Airline behemoth Delta Air Lines (DAL) has signed a deal with in-flight connectivity provider Gogo Inc. (GOGO). According to the deal, Gogo’s next generation 2Ku technology will be installed in more than 250 of Delta’s planes. Following the upgrade, passengers on board these aircraft – which primarily operate on long-haul, domestic, Latin American and Caribbean routes – will enjoy speedier in-flight Internet access.
Following the news, Gogo's shares gained traction, climbing 5.49% to reach $17.49 on Feb 25.
Gogo intends to begin installing its satellite-based 2Ku Internet Wi-Fi connectivity technology on Delta’s planes by 2016. According to the deal, the technology will be installed on Delta’s new international flights as well following their induction into the carrier’s fleet.
The next generation technology on launch is projected to deliver peak speeds of up to 70 Megabits per second (Mbps). This is 20 times the bandwidth of the original air to ground technology offered by the in-flight connectivity provider. Furthermore, the peak speeds are expected to exceed 100 Mbps following the availability of spotbeam Ku satellites. Gogo stated that the increased bandwidth will enable it to partner Delta on the development of operational applications and services, thus enhancing its scope beyond passenger connectivity.
Apart from the abovementioned deal, Delta will also team up with Gogo for the launch of next generation air to ground technologies for its short-haul aircraft operating within the U.S.
Delta, which is constantly striving to upgrade its planes to enhance customer satisfaction, intends to add more of such new technologies over the coming years, in the best interests of its customers. We remind investors that late last year, Delta had announced that plans of introducing a new five-tiered seating plan from Mar 1, 2015. This will replace the existing basic first class and coach seating schemes. The carrier has also started offering Starbucks coffee to passengers on board. All these moves are aimed at improving customer satisfaction, which in turn should boost the carrier’s top line by bringing in additional fliers.
Zacks Rank
Delta carries a Zacks Rank #2 (Buy) while Gogo has a Zacks Rank #3 (Hold). Better-ranked stocks in the airline space include Spirit Airlines (SAVE) and JetBlue Airways Corporation (JBLU). Both these stocks sport a Zacks Rank #1 (Strong Buy).
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