Finding Good Usage Numbers for Onboard Wireless Internet

(MoneyWatch)  When I visited with LiveTV in November, I wrote about the problems they were having in building a business case for inflight internet. We now have some new data out from Virgin America which may change some of the expectations for how inflight internet can perform.

The big problem for LiveTV was figuring out a business model to make installing inflight internet a profitable venture. The low usage rates they had already seen with their limited product combined with rumors of usage rates for other services did not lend themselves well to launching a new robust product. While many airlines have opted to do tests, none of those airlines have decided to go beyond a test yet, so there appeared to be some credence to their strategy. (Southwest just started its test.)

With that, I imagine that many people are taking a great interest in seeing the results from Virgin America's installation. The airline didn't opt for a test at all. They're in the process of installing wifi throughout their fleet, and they're about a third of the way through. Once the fleet is fully ready and its communicated, it will be easier to see the true demand for such a product.

If you only have wifi on a single plane, people aren't going to come expecting to take advantage of it. So I imagine that many people, even if they have their computers, aren't going to use the service. When Virgin America is done outfitting its aircraft in the second quarter, that excuse will disappear. So far, Virgin America says it has seen some flights with 30 percent internet usage. That's an encouraging number, though we don't know what they're averaging. Those could be outliers.

But once the install is complete, then we'll have a better idea of how this is going to work for them. They probably will have higher numbers, as they've noted, due to the fact that everyone has a power outlet at their seats. Without that, usage will probably drop, but at least this will help us to start getting some good baselines without much of the noise that test aircraft bring.