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The article doesn’t state how the cut-rate airline will provide cell calls and text messages: It’s likely that they are in discussions with OnAir, mentioned late in the article, as that firm is the only one I’m aware of that’s prepared to launch in-flight cellular service and, later, broadband over Europe. Ryanair keeps fares low—sometimes as cheap as £1—by charging for every thing, including checked baggage. This allows those who need extra services to subsidize everyone else. Even with a la carte on everything, many passengers pay much less overall.
I thought it would be against the philosophy of Ryanair to install expensive equipment on board planes, such as cellular picocells, but OnAir has been telling me that the retrofitting cost and the weight of their gear are both relatively low. The weight is especially low—about half a passenger’s worth. Ryanair’s proposed per-minute calls are in range with what OnAir has been suggesting as guidance: £1.80 to £2 (about $3.50 to $4.00) per minute and 40c (70¢) per outgoing text message.
This is a lot of revenue to capture, potentially several hundred pounds per flight, which would easily justify equipment costs. Add broadband on top of that eventually, and there’s even more money to be made quite easily. The Irish Examiner makes a rough estimate of £60m for one call per 30m passengers for one minute per flight. More likely, some passengers will talk through entire flight, spending £100 on business calls and other will never use the service.
This article notes that OnAir is now publicly mentioning Air France as an upcoming cell partner—their planned first, in fact. British carrier BMI and Portuguese carrier TAP have both been mentioned before as service partners. [link via TechDirt]
Posted by Glennf at July 28, 2006 12:56 PM
Categories: Air Travel
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$4/min? Why would we think this service will do better than the AirFone service. A $40 charge for a quick ten minute call is more than most people can rationalize. Aren't those in the range of the AirFone rates that no one ever used?
[Editor's Note: Ah, the joy of Europe. $4 a minute in the air is only somewhat higher than roaming prices paid in Europe across countries. There's a huge regulatory debate going on at in the EU HQ right now over whether the EU needs to step in to force tariffs and fee schedules on cross-border roaming within the EU.
As a result, roaming rates have dropped dramatically. While we pay nothing across the U.S. for roaming (most of us), cross into Canada, and you can spend $1 to $2 per minute without a special roaming program. In Europe, it's more ridiculous where common services and even common ownership make the cross-border costs fairly minimal. Walk from Basel, Switzerland into France and then Germany while making a call, and perhaps you'll pay a few dollars a minute in one country and nothing (if that's your home country with the SIM card) in another.
The problem with pricing in-air service at this rate is that it expects that terrestrial international roaming will remain excessively high. If that changes, and $1 a minute is on the high end of European roaming charges, then $4 a minute will seem like too much, and I would imagine pricing models will change.--gf]
Posted by: Ted Morgan at July 28, 2006 1:09 PM