Group sets up high-flying broadband subsidiary

Airbus and airline support specialist SITA have set up a subsidiary to take high-flying broadband systems from Tenzing a step further.

The new company will develop a system to allow airline passengers to make wireless calls on their own mobiles during flights. The company aims to have the service in European skies by early 2006 and plans to extend it to include high-speed web surfing on handheld devices and laptops.

Airbus already owns a major stake in Tenzing but SITA will be the majority shareholder of the new company and play a leading role. The partners will put up between $50m and $100m to get the venture off the ground.

The 65 staff of Seattle-based Tenzing will stay in the US but the new company will have its headquarters in Europe. SITA is based in Amsterdam and is already well known for its Aircom phones, used on 1,100 long-haul jets run by over 60 airlines.

The move will put the pressure on the rival Connexion by Boeing system, which has just announced a corporate deal with Siemens to connect its high-flying executives to the company's corporate networks.

Airlines have yet to rush to put the technology on their planes, despite a lot of trumpeting. At the beginning of the year, Emirates claimed to be the first in the air with broadband as it began to roll out the Tenzing system across its fleet.

Iberia will start to roll out Tenzing in October. Lufthansa is the first in the sky with Connexion and is being closely followed by SAS. But Lufthansa will not have the technology installed in all of its 80 long-haul planes until next year.

ANA, Japan Airlines and Korean Air have signed for Connexion and both Singapore Airlines and China Air have expressed interest.

On its side, Tenzing claims that its in-flight email and SMS systems are used by Cathay Pacific, Continental, Emirates, Iberia, Northwest, United, US Airways and Virgin Atlantic.

But much of the US domestic use of Tenzing is through a stripped-down version provided under the Verizon Airfone JetConnect label.

At the moment, Tenzing is recognised as the slower technology but it is easy to install. The Boeing technology can take two days to put into a long-haul plane, which is a long time for a plane to be on the ground.

But the new company intends to challenge Boeing's speed and plans to develop a shoebox-sized receiver, weighing about 20 pounds, that will send and receive calls from onboard wireless users and relay them to the ground-based telecommunications network.

Both Boeing and Tenzing are gung-ho about their technology and Boeing likes to quote research from the Forrester Group that passengers will be ready to pay up to $25 for in-flight net access. This gives a potential market of between $5bn and $8bn, says the US aircraft maker.