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The CEO of the largest airline offers one simple reason that Wi-Fi on planes isn’t free

Educational

Delta Air Lines Inc.’s chief executive officer, Ed Bastian, says he’d like to offer Wi-Fi free on his airline’s flights, but right now it would crash the system.

 

Speaking during a conversation this fall at the Economic Club of Washington, which aired on Bloomberg on Thursday, the 62-year-old Bastian told Carlyle Group private-equity luminary David Rubenstein, who hosts an eponymous interview show on the news platform, that charging for internet access actually prevents too many people from using it.

 

“It’s available on almost all of our planes,” Bastian said of Wi-Fi service, noting, though, that the carrier’s smallest regional jets don’t have internet access.

 

“I’m a firm believer that we need to make Wi-Fi free across all of our service, and we are working towards that,” he said to applause.

 

Bastian explained in greater detail why offering it free is a no-go for now. Here’s his take:

One of the reasons why I say it’s ‘not a good reason’ why we charge for internet — you don’t pay for internet practically anywhere else — is that the planes do not have the technical capacity and capability yet [so] if we made it free the system would crash. So, once it gets above about a 10% take rate, onboard performance starts to erode … if you turned it on free.

 

He went on to say that Delta has tested free Wi-Fi a number of times but has found the heavy traffic difficult to manage. He joked that traveling at 30,000 feet in the air should be advantageous in terms of Wi-Fi performance, since planes are technically closer to the satellite networks, but he noted that the big difference is that a plane is traveling at 500 miles per hour, which can degrade service.

 

Delta is the largest U.S. carrier by dint of its $36 billion market value. In October, Delta reported quarterly earnings that beat forecasts, but costs have been climbing as the carrier absorbs increased staff overtime as well as the impacts of numerous storms. Bastian has said that he expects this cost inflation to continue into 2020.

 

Delta’s shares DAL, +0.38% have gained 11.8% this year, through Monday, compared with a year-to-date 14.4% decline for rival American Airlines Group Inc. AAL, +0.95% . Both of the air carriers have underperformed the broader market, with the S&P 500 index SPX, -0.32% up more than 25% in 2019, compared with a gain of just less than 20% for the Dow Jones Industrial Average DJIA, -0.38% .

 

As seen on www.marketplace.com, Written by Mark Decambre

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