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How Delta Gains From Free WiFi, According to the CEO -- Barrons.com

Barron's · 01/06/2023 16:52
By Eric J. Savitz

For frequent fliers, one of the most significant pieces of news at this year's CES tech trade show in Las Vegas came from Delta Air Lines.

Delta (ticker: DAL) CEO Ed Bastian said on Thursday that the airline next month will launch free Wi-Fi services on all of the company's primary U.S. flights. By the end of next year, Delta will expand the service to all of its international and regional flights. The announcement follows through on a promise he made in 2019 to expand free access across the company's fleet.

In an interview with Barron's, Bastian said Delta has invested more than $1 billion over the past three years to get ready for the launch, retrofitting planes and buying satellite capacity from Viasat ( VSAT), which is providing the underlying service. For the past 18 months, he said, Delta has offered service on most flights for $5, while working out kinks in the network.

According to Bastian, the traditional airline approach to providing airborne connectivity is perverse in that carriers price the service in a way that ensures most people don't use it. They have to do that, he said, because capacity is limited, and too many users online at once would slow connectivity to the point where service becomes useless for everyone.

With the Viasat connection, that won't be an issue, he said. On one recent test flight, there were more connected devices on the plane than there were passengers because some connected to Wi-Fi with more than one device.

Connections will be fast enough to allow streaming from Netflix and other video services, he said. Delta is talking to web conferencing firms about offering a text-only experience for meetings, though it isn't going to let people do voice calls over the service.

The Delta CEO said the almost complete shutdown of air travel during the pandemic gave the company an opportunity to accelerate the rollout of the service. "We had a lot of planes on the ground," he said, which made it easier to complete the required equipment installation and inspections.

Delta will require passengers who want to use the service to log into their Delta SkyMiles frequent flier accounts. New users will be prompted to sign up for free.

That is core to the value of the service to Delta. Not only will it encourage customer loyalty, but it will offer an opportunity to cross-sell those people credit cards and third-party services.

Delta is working with content partners and sponsors on the project. Paramount+ is providing a library of content for the service, for instance, while the New York Times offers a collection of games. T-Mobile will be a "presenting sponsor," gaining access to a pool of potential customers with promotions on the platform.

"We're the only real distribution channel in the air," Bastian said.

Write to Eric J. Savitz at eric.savitz@barrons.com

(END) Dow Jones Newswires

January 06, 2023 16:52 ET (21:52 GMT)

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