Boeing Disconnects Connexion
Boeing said it will take a charge of $320 million to write off the in-flight WiFi effort. Industry analysts believe that the Chicago-based aviation giant invested as much as $1 billion to develop Connexion, which at its onset, in 2000, was seen as a major revenue-generator for the airlines and for Boeing. Predictions of eventual revenues from on-board Internet service ranged as high as $25 billion a year.
While international carriers such as Lufthansa, Japan Airlines, Korean Air, and Singapore Airlines signed deals to offer their passengers the service, the big U.S. carriers, which have struggled to avoid (or recover from) bankruptcy since the terrorist attacks of Sept. 11, 2001, declined to participate.
Original Connexion development partners American Airlines, United Airlines, and Delta Air Lines, pulled out of the project within months of 9/11.
"Over the last six years, we have invested substantial time, resources, and technology in Connexion by Boeing," Boeing chairman and CEO Jim McNerney said today. "Regrettably, the market for this service has not materialized as had been expected."
Price has been seen as a major factor in limiting the appeal of the service. At a time when WiFi access in many airport terminals is free, Connexion cost $10 for the first hour or $27 for 24 hours. Connexion now joins seat-back telephones in the annals of vaunted telecommunications services that have failed to catch on aloft.
At the same time, ground-to-air wireless services may be poised to succeed where the satellite-based Connexion could not: In a recent spectrum auction by the Federal Communications Commission (FCC) , a subsidiary of startup carrier JetBlue called LiveTV LLC purchased a slice of spectrum in the 1MHz frequency band that can be used to offer ground-based connectivity to airliners. (See JetBlue, AirCell Win Some Airtime.)
— Richard Martin, Senior Editor, Unstrung