The Skift Airline Innovation Report is our weekly newsletter on the business of airline innovation. We look closely at the technological, financial, and design trends at airlines and airports.

Brian Sumers writes and curates the newsletter, and we send it on Wednesdays. You can find previous issues of the newsletter here.

A decade ago, in-flight Wi-Fi showed so much promise. While few airlines placed big orders for it, many investors figured airline passengers eventually would crave connectivity as on the ground, forcing carriers to catch up and generating big profits for providers.

They were half right. Passengers increasingly demand internet — I’ll rarely book a flight that doesn’t have it — and nearly every airline, except for some low-cost-carriers, has it in some form. And though passengers expect free Wi-Fi nearly everywhere, including hotels, most are willing to buy it aloft.

Profits are a different matter. Gogo, a market leader, went public in June 2013 at $17 per share, spiking at nearly $33 per share six months later. But it has trended downward since, and on Tuesday, shares traded as low as about $6. In March, the board replaced long-time CEO Michael Small with Oakleigh Thorne, who, through his family office owns 30 percent of Gogo’s stock.

The cost of providing in-flight Wi-Fi is immense, and Gogo hasn’t created enough revenue to cover it. That problem isn’t unique to Gogo — Southwest Airlines’ provider Global Eagle Entertainment has also had its share of fiscal drama — but Gogo tends to attract more attention.

What happens next?

On his first Gogo earnings call last week, Thorne wasn’t giving details, but he spoke about how the industry might need consolidation, and noted some private equity firms seem interested in the space. “Our board has a duty to do what’s best for shareholders, and as a large shareholder, I’m going to make sure that they do that,” he said.

What do you think? What’s Gogo’s next move?

— Brian Sumers, Airline Business Reporter, bss@skift.com, @briansumers

Stories of the Week

Gogo CEO Concedes Company Lost Its Way — and Often the Wi-Fi Connectivity Too: Gogo’s new CEO spent much of the earnings call trying to console investors who wanted to know why the stock has tanked. But he also touched on the company’s inability to provide reliable service. “I’m sure everyone on this call has a frustrating Gogo story, either a hard time connecting to the network or an arduous log-on process or just slow performance,” Thorne said. “As a board member, I used to complain about all those things all the time. And now I get to complain about them as the CEO.” The honesty is refreshing, but it’s not going to magically make Gogo profitable.

Southwest Will Fly Routes Between Hawaii Islands in Major Challenge to Hawaiian Airlines: Southwest said last week it will fly inter-island routes in Hawaii at some point after it launches transpacific service. But will it even try to launch a real competitor to Hawaiian Airlines? Probably not. We’re guessing Southwest’s inter-Hawaii flights will be a relatively minor part of the airline’s strategy.

United Airlines Hires Former White House Press Secretary Josh Earnest: We know United has had some trouble communicating with customers in recent years. But Josh Earnest, who worked for President Barack Obama, is probably more qualified than anyone to try to fix them. Washington, D.C. reporters speak highly of him, Skift Managing Editor Tom Lowry wrote in this story.

Japan Airlines Finally Understands Why It May Need Its Own Low-Fare Carrier: You would think, given what happened in Europe and the United States in the 1990s and early 2000s, Asian airlines would have prepared long ago for competition from low-cost carriers. Some did plan ahead, but many, including Japan Airlines, seem to be surprised that they’re losing customers to discounters. Yes, JAL has a stake in Jetstar Japan. But is that enough? Perhaps it needs its own low-cost carrier.

Norwegian Rejects Approaches From British Airways Owner: Norwegian Air is not yet ready to sell to International Airlines Group, my UK-based colleague Patrick Whyte writes. The facts are different, but this reminds me a little of the saga of U.S. airline Virgin America. As an airline, Virgin America was a weakling, far behind major carriers on nearly every metric. But its competitors coveted it for its routes and gates, and it sold for a premium to Alaska Airlines. Is Norwegian, which has been struggling financially, prepping for a big payday?

Qantas Is Latest Major Global Airline to Give Up on Boeing 747: No surprise here. But it is sad, nonetheless. Qantas last week set a retirement date for its Boeing 747-400 fleet, saying the last aircraft will go by 2020. Qantas placed a follow-on order with Boeing for six Boeing 787-9s as replacements. They’re much smaller, but the economics are far improved, and they can fly as far the 747s.

Skift Tech Forum Preview: Travelport’s CEO on a New Era for Airline Merchandising: CEO Gordon Wilson of Travelport says his technology company is making it easier for airlines to display their content in the way they want on travel agency “shelves.” If true, that could significantly help airlines maximize their revenue, according to Skift Travel Tech Editor Sean O’Neill.

Meet Me at Skift Tech Forum?

We’re roughly a month from the first Skift Tech Forum — a new conference in San Jose, California. We’ll have speakers from all segments of the travel industry, and each will talk about their company’s digital strategies.

Four of the speakers work for airlines. They’re Andrew Watterson, chief revenue officer at Southwest Airlines; Bonny Simi, president of JetBlue Technology Ventures; Mark Nasr, vice president, loyalty, and eCommerce at Air Canada; and Linda Jojo, chief digital officer at United Airlines. I’ll be interviewing most of them on stage, and I promise to ask tough questions.

The main event is Tuesday, June 12. There’s a cocktail reception the night before, and it would be great to have as many newsletter readers there as possible.

You can find more information, including ticket prices and the other speakers, on our website.

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Skift Airline Business Reporter Brian Sumers [bss@skift.com] curates the Skift Airline Innovation Report. Skift emails the newsletter every Wednesday. Have a story idea? Or a juicy news tip? Want to share a memo? Send him an email or tweet him.

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Photo Credit: Gogo's new CEO is trying to keep investors calm. Pictured is the test aircraft Gogo used for its new 2KU satellite-based WiFi. Gogo