The airline giant is thinking of switching internet providers, as they think they have found someone who can offer better service.
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ViaSat is a competing service used by United, JetBlue, and Virgin America, and offers a satellite-based WiFi experience that is “8 to 10 times faster” than any existing inflight WiFi solutions. The lawsuit was first uncovered by the Star Telegram.
Gogo’s stock fell as much as 42% on Tuesday following news of the lawsuit, while ViaStat’s stock rose, climbing as much as 13% throughout the day. Competitors like ViaSat for example, use a different strategy that you can probably guess by the name: satellite delivery.
Shares of inflight internet service provider Gogo are plunging after a report that American Airlines may be looking to go elsewhere for inflight Wi-Fi.
“Nearly one in five customers have switched from a preferred airline to another carrier because of better Wi-Fi offerings”, American claims in the suit. “If Gogo submits a proposal, we’ll certainly consider it”.
In the SEC filing, Gogo said it had “no comment on the merits of this litigation”, but noted that it had only received such notification “earlier this month”.
Gogo finished installing 2Ku in 150 American Airlines planes in January but the lawsuit suggests the airline feels the project isn’t moving fast enough.
According to BuzzfFeed source Andrew DeGasperi, the loss of American Airlines would account for a 14 to 15 percent revenue drop for Gogo.
“We continually evaluate the in-flight connectivity service we provide customers to ensure it’s meeting their needs and wants”, American spokesman Casey Norton said.
“We believe that 2Ku is the best performing technology in the market and look forward to discussing our offer with American”, Gogo said.
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“It is unclear to us whether American Airlines is actively seeking to leave its relationship with Gogo, or if this is a negotiating tactic to draw out more favorable upgrade terms”, said Evercore analyst Jonathan Schildkraut.
