Looks like it's finally coming. I'm not sure that this is the ultimate technical solution, though. 1.5 Mbs won't go very far with a plane full of browsing passengers, and it won't work for international flights over the oceans. Ultimately, they'll have to find a satellite solution, with more bandwidth.

The superstupid aspect of this plan is that AA will charge some explicit small fee ($15/flight is mentioned) to cover the cost, instead of just folding it into the price of a ticket.

This is deeply ignorant of human psychology. People will gladly fork over $20-50 (or typically a mere 5-10%) more per ticket to fly an airline that offers "free Wi-Fi!" when they're booking the flight, but they'll grumble and pinch pennies when asked to pay $10 for it after they're on board. It's illogical, but that's what people are like.

Car salesmen know this well. The best way to upsell a guy about to buy a SUV is to sell him a fancier "luxury edition" model that comes complete with a bunch of little gew-gaws, seat belts with GPS, four-way electric adjustable sunglasses holder, or whatever. He doesn't really notice the extra 5% in the total purchase price, which is enormous anyway, so he feels like he gets all the little goodies for free. It's a lot harder to get him to fork over half as much for aftermarket installs after he's bought a standard model.

PeoplExpress tried the economist's fantasy TANSTAAFL airline model 25 years ago, where you paid for everything you wanted -- no free food, no free drinks other than water, no free baggage, not even free use of credit for your ticket instead of cash. If you've never heard of PeopleExpress, you know what happened to that experiment in ultimate rationality.

Who's running that airline, and what are they using for brains?

SAS have been running inflight internet for $39.99 a "long haul" flight for a couple of years now. I don't know if it's WiFi.

Cathy Pacific had ethernet internet on their Airbus aircraft in Business and First too when I last flew with them in early '06.

I also see that Virgin America have included ethernet jacks in all seating in their new aircraft.

The ultimate irony of Carl's comment is that airlines keep curring the goodies away. There's no free lunch these days where it used to be. I do see free headphones reappearing though, but it's a very feeble comeback. So, assuming that PeoplExpress was not fictional, they simply have done it too fast, too soon. They would be doing just find now.

The thing about folding the cost into the price of the ticket is, people are stingier than Carl realizes. Worse, Orbitz and Expedia made it much easier to squeeze extra dollar out of price. They sort query results by the price, for crying out loud. Maybe Carl still uses a travel agent. I sure as hell can live without WiFi for a few hours if it saves me money.

P.S. Rand, still no go at "AN-Five". Crazy.

The superstupid aspect of this plan is that AA will charge some explicit small fee ($15/flight is mentioned) to cover the cost, instead of just folding it into the price of a ticket.

It isn't stupid. As Rand says, "1.5 Mbs won't go very far with a plane full of browsing passengers."

It isn't intended to. These "micro hotspots" are designed for a limited number of simultaneous connections. About 10 per plane, if I recall correctly. If American did as you suggest, everyone would try to connect and you'd get the classic "Tragedy of the Commons."

If you've never heard of PeopleExpress, you know what happened to that experiment in ultimate rationality.

Yes, I know what happened. They went off model and tried expanding into markets like London where they had no business trying to compete. They went bankrupt and everyone bemoaned the death of "no frills" carriers. Until Southwest came along and succeeded because unlike PE, they didn't make stupid mistakes.

The "luxury edition" model does not work for airlines. Those first class seats are money losers on domestic flights because no one wants to pay to sit in them. The people you see sitting in first class are mostly non-revenue, upgrades, or frequest flyer tickets.

It's good enough for light browsing. Just cap each mac to 128kbit.

Ed, you're right about US domestic First - but on international long haul First and Business is where the gravy really is, at least for BA and a few others.

If American did as you suggest, everyone would try to connect and you'd get the classic "Tragedy of the Commons."

I dunno, Edward, that seems like an inappropriate analogy. You get a tragedy of the commons when people can help themselves to a resource and there's no way of charging them for it. American can obviously sort out who to charge for the service; it's the people flying their planes! They just need to measure the cost of providing the service and fold it into the price of the ticket, whatever it is. If that turns out to be more than people are willing to pay, then that tells them they either need to go to a la carte pricing or cut the service entirely.

Anyway, I suggest you contradict yourself. A la carte pricing only makes sense when you have a highly segmented market, that is, a major chunk of your customers want the service, and will gladly pay for it, and another major chunk don't want it, and would be annoyed at having to pay for it. In this case people value the freedom to choose more than the inconvenience of having to make the transaction. (We're talking ordinary people here, too, not libertarian whackos who would prefer a world in which individuals paid for the air they breathed, and could select better air for extra money.)

But if what you said were true in the context of your "Commons" remark, that pretty much everyone wants WiFi on board, then a la carte pricing will not work, because the annoyance of the extra transaction is greater than the annoyance of a lack of choice. There's a sound market-based reason for Dell pre-installing Windows on every PC they sell and rolling the price into the price of the computer, and it's not that Bill Gates controls Michael Dell through dark mental magic.

Finally, in re shopping around on Orbitz et cetera to find the lowest price: I would say these are weekend cheapskate pleasure travelers, and airlines don't make much money on them. Their bread and butter is the business traveler paying near full fare, and the question for American is whether or not they value the appearance of a freebie or the freedom to choose what to buy more.

It's not impossible to make money with lots of perqs and a higher price. Virgin Atlantic is Exhibit A. And Exhibit B, which suggests that sometimes you can make more money by charging flat rates for improved service, instead of charging a la carte to the discriminatin' customer, is Amazon's hugely profitable "Amazon Prime" membership.

I dunno, Edward, that seems like an inappropriate analogy. You get a tragedy of the commons when people can help themselves to a resource and there's no way of charging them for it. American can obviously sort out who to charge for the service; it's the people flying their planes!

I doubt Americans wants pilots surfing the web. :-)

Assuming you mean "the people flying *in* their planes," you still don't understand the problem. The technology is not designed to let everyone in the plane connect simultaneously. The connections are like first-class seats. They don't have enough for everyone in the plane.