Boeing ends in-flight internet after $1bn loss

Boeing, the world's biggest aircraft manufacturer, has pulled the plug on its in-flight internet service after six years of work and about $1bn (£530m) of losses.

The Connexion by Boeing service offered passengers broadband internet access through their laptops, but only President George Bush's Air Force One and a handful of airlines had signed up to install it.

When the project was launched at the height of the dot.com boom, Boeing estimated it would be raking in revenues of $25bn a year by now, but Jim McNerney, Boeing's chief executive, said yesterday his predecessors had overestimated demand.

His decision to abandon the project and reassign 560 Connexion employees raises the intriguing prospect that Airbus might steal a march on Boeing, at least in this area of their titanic rivalry. The European aircraft maker holds a stake in OnAir, another internet-in-the-sky technology company, which plans to roll out phone, messaging and internet services over the next two years.

It is understood that Airbus is about to sign up one of Boeing's customers to install OnAir's technology in the airline's fleet of Boeing planes.

Boeing said it would take a one-off charge of $320m after failing to find a buyer for Connexion. It will shut the service to customers including Lufthansa and Singapore Airlines, several of whom have marketed it heavily.

"We have invested substantial time, resources and technology in Connexion by Boeing," Mr McNerney said. "Regrettably, the market for this service has not materialised as expected."

Last year, Airbus folded its own work on in-flight internet technology into a company called OnAir, in which it now holds a minority stake. Unlike Connexion, OnAir aims to offer a menu of different services, ranging from voice calls and instant messaging to wireless internet. Air France and BMI have signed up to install the service, which involves having a mini base station on board, and which will be charged to customers at close to international roaming rates. Internet services are due to be added in 2008.