Economic Analysis of Gogo’s in-Flight Wi-Fi

In: Business and Management

Submitted By xyzhang
Words 3379
Pages 14
Case Study: Economic Analysis of Gogo’s In-flight Wi-Fi
November 2, 2015
Introduction
Gogo pioneered and now dominates the in-flight Wi-Fi business, which allows passengers to access the Internet during their flights. In recent years, consumers have grown from anticipation to dislike towards Gogo’s services due to its steady increase in fees and rapid decrease in speed.
Through a dynamic pricing strategy they hope to relieve congestion which indeed have effect, but will not last in the fierce competition of an oligopoly market structure. Unlike its monopolistic position before, Gogo now faces at least three companies—ViaSat, Global Eagle
Entertainment, and Panasonic— swiftly eroding its market share with cheaper and faster in-flight
Wi-Fi services using satellites instead of antennas. Gogo’s own next-generation technology 2Ku, to come online in 2016, uses satellites that hopefully would achieve better prices with higher speed. To analyze the market for in-flight Wi-Fi and the pricing strategies of Gogo, our paper will discuss five core areas:






The price elasticity of demand for Gogo’s service, and how it varies with price levels
The market structure Gogo is operating in
Its dynamic pricing
How the demand for in-flight Wi-Fi has changed over time, technological changes over the past 15-20 years that has affected demand
Technological factors that affect supply, how congestion affects pricing and our recommendation Price Elasticity of Demand for Gogo’s Service
To better analyze the price elasticity of demand for Gogo’s service, we will discuss those factors that affect the price elasticity of demand.
The availability of a substitute: though there is no substitute for the use of Wi-Fi available to a traveller who is onboard a flight installed with Gogo, the traveller has a range of airlines like
Southwest and JetBlue to choose…...

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