How airlines justify ‘free’ in-flight WiFi: loyalty revenue and retail strategies
September 20, 2025
Airlines are shifting from selling hourly and flight-long passes to access in-flight WiFi to using free access as a loyalty magnet. But high-speed WiFi at 35,000 feet is an expensive amenity, so how can airlines justify the cost of installing and providing the service at no charge to passengers?
The economics of in-flight entertainment and connectivity
As airlines race to offer fast, free onboard internet, they are constantly reviewing the economics behind in-flight connectivity.
The costs of providing in-flight WiFi vary widely depending on the type of service (geostationary and non-geostationary satellite connections or air-to-ground) and are difficult to pin down. Added costs include antenna installations, aircraft certification, and the time the aircraft is out of service.
As reported by Kratos Space, in 2023, “The average high-throughput Ku-band flat panel antenna for commercial aircraft is a roughly $100,000 investment, not including installation or the cost of grounding an aircraft.” Kratos also listed the costs of Starlink IFC antennas at $150,000 with monthly service costs of up to $25,000.
Airline contracts with their satellite providers may vary, but the service is not free of charge.
Covering the cost of in-flight data consumption
Offering free WiFi, especially high-speed connections, will increase data consumption per flight. As reported by Satellite Today:
“Free streaming services will typically see a take-up rate above 50%, leading to massive increases in the capacity demand per plane. The average data consumed per aircraft varies depending on several key parameters. However, Novaspace estimates that it can grow from ~10 GB in 2023 to 150 GB per aircraft per flight in the next decade. Consequently, the capacity demand generated by the IFC segment is expected to multiply more than 20 times in the next decade.”
As free streaming becomes the norm, it will multiply airlines’ bandwidth bills unless monetisation scales alongside. Simply offering free internet to everyone would be a loss leader—unless it drives much larger revenue elsewhere.
In-flight WiFi: from pay-to-connect to free-for-(mostly)-all
When airlines first introduced in-flight WiFi, most sold passes to access the service in-flight, ranging from affordable hourly passes to pricier packages for the duration. Pay-to-connect has yielded mixed results for airlines. Passengers who suffer through in-flight service interruptions feel they didn’t get their money’s worth.
For many years, in-flight entertainment and connectivity providers have argued that IFEC can also enable new revenue streams from retail and advertising. But implementation of these ancillary revenue drivers is a delicate balancing act. Airlines want to avoid diluting their brand value by bombarding passengers with ads, and effectively implementing retail is complex.
However, increasingly, carriers are offering complimentary WiFi to their loyalty program members, even to those who sign up during the flight. Loyalty growth may justify the IFEC expense, with multi-billion-dollar co-brand credit card deals significantly offsetting airlines’ narrow profit margins on tickets.
In-flight WiFi has become an airline brand necessity
As more digital-native travellers take to the skies, airlines also see in-flight WiFi as a brand necessity, ensuring their loyal customers have a seamless in-flight experience, one that is close to the same connections they enjoy on the ground.
“Our customers greatly value staying connected while in the air, whether communicating with friends, getting work done, checking in on social media or streaming their favourite subscription services,” said Heather Garboden, Chief Customer Officer, American Airlines in the airline’s announcement of free WiFi for AAdvantage Loyalty members, sponsored by AT&T.
“We’ve been working diligently to outfit our aircraft with best-in-class high-speed Wi-Fi and together with AT&T are proud to offer those services at no cost to our most loyal customers.”
Jenifer Robertson, EVP & GM Mass Markets, AT&T, added: “People want to be connected. Everywhere. All the time. Whether it’s staying in touch with those who matter most, following a favourite sports team or catching up on that show everyone is talking about, connectivity brings people a world of possibilities. By advancing connectivity, everything becomes more immediate and accessible anywhere they go.”
Alaska Airlines announced a similar partnership with T-Mobile to sponsor its free Starlink connections for loyalty customers.
How loyalty revenue dwarfs WiFi fees
Betting on loyalty revenue to offset the costs of the service could pay off for airlines. Over the past four decades since American Airlines first launched AAdvantage in 1981, airlines’ revenue share from loyalty programmes has soared. As the membership list grows, these programmes become increasingly valuable to banks that purchase miles from airlines.
Delta Air Lines disclosed $7.4 billion in cash sales of SkyMiles to American Express in 2024, exceeding Delta’s net profit that year. The airline reported overall loyalty revenue of $3.2 billion, which dwarfed its reported ancillary revenue of $772 million (which included aircraft maintenance services).
In 2020, United Airlines valued its MileagePlus program at $21.9 billion, using it as backing to secure much-needed financing during the pandemic.
In its industry ancillary benchmark report published last year, industry consultancy IdeaWorksCompany stated that the top 10 airline loyalty programs generated $32.2 billion in 2023, representing an 18.6% year-over-year increase—a significant share of the total $54.1 billion ancillary revenue the top 10 airlines generated that year.
