Air NZ inflight phones may be too costly for mass appeal

Air NZ's inflight mobile, internet charges still too high for mass appeal, analysts say

By Jason Krupp

Feb. 9 (BusinessDesk) - Air New Zealand Ltd.'s launch of inflight mobile and internet services is unlikely to herald a flood of passengers surfing the web or chatting on their phones while in the air while charges remain sky high, analysts say.

The Vodafone-backed service, which the national carrier has launched on its two Rugby World Cup branded A320 planes, is being charged at a premium, with texts costing 80 cents each, making a call at $3.50 a minute, and receiving calls at $2 a minute. One megabyte of data costs $20.

"The price is too high to see mass use," said Paul Budde, managing director of BuddeComm, an independent telecommunications consultancy in Australia. "Many people can wait until they are on the ground where access is free or cheap."

The rates outstrip international roaming fees charged by phone companies – rates that Singapore Airlines and Emirates plan to use to benchmark pricing of similar services they are about to start offering. Vodafone Traveller roaming fees are 80 cents per text, $1 per minute to receive a call, between $2 and $3 per minute to make a call in Europe, Asia and North America, while data costs $10 a megabyte.

Vodafone says one of the reasons why inflight connectivity is being charged at a premium is that it the plane connects to its ground network via a satellite service operated by OnAir, a Swiss company owned by plane maker Airbus and inflight communications system manufacturer SITA.

The cost of a satellite connection is significantly higher than connecting through terrestrial networks, and may help explain why OnAir has battled to gain traction among major carriers until recently.

Another factor limiting Air New Zealand's inflight services is that it is only available to Vodafone users, who make up just half of country's mobile users, and international travelers with an existing OnAir account. This means that each customer has the bear a bigger share of the costs.

By contrast, German carrier Lufthansa's FlyNet service, which allows long haul passengers to buy unlimited data for a fixed fee. An hour's connectivity costs 10.95 euros ($19.30), while 24-hours will cost 19.95 euros ($35.22). Mobile calls and texts are still billed at roaming rates.

Similarly in the U.S., most airlines offer all-you-can-eat internet access on major routes through Gogo Inflight Internet, where a month of unlimited usage costs $US34.95 ($45.30).

Vodafone says the domestic route-only service is not aimed at catering for extended periods of web browsing or chatting, but rather as a facility for last minute or urgent situations.

"We see the service as a way to receive and action that urgent email that you were waiting for, to fire off a quick text to confirm plans or to call a friend to arrange a lift when you land” said a Vodafone spokesperson.

The mobile phone company said that the service is still being trialed, and no final decision has been made on whether to extend to other planes or the shape of its pricing plans.

Major carriers including Qantas continue to buy planes which come with mobile internet connectivity equipment installed, such as the A380, and are touting inflight connectivity as a means to attract business travelers.

"Internet access in planes is not yet widespread," Budde said. However as more airlines offer these services prices are expected to fall and "when prices go down usage will certainly go up."

(BusinessDesk)

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