Gogo (GOGO) lands first international customer

• ticker:  GOGO

Gogo Inc., which provides Internet access on commercial flights, has landed its first international airline customer.

The Itasca, Illinois-based company said today it won a contract to provide broadband to Japan Airlines' 77-plane domestic fleet, starting next year. JAL will use Gogo's satellite-based Internet service, which was announced in January, joining launch customer Delta Air Lines, which is installing it on its international fleet.

Gogo stock rose 5 percent in morning trading to $17.10. It went public at $17 on June 21 but traded as low as $9.71 on Aug. 21.

The deal is critical to Gogo because most U.S. airlines have chosen broadband providers.

"We're in open dialogues with carriers around the world," Gogo spokesman Steve Nolan said.

Gogo emerged as the early leader, landing Delta, American Airlines, US Airways, Virgin America and Alaska Airlines. About 80 percent of planes in North America that have Wi-Fi use Gogo's equipment, although competition is increasing. Chicago-based United Continental Holdings Inc. tested Gogo's service on some aircraft before choosing Panasonic's satellite system for its international fleet.

Adoption of in-flight Internet connectivity has been slow. Overall penetration finally has risen above 6 percent, though on some transcontinental flights it can top 30 percent.

The company initially developed a ground-based system, using a network of cellular towers, for domestic service. But airlines see the highest demand — and the highest likelihood that customers will pay for the service — on long international flights. That meant Gogo had to come up with a satellite-based solution. It waited for next-generation technology that has much higher capacity. The first satellite-equipped planes are expected to be in service this year.

In the meantime, it's been cranking up the capacity of its ground-based network to keep up with demand for bandwidth-hogging uses, such as video. Gogo doesn't allow passengers to stream Netflix, but they can surf YouTube.

Last year, Gogo began installing additional antennae on aircraft, tripling the average peak download speeds on board to about 12 megabits per second. By combining satellite and ground-based systems, it can boost speeds to about 60 megabits per second. That's nearly double the average peak U.S. broadband speed of about 36 megabits per second, according to Akamai Technologies' "state of the Internet" report.