Imagine for a second that it is 2006 and you have stepped into an airport in Anytown, USA. You are looking to check your email through the airport’s Wi-Fi, when the dreaded corporate landing page greets you with a sky-high price.
At that moment you forget about why you were trying to get online in the first place, cursing the name of the airport, and tick off the last few minutes before you board.
This experience is still the case in some airports today, although, fortunately, it is more the exception than the rule.
Today, most US airports are looking to give their travellers an experience that would have been unheard of just six years ago, complimentary Wi-Fi, while at the same time seeking out new sources of revenue to at least offset the growing costs of providing this service.
The introduction of a ‘hybrid’ option for Wi-Fi has created a middle ground addressing this challenge for airports and allowing travellers to select the Internet connection option that best fits their needs.
How does the ‘hybrid’ model benefit today’s traveller? Each individual logging in with any of their growing slew of web-based devices can select either the ‘complimentary’ option for a session that lasts anywhere between 30 to 45 minutes at basic speed, or go for a ‘premium’ option.
The premium option typically offers Internet speeds similar to those they would enjoy at home, and without the need to view a preliminary video advertisement.
Perfect for power users and those individuals looking for a rich web experience, the premium option is also available for the passenger that needs more than the original allotted time.
What are the benefits of such a model to airports, as surely the introduction of free Wi-Fi, albeit for a limited period, will cost them revenue?
Traditionally, these questions are answered based on the factor of both airport size and the type of Wi-Fi offered. While a premium Wi-Fi option would naturally bring in more revenue, this gap has begun to shrink as sponsors have recognised the value of this captive portal generally used by the top end of the airport traveller demographic.
And it is not only the sponsors that have led this transition. The ‘up the ladder’ evolution of larger airports making the move from paid to hybrid/free Wi-Fi, combined with the inherent value of driving customer satisfaction, has changed how airports manage (and potentially forfeit) this additional revenue stream.
Today’s traveller brings inherent expectations each time they look to connect their device to the airport’s Wi-Fi network. These customers expect not only free, but fast, Internet connection, without service interruptions.
This creates a scenario where the airport needs to prepare the necessary infrastructure and manage the bandwidth requirements associated with more individuals using the same Wi-Fi network.
You see the ‘Economics 101’ situation – where is the airport’s breaking point between the considerable OPEX/CAPEX investment and the declining revenue associated with more individuals using the free/sponsored version?
Let’s step back again to 2006, and consider the experience and the user expectations at the time.
While there is an inherent connection between the traveller and the airport they fly out of, the lack of Wi-Fi proliferation (and associated devices at the time) meant that they saw airport wireless capabilities more as a novel amenity than a necessity.
Even though Wi-Fi may seem like the latest moving target for airport management to provide its travellers, the fact of the matter is that, by creating both a flexible model behind the scenes and a hybrid model for the public, the airport Wi-Fi business model has evolved into one that can be amenable for both passengers and airport management.
San Francisco International Airport
San Francisco International Airport (SFO) was at the forefront of paid Wi-Fi, having initially contracted T-Mobile to fund the build-out and operation of the network. However, this changed two years ago when San Francisco’s mayor, Gavin Newsom, openly declared that his city’s airport was to turn to a free model in the summer of 2010.
Declaration of the intention to go ‘free’ meant that the current infrastructure had to ‘flip the switch’ without first being upgraded. This resulted in SFO not only foregoing a considerable amount of revenue, but additionally facing the cost of a significant network improvement requirement.
With SFO management looking for an alternative Wi-Fi vendor, an RFP was issued for an operator that could, (a) either operate the network on behalf of SFO, with the airport bearing the cost of operations or, (b) take over the network at their risk, monetise it and fund all necessary CAPEX and OPEX costs.
AWG competed in the SFO RFP process along with Boingo and AT&T, and were subsequently awarded the contract in the spring of 2011.
And in July of last year, AWG officially launched the service, having since invested over $500,000 in network improvements, including new infrastructure and Internet WAN circuits.
As part of the contract, it provided SFO with an option to implement the popular hybrid (free/sponsored with a paid option), but airport management preferred their Wi-Fi to be free only, choosing the perceived customer satisfaction over revenue upside potential.
To date, usage is averaging close to 30% of all enplaning passengers, or close to 15,000 sessions each day.
The question of customer satisfaction appears to be answered as the airport has received considerable positive feedback around the facility’s Wi-Fi bandwidth.
SFO also supports a handful of private side applications on the network via wireless connectivity, including: Flight Information Display Systems (FIDS) monitors, visual paging monitors and self-service check-in kiosks.
AWG manages these connections as well, ensuring priority and quality of service.
Boston Logan International Airport
AWG began as the initial network operator for Boston-Logan, and continues to this day as the sole operator.
The Logan network is unique since it began as an Enterprise-grade infrastructure designed to support connections for the tenants in International Terminal E that wanted to deploy their own networks for a variety of applications.
Massport capitalised on the initial build of the Terminal E network under subcontract to AWG’s parent EMS for approximately $600,000 in 2002.
As this project neared completion, Massport asked for public Internet access to be added, placing out an RFP and subsequently launching EMS/AWG’s public Wi-Fi service.
As part of its successful response to the Massport RFP, AWG made a multi-million dollar investment in building out the network to fit the airport’s standards.
The resulting build-out was far more expensive than a simple public access network where fault tolerance is much higher.
As a result, in June of 2004, AWG launched a paid service with limited campaign based sponsored access. The paid business model continued over the next five years (ending in 2009), until Massport approached AWG to investigate the options of offering permanent free Wi-Fi.
Around this same time, it teamed with Google to offer free Wi-Fi as part of a nationwide ‘Holiday Wi-Fi’ programme. Massport’s aviation director mandated that the airport would continue to have a free option following the promotion at the same time as a hybrid service option.
Today, Massport sees itself as an industry leader for providing airport Wi-Fi on both the public and private side. Network utilisation has jumped from 2% of enplaning passengers to 10% initially and has since grown to over 20% at present.
Food for thought?