Free Internet for All Inflight Passengers Eventually

In an era where everything seems to be unbundled (fee crazy) that seems like a strange thing for me to have said. However JetBlue did start offering free to the consumer internet. Sponsorship is one model to fund internet. And Delta is following Alaska’s lead in offering free inflight texting. T-mobile subscribers get an hour of free Gogo internet.

More importantly speeds are improving. Delta has been rolling out satellite internet and American is too. You need to price internet because on a plane there hasn’t been enough to go around and you need to limit its use to those who value it most, otherwise it would become as unusable as it is on an Emirates A380 where it’s mostly been given away free.

However once you have enough bandwidth the costs to provide access are mostly fixed, and the economics of airline fees reverses. Bundling — like your cable company does — becomes a profit-maximizing strategy.

Bundling makes sense where consumers demand various levels of service, will pay different amounts for each service, and the marginal cost to provide services is low. Once the investment is made to be able to to provide the service, the key is to extract as much total revenue from all of your customers as possible. You can make more by offering a premium product than a stripped down one.

My original prediction said it would happen in 10 years. There’s 5 years left, and that might be aggressive. My prediction could wind up right, but my timeframe wrong.

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