Cathay unit buys into Web partner
A Cathay Pacific Airways subsidiary has acquired a 10 per cent shareholding in United States-based Tenzing Communications, the carrier's inflight Internet partner, for US$10 million.
The investment by Taikoo Aviation Technologies, wholly owned by Cathay, is part of Tenzing's second round of funding.
The US$12 million first round was led by international telecommunications investment firm Fremont Group.
Investors in both funding rounds include the venture capital and aerospace companies TH Lee, Riverside Management Group, JGL Investments, Deutsche Bank and Itochu, as well as a number of private investors.
Ian Riddell, Cathay director of information management and e-business, said the investment in Tenzing was consistent with the airline's venturing programme, a key element of its e-business strategy.
"It recognises that inflight connectivity for air travellers will become an essential part of the service offered by leading airlines over the coming decade," he said.
Cathay will roll out in-flight Web access and e-mail across its entire fleet of more than 80 aircraft in the third quarter of this year, making it the first airline to offer the service.
Some industry analysts believe providers of in-flight Internet access could see revenue of US$70 billion over the next decade.
This might seem high but analysts generally agree in-flight e-business will be more lucrative than in-flight telephones, which have failed to take off.
Passengers are thought to be deterred from using seat-back phones by high prices, the need to shout to be heard above the sound of the aircraft and lack of privacy.
Tenzing has said its in-flight Internet access and e-mail service will be handled by Hughes Global Services, which will use a variety of satellites to connect airliners using the Tenzing service with the Web and e-mail systems.
In October, Cathay announced plans to invest more than HK$2 billion on a range of e-business projects in the next three years.
These included the relaunch of its flagship Web site, which would include new features such as "notiFLY", which alerts passengers to changes in flight status, an improved online booking system, online check-in, and a downloadable trip planner.