American Airlines strikes a deal to get better WiFi for passengers

The airline has chosen ViaSat to speed up the internet offered on its newest fleet of Boeing 737 MAX planes. The change reflects larger trends in the industry, with airlines investing heavily to attract lucrative business class travelers. 

Alan Diaz/AP/File
An American Airlines passenger jet takes off at Miami International Airport in Miami (Wednesday, April 20, 2011).

The spotty WiFi on many flights just won't do for getting important work done mid-air, and American Airlines is trying to change that for its passengers.

The airline has struck a deal with ViaSat, a broadband services and technology company that provides internet for major airlines including United and JetBlue, to be American's newest in-flight WiFi provider. The agreement follows a legal disagreement with Gogo, American Airlines’ other internet partner.

In February, American sued Gogo, arguing that its internet service was too slow, and stated its intention to switch to a different carrier. American later dropped the suit after it reached an agreement with both ViaSat and Gogo.

Under the terms of the deal, ViaSat will provide internet on 100 of American’s new Boeing 737 MAX planes, and Gogo will improve its internet speeds on 140 of the 560 American jets where it currently offers service. Only smaller, regional planes will keep the old Gogo internet. In the SEC filing, made Friday, American is able to entirely deinstall Gogo at any time if it so chooses. 

"We believe we are now approaching the end of an era where passengers have paid very high prices for very slow connections," ViaSat chairman and CEO Mark Dankberg said in a press release. "Our agreement highlights a significant initial step for American to deliver an onboard Wi-Fi experience every passenger will want to use." 

The upgrade  highlights the shifting economics of the airline industry, which increasingly prioritizes attracting the highest-paying customers over passengers in economy class. Business class is now one of the most lucrative segments of air travel. According to an analysis by the Global Business Travel Association, spending on business travel climbed to $1.25 trillion in 2015, up 6.5 percent from 2014. The bulk of that increase now comes from China, although American business travelers still make up the overall majority. 

The expectations of business class passengers have risen as flights have gotten longer, and airlines are adjusting accordingly. Some, including Delta and Air Canada, have even gotten rid of first class entirely to shift their luxury efforts solely to the business class set. Airlines  invest thousands of dollars in updating their business class seats to make them more attractive; Just designing one business-class seat costs upwards of $80,000, according to the New York Times.

Because business-class seats can also typically lie flat, introducing more of them can mean constricting the already-tight legroom in coach class. But it pays off for the airlines. In 2014, 10 percent of American’s revenue on the route between John F. Kennedy International Airport and Los Angeles International Airport came from tickets that cost more than $3,600. 

However, the airlines still throw a bone to economy class travelers here and there. In February, United Airlines reintroduced free snacks to economy class on its domestic flights. 

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