Boeing Makes Critical Scandinavian Connexion

Scandinavian Airlines (SAS)’s deal with Connexion by Boeing, a business unit of Boeing [NYSE: BA] to use Boeing’s satellite-based broadband service on its long-haul flights is further confirmation of the opportunities for satellite in the area of in-flight entertainment. By inking this deal with Connexion, SAS now appears to be taking the lead in offering consumers the latest in terms of broadband services. Jens Willumsen, senior vice president of marketing and product management at SAS, explained the reasons why his company signed the deal with Boeing. “We decided a long time ago that we wanted to be at the forefront of adding value to our products through IT-related services. So, this was a very natural element for us to add onto our services as soon as it was possible. We know that about 80 per cent of our customers today on our long haul routes carry their laptops and more than half of them use them to work with while they are travelling. The Connexion by Boeing service is a very natural element to add on.”

Installations onboard the SAS fleet will begin in early 2004. Once an airliner is equipped with the Connexion service, passengers will be able to use wireless-enabled laptops or personal electronic devices for high-speed Internet access. Features will include e-mail, virtual private network access and streaming audio and video content. Initially, 11 SAS long-haul aircraft will be equipped with the service.

In terms of how the service will develop once it is up and running, Willumsen said: “It is going to be a $35 flat fee charge for using the service on a long-haul flight … There is also going to be some e-commerce opportunities. We have just started looking at what they are and which are the relevant services to our customers. In a longer-term perspective, we will be able to add different types of entertainment opportunities.”

He continued: “Ultimately, this technology will be used for in-flight entertainment, which is not something we are planning at the moment, but we do see it as an opportunity.”

Willumsen said that SAS has not projected how much the service will generate in terms of incremental revenue, but he believes the airline company will be able to cover costs. In terms of how many customers will use the service, he said: “From the test Lufthansa carried out on a transatlantic flight, about half the passengers on board who were carrying a PC wanted to utilize it … That is the volume numbers we are looking at. It was, however, a very business-orientated route … [We expect] 20 per cent of our long-haul passengers will utilize this service.” –Mark Holmes

(Contact: Jens Willumsen, Scandinavian Airlines, e-mail: [email protected])