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Boeing Is Well-Equipped as Airlines Race to Offer High-Speed Web Access

The plane maker has invested $1billion to develop a satellite-based system aimed at attracting business travelers.

June 27, 2005|Peter Pae | Times Staff Writer

34,000 FEET OVER THE ATLANTIC — An hour into a recent Los Angeles-to-Munich Lufthansa flight, Boris Kushnir flipped open his laptop and e-mailed the parents of his nine teenage fencing students en route to an international competition in Kiev.

"You don't know how excited they were to know I was telling them this from an airplane," said Kushnir, a fencing instructor at the Beverly Hills Fencers' Club.

Later, he chatted by e-mail with a friend in Russia and then surfed the website for the fencing competition. Kushnir paid about $15 and spent two hours on a direct network connection while airborne.

Traditionally, airplanes have been one of the few places where the Internet has been kept at bay. But more airlines are hoping to differentiate themselves in the lucrative business-traveler market by offering high-speed Internet access.

And that may be good news for Boeing Co., which has invested more than $1 billion to develop the Web technology, analysts said.

The aerospace giant launched its Connexion by Boeing system last year. Since then, Deutsche Lufthansa, Singapore Airlines Ltd., SAS' Scandinavian Airlines, Japan Airlines Corp. and All Nippon Airways Co. have added the service on 64 aircraft flying 100 routes daily. Six more foreign airlines will add it by next year.

Boeing is also installing its Internet system in all of its new 787 passenger jets slated to fly in 2008. Boeing has 266 orders for the plane.

Some airlines also want Boeing to install its Internet system on Airbus' upcoming double-decked, 555-passenger A380 that will fly in late 2006.

Airlines pay Boeing a one-time equipment fee for the Internet package -- which includes the antenna, wireless routers and a computer server. Boeing and the airlines then share the Internet fees paid by passengers.

"We see it as a several-billion-dollar-a-year market," said Laurette Koellner, head of Connexion by Boeing.

Lufthansa has been the most aggressive in rolling out the service: Forty-two of its 78 wide-body, long-haul airplanes are outfitted with Connexion equipment. By next year, Lufthansa expects most of its wide-body fleet to have the high-speed Net service.

"We don't have a single monopoly route, so every passenger has a choice," said Thomas Winkelmann, Lufthansa's vice president for the Americas. "This is one way to distinguish ourselves from the competitors."

Lufthansa charges $9.95 for the first 30 minutes of Internet hookups and 25 cents for each minute thereafter. Or passengers can pay $14.95 to $29.95 for unlimited access on long-haul flights. Lufthansa said one to two dozen passengers use the service on each flight and on average they spend about three hours surfing the Internet, paying bills and logging on to their companies' networks.

Boeing won't have the market to itself, though. This month UAL Corp.'s United Airlines and Verizon Airfone Inc. received Federal Aviation Administration approval to begin offering a rival Internet service using a ground-based cellular phone technology.

Boeing's system relies on orbiting satellites that beam signals to an airplane's antennas to provide a connection for passengers with wireless-enabled laptops. Boeing has also sold the service to cargo ships. This month Boeing won its first maritime order from Bahamas-based Teekay Shipping Corp. to equip 50 ships with the service.

The airborne service, though, is still a novelty. A Lufthansa employee stood in front of the gate for a recent Munich-to-Los Angeles flight to tell passengers with laptops that Internet service was available.

But one frequent user onboard Lufthansa Flight 452 said the price might be too high and has kept passengers from using it. "I think [the cost] needs to be lower," said Thomas Kolbusch, managing director for Coatema, a coating machinery maker in Cologne, Germany.

Kolbusch flies about 200,000 miles a year and bills his company for the Web service so he can e-mail colleagues and empty out his e-mail box before landing. That way he can "relax at the hotel knowing [he's] done with work." Kolbusch spends about five hours per flight using the service.

He also talks to his wife while flying by using a voice-over-the-Internet phone service through his laptop computer attached to a headset.

"The first time, it bothered the guy sitting next to me," Kolbusch said. "But I've learned to talk a little more quietly."

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