Delta Air Lines Inc.’s chief executive officer, Ed Bastian, said last year that he’d like to offer Wi-Fi free on his airline’s flights, and reiterated that point at CES in Las Vegas on Tuesday, but has noted that offering the service would crash the system.
Speaking during a conversation in the fall at the Economic Club of Washington, which aired on Bloomberg last year, the 62-year-old Bastian told Carlyle Group private-equity luminary David Rubenstein, who hosts an eponymous interview show on the news platform, that charging for internet access actually prevents too many people from using it.
“It’s available on almost all of our planes,” Bastian said of Wi-Fi service, noting, though, that the carrier’s smallest regional jets don’t have internet access.
“I’m a firm believer that we need to make Wi-Fi free across all of our service, and we are working towards that,” he said to applause.
Bastian explained in greater detail why offering it free is a no-go for now. Here’s his take:
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One of the reasons why I say it’s ‘not a good reason’ why we charge for internet — you don’t pay for internet practically anywhere else — is that the planes do not have the technical capacity and capability yet [so] if we made it free the system would crash. So, once it gets above about a 10% take rate, onboard performance starts to erode…if you turned it on free. |
He went on to say that Delta has tested free Wi-Fi a number of times, but has found the heavy traffic difficult to manage. He joked that traveling at 30,000 feet in the air should be advantageous in terms of Wi-Fi performance, since planes are technically closer to the satellite networks, but he noted that the big difference is that a plane is traveling at 500 miles an hour, which can degrade service.
At popular digital conference CES on Tuesday, Bastian said he is aiming to bring free Wi-Fi on its flights in the next few years. “I’m confident we will reach the goal within the next couple of years at speeds as fast as on the ground,” he said.
However, MarketWatch’s Jon Swartz at CES in Las Vegas, writes that free Wi-Fi may be a “quantum leap” for air carriers and notes that airlines have enough trouble providing consistent in-flight internet at any price.
Delta is the largest U.S. carrier by dint of its $37 billion market value. In October, Delta reported quarterly earnings that beat forecasts, but costs have been climbing as the carrier absorbs increased staff overtime as well as the impacts of numerous storms. Bastian has said that he expects this cost inflation to continue into this year.
Delta’s shares DAL, +0.21% gained 17.2% in 2019, compared with a year-to-date 10.7% decline for rival American Airlines Group Inc. AAL, -0.38%. Both of the air carriers have underperformed the broader market, with the S&P 500 index SPX, -0.17% up more than 28% in 2019, compared with a gain of just less than 22.3% for the Dow Jones Industrial Average DJIA, -0.30%.
Check out Bastian’s Rubenstein interview below via Twitter.
Here’s a more complete version of the Bastian-Rubenstein interview.
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