Delta Air Lines has filed a change to its agreement with Gogo, removing the exclusivity rights of the supplier. The five-year-old agreement for Gogo’s 2Ku service has been amended to allow Delta to explore offers from other suppliers, although it is likely to stay with Gogo for at least some of its requirements. The original agreement was due to last until 2027.
Slowly breaking away from Gogo
The split from Gogo isn’t a complete surprise. Delta had been saying since March that it was leaning towards a multi-vendor arrangement, something that we’ve seen increasingly in other carriers worldwide. Most of Gogo’s airline partners already have contracts with other providers too, but it didn’t stop Gogo’s shares plunging 23% in the hours after the announcement.
Gogo isn’t being phased out fast. In fact, the removal of its services will happen in a staggered manner, beginning in November and running through to July 2022. The ‘alternative provider’ is yet to be named but will be free to begin phasing into Delta’s fleet from November onwards.
The affected aircraft number 575, split across 13 different, largely narrowbody types, but also includes Delta’s A350s. Gogo may not lose all of these planes, but the detail of which will be contracted to another provider have not been revealed yet. In a statement, CEO of Gogo Oakleigh Thorne said,
“Though we do not relish the idea of having a competitor join us at Delta, this amendment gives us time to complete our 2Ka offering and add capacity to our 2Ku network and will enable us to compete effectively for the fleets in question.
“We are also very pleased to see Delta’s continued focus on providing free WiFi despite the impact of COVID-19 and view that as a positive for the in-flight connectivity industry as it will drive demand. We look forward to continuing to work with Delta to drive its vision.”
Moving towards free WiFi
The positive part of this situation is that it signals Delta is still on course for the provision of free WiFi to its passengers in the not too distant future. For the longest time, Delta’s CEO has been lamenting the bandwidth available with Gogo’s 2Ku service, claiming it has not been sufficient to support heavy use at anything like a decent quality.
Unwilling to offer a sub-par product to its passengers, Delta has held off on the launch of free WiFi, blocked by technology rather than budget. Speaking last year, Ed Bastian commented on the lack of progress with free WiFi, saying,
“It is really just a question of technical. It is not economics. I am nervous that if we turned it on, it’s going to cause system outages.”
The lack of capacity in the Ku-band has encouraged Gogo to develop a 2Ka system, which could see it claw back some service from Delta. When Delta does move to a free WiFi model, this would be highly beneficial to whoever provides it, as the airline will be paying directly for the service, rather than the current royalty model.
For passengers, this is a positive step, as it shows Delta is serious about nailing the free WiFi service, despite current challenges. If Gogo is able to get some breathing space to finalize its 2Ka product, in the long run, it could be good for them too. If not, there are plenty of other providers waiting in the wings with ready-to-go Ka-band products.