Dealing a blow to Gogo, the U.S in-flight Wi-Fi market leader for nearly a decade, American Airlines is switching more than 500 domestic aircraft to ViaSat, the same company that provides speedy, streaming-capable Internet for JetBlue Airways.
ViaSat alluded to the announcement Tuesday on its third quarter earnings call, and American confirmed it Wednesday. Installations of the new system will take “years,” an American spokeswoman said. A ViaSat spokeswoman said installations will begin in Summer 2017.
This is the second ViaSat order for American, a long-time Gogo customer. In June, American said it would outfit roughly 100 new Boeing 737 Max aircraft with the new system, which, at least on JetBlue, supports video streaming. The Gogo systems now on American’s fleet are much slower than ViaSat’s platform, because they rely on different technology. Gogo’s systems for American’s domestic flights uses cell phone towers, rather than satellites.
“As more customers bring and use Wi-Fi enabled devices onboard, we constantly look for ways to improve our inflight Wi-Fi service to give them the best experience possible,” American spokesman Martha Thomas said.
American’s regional aircraft will retain Gogo, while long-haul aircraft will keep a satellite-based system from Panasonic. Gogo still will install its next-generation satellite Wi-Fi called 2KU on about 140 aircraft in American’s fleet. That deal was announced earlier this year, and remains on target.
Thomas said American is using three providers so it can “upgrade our fleet with the latest and fastest Wi-Fi service as quickly as possible.”
American was Gogo’s first customer in 2008, debuting the service on flights between New York and California. At the time, it was a major technological feat, but the cell tower-based system has considerable capacity constraints, and it slows as more passengers use it. To manage capacity, Gogo has steadily raised prices, and it can sometimes cost roughly $50 more to buy Wi-Fi on long domestic flights. Gogo has also improved its network over time, but not enough to satisfy passengers.
A Gogo spokesman called losing the contract to American “old news,” noting that the company had said in a June filing that it expected it might lose contracts “with respect to a significant portion, or potentially all, of such approximately 550 aircraft from time to time over the next several years.”
On Wednesday, Gogo’s spokesman said, “It doesn’t change our business outlook and financial guidance.”
ViaSat has been growing quickly, and it now has contracts with Virgin America, American, JetBlue and United. Adding to its airline business is a priority, executives have said, and ViaSat soon will launch a new satellite to support its business.
Airlines like ViaSat’s system because it generally has enough bandwidth for passengers to use the Internet as they do at home. ViaSat generally does not need to ration its connectivity, as Gogo does, though United blocks streaming, even though it does not need to.
“We anticipate that our North American airline expansion will impact the industry in a way that’s good for both the passengers and the airlines,” ViaSat CEO Mark Dankberg said Tuesday. “And we believe it’s becoming more evident that more passengers are expressing their preference for good connectivity when given the choice on competitive routes.”
Southwest could be the next major airline to add a new WiFi provider. The airline is requesting proposals from connectivity companies, a spokeswoman said.
“We’re still in the middle of this process and cannot share specifics on the providers included,” the spokeswoman said.