January 23, 2002 4:55 PM PST
Airline industry grounds high-speed Net
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The two leading makers of high-speed Internet equipment for airplanes say many airlines are delaying projects to wire up their fleets. Airlines are instead focusing on cutting costs and flight schedules to deal with a travel downturn.
The latest moves have put a temporary kibosh on the movement to let airplane passengers stream movies or get telephone calls while in flight. It was an effort to capture a predicted $70 billion that travelers would spend in the next 10 years accessing their e-mails or downloading movies while on an airplane.
"Things are tough for all of us," said Ed Nicol, chief executive of Tenzing Communications. Tenzing and Boeing are the two leading providers of the high-speed Internet equipment for airplanes.
"Everybody still wants connectivity, but for some airlines, it's now a low priority," Nicol said.
Air Canada was among the first to test the high-speed waters, installing a Tenzing Internet system into five planes. More deals followed, including American, United and Delta entering into a joint venture with Boeing to wire up 1,500 of the three airlines' planes.
But after Sept. 11, Air Canada indefinitely put off its plans to use the technology on a significantly larger number of planes, according to Nicol. An airline in Singapore that was to outfit 56 of its planes with Tenzing gear is now delaying those plans as well, although talks continue, Nicol said.
Boeing's plans with the three airlines were put on hold after Sept. 11, according to a company representative. Boeing has since trimmed the staff of "Connexion by Boeing," which the high-speed Internet service was to be known, according to a representative.
Instead of selling it to airlines, a Boeing representative said the company is now exploring selling the same gear to corporations that own aircraft for such things as high-altitude video conferencing. Or, Boeing says, it is exploring a way to craft a product to sell to the military.