Airlines say they view in-flight Wi-Fi as a ‘huge competitive advantage’

In-flight Wi-Fi may soon be the norm on domestic and international flights, despite some halting starts.

According to a report by Routehappy.com, a website that ranks airlines, 38 percent of U.S. flights now offer Internet connectivity. The data reveals that longer flights — and popular routes — are most likely to be equipped with Wi-Fi. For instance, about 80 percent of nonstop flights between California and New York are connected.

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But it’s still just a small fraction of domestic and international flights. As Norweigen recently put it, when the airline became the first to offer high-speed broadband on flights within Europe, Wi-Fi is a “huge competitive advantage.”

Airlines believe that Wi-Fi services will set them apart, so most flights will be equipped with reliable Internet in the coming years. Ironically, Wi-Fi would then be routine — and no longer a competitive edge. To stand out, airlines will need to offer bigger and better services, like streaming movies straight to a smartphone device.

Basic connection is just the beginning.

What’s next for Gogo?

Most airlines offer Gogo, the leading provider of in-dlight Wi-Fi. Illinois-based Gogo filed for its initial public offering on Friday. As of April, just over 1,900 aircraft had Gogo Internet, which is used by nine of the 10 airlines that offer Wi-Fi. Check out ReadWrite’s report on the state of in-flight Wi-Fi — Delta leads the pack, closely followed by SouthWest.

The IPO was perfectly timed, given that the FAA announced last week that it will ease up on in-flight electronic gadgets. Certain devices may no longer need to be powered down during take off and landing, so travelers can work (or play Angry Birds) uninterrupted for the majority of the flight.

The FAA’s policies were created before the explosion of smartphones and tablets, which are often used by passengers for work. Consumers are impatient, and airline crew-members often complain that bans on electronic devices are getting too difficult to enforce. For more on the backlash, read up on columnist Nick Bilton’s protracted battle with the FAA.

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Related: For more on airline innovation, check out our story on British Airways’ “hackathon in the sky.”

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With the FAA conceding to popular demand, in-flight Wi-Fi is coming into its own.

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According to the New York Times, frequent overseas fliers will also be able to access the Internet. Gogo plans to invest the money it makes in its stock offering in an international rollout partly using Ku-band satellite technology, which allows the service to work over oceans.

This would be a strong move for Gogo, as in-flight Wi-Fi is expensive, and hardly seems worth it on short, domestic flights. Today, only about 6 percent of fliers on Gogo-enabled flights used the service in the first quarter, the company says.

British Airways’ executive vice president of the Americas Simon Talling Smith added that “it has taken a while for technology to catch up with the expectations of customers in the air.” Passengers are connected on the domestic flight between San Francisco and New York, but the airline will not implement Wi-Fi in a big way on international flights, as the service is not “reliable” enough.

VentureBeat recently reported that Gogo further increased the pricing on several flights in the United States. Pricing fluctuates, but appears to depend on the popularity of the flight, and the device. On certain flights, it’s marginally cheaper to purchase Wi-Fi on a smartphone device than a laptop or tablet.

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Gogo has been quick to point out that it’s still early days for Internet connectivity, and claims that it is still “experimenting” with pricing models.

Wi-Fi may no longer be just an option

With more airlines offering Wi-Fi, Gogo expects that it will be a required expense for business travelers, rather than an option.

In other words, you won’t be able to blow off work, take a nap, and then blame the lack of Wi-Fi on your flight. It will be assumed that traveling employees will be able to access the Internet.

For this reason, Wi-Fi is viewed as an investment with a long-term payoff by the major airlines.

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Once all airlines are equipped with Internet connectivity, they will strive to one-up each other. New York Times suggests that airlines are also considering new ways to hook consumers. Select airlines offer high-speed broadband, enabling them to sell and streaming content, not just basic connection. Southwest Airlines started selling movies for $5 on its Wi-Fi-equipped flights early this year.

In addition, American Airlines is leading the charge on offering power outlets, so passengers using Internet for work or play won’t have to be anxious about running out of battery.

Gogo’s IPO raised $187 million, but shares have fluctuated. In a statement to the press, CEO Michael Small said he remains confident: “The credibility of being a public company will help us with airlines around the world.”