Press Release
Press Release

Verizon to end airline telephone service
Verizon to end airline telephone service
June 24, 2006

Verizon Airfone, whose handsets have graced the backs of airline seats for more than two decades, will end its phone service on commercial airliners before the end of the year.
Verizon Communications, Airfone's parent company, has decided instead to focus on its faster-growing broadband, cellular and television businesses, Jim Pilcher, the director of marketing at Verizon Airfone, said yesterday.

Though Mr. Pilcher declined to say how many customers Airfone has, industry analysts said the service was rarely used. Verizon, they said, would have had to spend heavily to install newer, more compelling technology.

"The business they went after is the calling business, and the reality is no one sits on planes and makes calls," said Jonathan Schildkraut, a telecommunications analyst at Jefferies & Company. Verizon has "much bigger fish to fry," he said.

Airfone, which Verizon acquired when it bought GTE in 2000, has phones in about 1,000 planes operated by Continental, Delta, United Airlines and US Airways. The company will work with the airlines to figure out how to remove the phones and other equipment from the planes.
Airfone, which began service 21 years ago, is still exploring the option of selling the business. Mr. Pilcher declined to say whether his company had identified any potential buyers.

Airfone will continue to provide telecommunications services on about 3,400 corporate and government planes. The company, which is based in Oak Brook, Ill., has 140 employees. The company has not decided whether to move some of them elsewhere within Verizon, Mr. Pilcher said.

The decision to stop selling phone service on commercial airlines is not a complete surprise. Last month, the company dropped out of an auction for licenses to provide in-flight broadband Internet services.

Airfone had bid in early rounds, but a division of JetBlue Airways and AirCell, a company based in Louisville, Colo., ultimately won the two licenses. Those companies are expected to develop wireless "hot spots" on planes that will allow passengers to check their e-mail messages and potentially make Internet-based phone calls.

Mr. Schildkraut and others said consumers were more likely to use that technology because for about the same price as a long phone call, they can check Web sites and send e-mail messages for several hours.

Airfone charged 69 cents a minute, or 10 cents a minute for customers who paid a $10 monthly fee.

Airfone's current license from the Federal Communications Commission was due to expire in 2010. Without a new license, it would have had to retrofit its equipment within two years to allow the new licensees to operate. By 2010, it would have had to stop service altogether, or enter into a partnership with the two winners of the auction.