As IdeaWorks also reported in 2024, US majors collectively pocket over $25 billion annually from co-branded cards, far outstripping the revenue WiFi could generate through paywalls.
For airlines with high-value loyalty programmes, providing free WiFi is worth the investment to keep passengers coming back for more. Airlines can’t afford to fall behind and risk having high-value flyers migrate to a competitor.
Refining the in-flight connectivity monetisation mix
According to a recent study by IFEC services provider Moment, passengers spend an average of 58.4 minutes, or 20% of their time, on medium-haul flights of around five hours, interacting with in-flight entertainment systems onboard, including wireless IFE systems or Bluetooth connections to seat-back embedded systems. All that screen time makes fertile ground for retail.
Rather than charging passengers for their in-flight connections, airlines are exploring ancillary revenue models that piggyback on connectivity, including:
- Advertising & sponsorship: New airline-controlled portals, such as Panasonic Avionics’ next-generation WiFi Portal, let carriers set their own content, pricing, and entitlements while selling banner or video sponsorship slots to brands.
- Curated app ecosystems: Viasat’s Connected Partner Platform enables airlines to host third-party apps—destination guides, streaming, retail—turning captive attention into a marketplace.
- Loyalty: “Free for members” access grows enrollments and increases co-brand card spend, the most lucrative ancillary stream for full-service carriers.
- E-commerce & retail: Industry analysts expect IFEC-driven in-flight retail to grow sharply
As reported by the Airline Passenger Experience Association (APEX), an industry body that specialises in IFEC and passenger experience services, “the in-flight retail market, valued at $3.5 billion in 2024, is projected to surpass $5 billion by 2030.” In-flight connections to airline-branded online shopping portals that offer home delivery options will encourage uptake.
InterLnkd’s AirMall aims to boost in-flight retail to cover connectivity costs
InterLnkd has just launched AirMall—a white-label, plug-and-play digital shopping mall inside the captive WiFi portal. It enables e-commerce directly on passengers’ devices, potentially converting some of that near-hour of IFEC engagement into sales that cover the cost of all that bandwidth.
“Free, fast WiFi is becoming an expectation, leaving airlines to fund an expensive connectivity stack without charging for access,” said InterLnkd CEO Barry Klipp at the launch. “That’s why we built AirMall: a simple, plug-and-play solution that lets carriers engage and monetise their onboard WiFi users.”
Still, the success of any in-flight retail offering depends on frictionless UX, strong personalisation, and reliable post-flight fulfilment.
Interlink promises AirMall will offer:
- No onboard stock or crew workload
- Personalised storefronts based on destination and loyalty profiles
- In-flight payment and post-flight delivery
- Easy integration with existing portals and loyalty schemes
“It is the first in-flight retail solution to break free from the constraints of pre-loaded airline catalogues and airport delivery, giving passengers the same convenience and choice they expect on the ground,” Klipp said.
Airlines will scrutinise conversion rates and revenue-share margins before scaling such platforms fleetwide.
David Whelan, Senior IFCE analyst at Valour Consultancy, told AGN that there are ancillary revenue opportunities for airlines to cover the costs of WiFi.
“There has definitely been more interest from airlines in the ancillary revenue-generating potential of IFEC platforms, and digital services more broadly,” he said. “There’s significant potential in this type of business model, and I believe that airlines have only really touched the surface of the potential of dynamic advertising onboard. There’s certainly way more that can be done on the personalisation front.”
Whelan has seen digital services having a positive impact on in-flight retail sales, such as Immfly’s services onboard Iberia.
“And of course, there are plenty of other benefits to IFEC. Including increasing passenger loyalty,” he added.
Free in-flight WiFi is a powerful loyalty engine
For now, loyalty revenue—not WiFi fees—pays the connectivity bill. Airlines are offering free WiFi to frequent-flyer members to deepen engagement and grow their lucrative co-branded credit card business, while building portal technology to support future retail and advertising income.
The bet is that as uptake rates rise and passengers come to expect internet at 35,000 feet, the combination of loyalty economics and portal monetisation will eventually make “free” WiFi pay for itself—and perhaps turn a profit. At least, that is the case for full-service carriers, though Whelan told AGN that the economics of WiFi don’t yet add up for all airlines.
“IFEC is not a must-have yet, though. The business model still doesn’t make sense for many LCCs,” he said. “It’s fair to say that no IFEC provider is really making the case that ancillary revenues can directly cover the costs of these services, though they can help. In terms of IFC and seatback IFE, it is more about improving the passenger experience.”
Economics aside, for full-service carriers, WiFi is part of the brand promise to passengers. Airlines that offer quality WiFi connections onboard build genuine brand loyalty even when passengers don’t sign up for the miles.
