American Airlines Filed A Lawsuit Due To Slow Internet

It could just be a negotiation tactic, but it seems that American Airlines filed a lawsuit due to slow internet against their main provider, GoGo. This is what happens when you put clauses in the contract that others can take advantage of.

• American Airlines filed a lawsuit against GoGo, claiming that ViaSat has a better offer
• GoGo’s contract allows their customers to terminate or renegotiate the contract if there is a superior offer on the market
• The lawsuit refers only to the 200 aircrafts that use GoGo’s old ATG technology
• GoGo does offer a 2Ku solution, which is better than ViaSat’s Ka satellite connectivity

American Airlines (NASDAQ: AAL) notified GoGo (NASDAQ: GOGO) that there is another in-flight internet provide out there, specifically ViaSat (NASDAQ: VSAT) that can offer them a better deal. Thus, the airline has filed a lawsuit, well in accordance to a clause within their contract with the internet provider. The contract states that GoGo’s customers are allowed to terminate or renegotiate when there is a competitor on the market who offers a superior deal.

Now, American Airlines is well within their right to point out that some of their tech is outmatched by ViaSat’s. According to the lawsuit, “alternative service providers are offering faster, more reliable and less expensive satellite-based WiFi services”. They particularly named airlines such as Virgin America, Southwest, JetBlue and United to having superior in-flight internet speeds. Thus, GoGo’s services are no longer up to par. Although, aren’t they?

It should be noted that the suit is referring to just 200 of the total 1,600 planes that American Airlines have in their fleet. The problem is in the fact that the airline is comparing GoGo’s ATG technology to ViaSat’s Ka satellite technology, which is far from a fair assessment. The newer ATG-4 services from the provider were not mentioned in the suit. If the problem was with GoGo as a whole, the lawsuit would’ve referred to American Airlines’ entire fleet. However, it’s not.

Instead, the airline is focusing on GoGo’s ground technology, which is understandably worse than ViaSat’s satellite services. ATG is around 5 years old and offers around 3 MBPs to be shared among passengers, which makes customers unable to enjoy data-heavy media, such as video streaming. ViaSat’s Ka connectivity, on the other hand, offers around 15 MBPs per user.

However, while it seems like a reasonable complaint, the old ATG is not all that GoGo is offering. Instead, the company’s 2Ku solution has been deemed to be the equal, if not better, than ViaSat’s. Ku offers global coverage, and has been noted to achieve faster speeds than Ka. That means that GoGo does possess technology well in terms with their contract: they have the best on the market.

Thus, it’s highly unlikely that American Airlines will be able to completely terminate the contract with GoGo and switch to ViaSat. The most that they will get is likely a renegotiation. According to Casey Norton, the airline’s director of corporate communications, they’ve only notified GoGo so far. Now, the in-flight internet service provider has 45 days to respond to the lawsuit.

Image source: businessinsider.com