Carrier to offer new service package, but airline says no decision yet.
American Airlines is making nice with its in-flight Wi-Fi carrier Gogo, avoiding, for the time at lease, what looked to be a messy breakup.
Earlier this month, the airline filed a lawsuit seeking to sever its contract and enable it to launch a relationship with a new Wi-Fi provider.
Citing issues with reliability, speed and high pricing, American planned to switch to a satellite-based provider, such as those used by competitors Virgin America, Southwest and United Airlines. Gogo sought to prevent the split in part by offering American its own satellite-based system.
A week later, though, American and Gogo announced that the suit had been dropped. Gogo said it will offer the airline another, presumably satellite-based, service package to be covered by the existing American-Gogo contract.
Investors were encouraged by the news, with Gogo’s stock price jumping 10% after the suit was dropped, according to CNN.
American’s decision, though, is a rare spot of good news for the beleaguered Gogo.
Gogo launched in 1991 and began providing ground-to-air service to airlines in 2006 using a network of North American transmission towers that point up instead of down. The company claims to have spent nearly $1 billion developing its onboard equipment and network.
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As the only in-flight Wi-Fi game in town, Gogo quickly bagged American, as well as Delta, United, Virgin Air and others.
Customers, though, have grown disgruntled, complaining that Gogo’s rates have continued to rise as its service has deteriorated.
Gogo now faces competition from the likes of ViaSat, Thales and Panasonic. Despite faster, cheaper and more reliable satellite-based connections offered by the competition, Gogo has reportedly maintained control of 80 percent of the in-flight Wi-Fi market. It’s managed to do so courtesy of long-term contracts with airlines, such as the one held by American, and a reliance on business passengers who are able to write off the expenses, which can climb upwards of $40 on some flights.
After American sued, Gogo announced plans to submit a proposal to American offering its latest Wi-Fi technology, 2Ku, which is satellite based. Satellite transmissions provided by other carriers, such as ViaSat, American’s preferred rebound provider, are considered superior in the air. Although many say the service is superior, satellite-based competitors have not yet been able to put much of a dent in Gogo’s market dominance because of those long-term contracts inked years ago.
The make-up may be temporary, however. “We originally notified Gogo of a competitor’s offering, and we will evaluate all of our options,” a spokesperson for American told website The Verge. “No decision has been made.”
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