Coming to Seatbacks Near You

Posted by: Justin Bachman on January 29

Television is moving into the U.S. airline mainstream. I say this because of the announcement that Continental Airlines has signed on with LiveTV LLC to install 36 channels of live television and e-mail service on 225 newer 737s and 757s by 2010. The service will be free in first class, and $6 in economy, allowing the BlackBerry addicted to stay in touch on e-mail and instant messaging.

The deal represents the largest to date for LiveTV LLC, a subsidiary of JetBlue, which also has installed its DirecTV system domestically on Frontier, as well as several international airlines. The deal, which LiveTV spokesman John Hyde called “a real milestone for us” also represents what he describes as “a high-risk, high-reward” proposition for Melbourne, (Fla.)-based LiveTV.

And that’s probably the most intriguing part of the venture. In this deal, Continental faces only upside…

After the FAA signs off on the work, Continental will have to park the planes briefly as they undergo installation next year. And that's about its heaviest financial burden. LiveTV arranges the work flow, and covers the installation outlays. The airline also will receive a cut of the $6 LiveTV collects for access and no doubt will market the service heavily as a lure for business travelers. To date, LiveTV has installed its system on about 500 airplanes worldwide. "The business model works," says Hyde.

Continental is now the second major betting on TV. Delta is installing 18 channels on 136 planes by June (and 59 more in only business class) using a separate technology pushed by a unit of Panasonic. The Atlanta airline dabbled in television with its former Song unit, which folded in 2006. And last week, AMR's American Airlines said it would begin putting Wi-Fi capability on 15 of its 767s.

Flight duration is key to LiveTV's business model: too short and no one uses it; too long, and you're watching Hollywood movies, eating, drinking, and sleeping.