At a time when airlines are charging for the second — or first — checked bag, air travelers are right to be weary of the nickel-and-dime travel experience. But David Hagen, CEO and president of Boingo Wireless, says an airport’s Wi-Fi network is one area where a better experience is worth the money.
Boingo currently has 100,000 locations around the world, including a footprint covering 40 percent of North American airport passenger traffic. Boingo charges customer $4.95 for an hour of access to the network; $7.95 for a day pass; and $21.95 for monthly subscribers. And that last demographic is key.
Hagen says more than 50 percent of his customers are among the wealthiest 11 percent of U.S. residents. Eighty percent of his customers take more than 10 trips per year.
“We really have two customer segments,” Hagen says. He notes that 80 percent of subscribers travel with a laptop all the time, primarily for email or to connect to their corporate office. And these people are willing to pay for the improved experience he says his network provides.
“It’s not free, there is a cost to it and the better quality that you try and produce the higher the cost,” Hagen says. “As an operator or as a venue, if you really care about a customer experience, free is not going to get you that over time.”
Boingo provides 1.5 megabits per second. “You can’t afford to do free at that kind of a standard,” Hagen comments. “So we engineer to a very high quality because people in our research really want to get connected and have a great experience. It’s more important to them than, is it $4.95 or free.”
Hagen explains that Boingo covers deployment of the network at a new site, then has revenue-sharing back with the airport. Other costs include network support and backhaul, which he says is overhead that makes the economic model of free networks unsustainable.
He says we’ve been down this road before, beginning with NetZero in the days of dial-up. “That business didn’t work. They actually charge now and have done quite well once they went to a pay model.”
Hagen also points to the more recent municipal network trend — and crash — with cities demanding portions of the network to be free.
He notes that advertising can help support the network, but even at a very high cost per thousand, ad revenue doesn’t come close to covering the cost. At airports, revenue must be made up elsewhere to cover the network costs, which he says can be unfair to all airport passengers compared with the ‘relatively few’ who access the networks.
However, with cell phone models increasingly accessing Wi-Fi like iPhone and Blackberry, that user number is growing. “We’re now seeing about 15 percent of our traffic is non-PC device on an airport network up from almost nothing a year ago,” Hagen says. And with 2 billion cell phone users, the wireless market is poised to explode.
First security, now Customs. The U.S. Customs and Border Protection has a new pilot program called Global Entry, which allows pre-approved travelers expedited clearance upon acceptance. Eligible are U.S. citizens and U.S. Lawful Permanent Residents aged 14 years and older who may apply to this program, which charges a non-refundable $100.00 fee.
Beginning in June, the program will be available at Terminal 4 of JFK International Airport, Washington-Dulles, and George Bush Intercontinental. All applicants must undergo a “rigorous” background check and be interviewed by a CBP officer before they are enrolled. Participants can enter the U.S. via automated self-service kiosks. Upon arrival, participants use their machine-readable U.S. passport or permanent residency card, submit their fingerprints for biometric verification, and make a CBP declaration at the kiosk’s touch-screen. They pick up a receipt and are done, unless chosen for additional search.
Boingo will manage and operate ad-supported Wi-Fi services throughout both airports, which serve a collective total of more than 66 million leisure and business travelers annually.
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