandwidth to the aircraft you are going to see skyrocketing passenger demand,” said Gogo CEO Michael Small. “This is a supply-constrained business right now. I still firmly believe that the airplane would have to be the exception if you don’t get to a 100 percent usage on the plane, maybe in all different ways and varieties and some maybe for free and some maybe paid. But, ultimately, the whole plane will use it.”
Gogo also announced its deal to increase bandwidth capacity on its new broadband system this week. Besides the capacity increase, the system will also broadcast high-definition TV content to the aircraft.
Small thinks that streamlining internet access along with television signals will end up cutting costs for airlines.
“Airlines care about it because it will be their biggest opportunity to drive cost out of their business, and it will be their biggest opportunity to improve the customer experience on their planes,” said Small.
Small also expects to have Gogo technology in service for all three major airline alliances, despite the drama with American. The company’s business model, however, may have to shift as increased competition enters the space from rivals like Viasat.
“We had the right business model to get this industry started,” said Small. “Gogo had to control it all. I don’t think it would have come together [any other way]; we had to absolutely minimize the risk for the airlines with the turnkey approach or I don’t think it would have happened. But at this stage, we are open to all business models.”