Delta Air Lines Inc., Chief Executive Officer Ed Bastian says he’d like to offer Wi-Fi free on his airline’s flights but right now it would crash the system.
Speaking during an interview in September at the Economic Club of Washington, which aired on Bloomberg on Thursday, the 62-year-old Bastian told Carlyle Group private-equity luminary David Rubenstein, who hosts an eponymously named show on the news platform, that charging for internet access actually prevents too many people from using it.
“It’s available on almost all of our planes,” Bastian said of Wi-Fi services, noting that the carrier’s smallest regional jets don’t have internet access.
“I’m a firm believer that we need to make Wi-Fi free across all of our service and we are working towards that,” he said to applause.
Bastian explained in more detail why offering it free is a no-go for now. Here’s his take:
| One of the reasons why I say it’s ‘not a good reason’ why we charge for internet’ — you don’t pay for internet practically anywhere else — is that the planes do not have the technical capacity, and capability yet that if we made it free the system would crash. So, once it gets above about a 10% take-rate onboard performance starts to erode…if you turned it on free. |
He went on to say that Delta has tested free Wi-Fi a number of times but find that heavy traffic difficult to manage. He joked that flying at 30,000 feet in the air should be advantageous since the planes would technically be closer to WiFi-satellite networks but he noted that the big difference is that plane is traveling at 500/mh, which can degrade service.
Delta is the largest U.S. carrier by dint of its $36 billion market value. In October, Delta reported on Thursday quarterly earnings that beat forecasts, but its costs have been climbing as it absorbs increased staff overtime as well as the impact of several storms. Bastian has said that he expects this inflation to continue into 2020.
Delta’s shares DAL, +0.47% have gained 12.5% this year, compared with a loss of 13.7% in the year-to-date for rival American Airlines Group Inc. AAL, +1.78%. However, both of those air carriers have underperformed the broader market, with the S&P 500 index SPX, +0.91% up more than 25% in the year to date and a gain of 20% for the Dow Jones Industrial Average DJIA, +1.22%, according to FactSet data.
Check out that segment of Bastian’s interview below via Twitter.
Here’s a fuller version of the interview.