United Airlines announced in January that it had introduced onboard satellite-based Wi-Fi internet connectivity on the first of its international widebody aircraft, saying that it had become the first U.S.-based international carrier to offer customers the ability to stay connected while traveling on long-haul overseas routes. United also said that it expects to complete installation of satellite-based Wi-Fi on 300 mainline aircraft by the end of this year. Mark Nasr, Managing Director of E-Commerce for United Airlines talks about how the carrier will be using satellite technology to ramp up the passenger experience.

VIA SATELLITE: Could you tell us about United’s plans to launch in-flight connectivity services? What are the keys behind making this investment?

Nasr: The key issue is giving our passengers connectivity. We seek to do so a little bit differently that most of the U.S. competitors have done. We are focused on a global experience. We are the largest airline in the United States that flies across the Atlantic and the Pacific. So, we need to make sure we are giving passengers connectivity as they are crossing oceans as well as over the United States. We are also looking to provide the highest possible quality experience, given where technology is today, but set ourselves up for where technology will develop in the future. With those things in mind, we decided to go with a number of satellite-based systems, both Ku-band and Ka-band.

VIA SATELLITE: There is a debate regarding going with a Ku-band solution rather than a Ka-band solution. What is United’s take on this?

Nasr: We strongly believe that they are both great technologies, and both with future promise and potential. We have this unique situation where on about 200 aircraft we have LiveTV installed. So, we opted to go for a Ka-band solution on the 737s and 757s that offer LiveTV today. For the remainder of our fleet we went with Panasonic and a long-term partnership using Ku-band. We don’t have any plans to go fully Ka-band.

VIA SATELLITE: What is the timeline in terms of equipping your fleet with these services? What is your planned rollout of such services?

Nasr: We want to do this as fast as possible. We want to do around one aircraft a day this year. Our stated public goal is to have at least 300 aircraft equipped with Wi-Fi before the end of the year. I believe we have around 700 mainline aircraft and almost all of them will get connectivity, except for very few that are coming up to retirement or not in the overall fleet plan. So, we expect to substantially complete as you get into 2014. For example, with the 787s there are delays in certification and delivery of the aircraft, so the 787s will come in later.

VIA SATELLITE: A number of airlines have now launched these services over the last two years? What have been the key learnings so far you have taken from the market?

Nasr: One of the key early learnings for us is the portal experience and the ability to price product as we would like as a company and offer more customized services to our customers. I think we are the first airline to go out with a fully proprietary portal. This is a huge advantage to us. As we are using different partners for the service, we are going to have an absolutely consistent front-end and purchase experience, whether you are on one of our Ku- or Ka-band aircraft. It also gives us a great base to build on in the future, from the standpoint of being able to control price. We have the flexibility to decide how much we are going to charge, and if we are going to charge for certain services. We are the first airline to offer two speeds of Wi-Fi; we will offer a standard speed, which is at least competitive with the offerings in the U.S. market today, and an accelerated speed, which will offer a notably better experience than what is currently offered in the United States. We would not necessarily be able to do these things if we did not have our own portal and kind of have strategic control from a commercial perspective over the product. We have also announced, as part of the $500 million investment we are making with Wi-Fi, that we will be offering customers a streaming service, so movies, TV shows etc. That is all part of the package of being able to have commercial control and direction over our activity product. We will be able to enhance that from our on-board server and then being able to appropriately price and ensure that speeds meet what customers expect as demands change. This is a fast-moving market, customer expectations will develop from what they are today.

VIA SATELLITE: Could you tell us about your pricing strategy for this and the thinking behind it?

Nasr: One of the things we have been pleasantly surprised by since we launched the service is that we have had a significantly higher interest in our accelerated speed than we thought we would have. That tells us that customers are clearly looking for a better speed experience and are willing to pay for that product. We assumed we would get a certain percentage using the standard and then the accelerated package. But, a dozen aircraft and a couple of months into this, what we are seeing is interest and purchase behavior much more towards the accelerated side.

We want to provide services across the board, whether it is economy or business, we want to provide customers with options. But, there is a price for those options. Rather than have cross-subsidization and have customers forced to pay for things they don’t enjoy or value, we want to invest very heavily in products that customers value.

VIA SATELLITE: What are the technical challenges when trying to offer customers connectivity-based services on airplanes?

Nasr: We are still fine-tuning the product even though Panasonic is an established player in the marketplace. We are doing things differently with them than they have done with some of their clients in the past. So, right now, it is really a process of optimizing the system, when you do a plane the first time with a new system, it takes a little longer. But, the second and third planes, you get into a rhythm, you have all the certifications in place and you move much more quickly. This really is an engineering feat, and our engineering team has put together an incredible program. We have two types of airbus, a bunch of different Boeing aircraft, pretty much the entire Boeing model line. The engineering team was able to put together a program where we could pretty much run the installations by the time we get to the summer on all of our aircraft family at the same time. We have got installation lines all across the United States and with our MRO partners around the world that will be installed; it is quite a feat.

VIA SATELLITE: Will the systems be able to cope with heavy usage?

Nasr: The two primary reasons why we went with satellite based Wi-Fi across the fleet were to have global coverage between the partners, but also to have that wider pipe. We have done tests in labs on the ground with 100 people at the same time using the service. We have also simulated tests in the air using a large user base and using higher take rates than the industry has seen in general, and the service holds up very well. That being said there is still tuning and optimization and making sure that is priced appropriately, but the service definitely has strong robust muscle and is able to handle high usage. However, there is still work to be done.

VIA SATELLITE: What is the return on investment for United Airlines on such services?

Nasr: We view Wi-Fi as key to our product offering. United’s position is as a strategic travelers’ airline, and we would look at a lot of different customer types but clearly we are building the world’s premier airline, and part of that is connectivity, which is crucial for business travelers, but is also important for leisure. It is key to the overall investment we are making. We have more flat beds in business than any other U.S. carrier, we have thousands of them flying every day. We have advanced VOD systems on our aircraft. The Wi-Fi investment will also enhance the customer experience.

VIA SATELLITE: You mentioned a proprietary portal. How will you look to improve these services still further?

Nasr: I will give you a great example: Passengers can definitely take care of any service issues in-flight. Lets say there is going to be a weather delay and they are circling the airport, and they are not able to catch their ongoing flight, they would be able to rebook it. You can do baggage tracing and make sure their luggage follows them on board the aircraft. They would be able to do that. In most cases it does, but in the few cases it doesn’t, you can manage it. So, we are looking at a lot of customer service features. We provide these free of charge as well as access to our mobile app. So, customers can avail themselves to these features today.

VIA SATELLITE: United took its time to launch these services. What were the key decisions you made and the processes of examining these services going all the way to launching them?

Nasr: What was key for us was to make the right investment decisions in the long-term. We are making considerable investment in these services so we did a number of tests with different Wi-Fi providers over the last two years. We have another product launched that goes from San Francisco and Los Angeles to JFK. We really wanted to get experience with the products, truly test them out and see where the marketplace was going, and get customer and co-worker feedback.

VIA SATELLITE: What are you forecasting over the next 12 months in terms of take-up?

Nasr: We are hoping over the next year for more than 300 aircraft to be installed flying all over the world and customers happily accessing services. We are hoping to have a really robust program in place in terms of operations. We think there is tremendous potential for the product to service, support and delight passengers. We have put the right investments in place.