Elon Musk has a warning for American Airlines Group Inc. (AAL): pick the wrong in-flight internet provider, and passengers might start booking with your competitors.
The SpaceX CEO weighed in Sunday after Starlink's VP of Engineering, Michael Nicolls, touted Starlink as the only source of "good connectivity" on flights. Musk didn't mince words in his response.
"American Airlines will lose a lot of customers if their connectivity solution fails," Musk said.
The Battle For The Skies
The backdrop here is important. American Airlines appears to be leaning toward Amazon.com Inc. (AMZN)'s Leo satellite internet service instead of Starlink. CEO Robert Isom recently hinted at this potential deal, noting that other options besides Starlink exist in the market.
Tesla influencer Sawyer Merritt echoed Musk's concerns, pointing out what seems like a pretty significant numbers gap. SpaceX currently has over 9,000 Starlink satellites in orbit and growing fast, while Amazon Leo has 150. That's quite the infrastructure difference, and Merritt questioned why American Airlines would choose the smaller network.
United Takes A Different Path
While American Airlines explores its options, United Airlines Inc. (UAL) has already signed on with Starlink. The service is rolling out initially on United's regional network, with plans to expand across more aircraft in the fleet. United sweetened the deal for passengers by making the service free for its MileagePlus members.
It's shaping up to be an interesting competitive dynamic. If United's passengers get reliable, free WiFi while American's connectivity struggles, that could genuinely influence booking decisions for business travelers who need to stay connected at 35,000 feet.
Starlink's Bigger Ambitions
In-flight WiFi might just be the beginning. Recent trademark filings with the USPTO reveal that SpaceX is exploring "STARLINK MOBILE," which would enable "two-way real-time transmission of voice, audio, video and data by means of wireless telecommunications devices." Translation: Starlink could be positioning itself to compete with traditional cell carriers.
And then there's the IPO news. Musk recently confirmed that SpaceX is gearing up to go public next year, targeting a valuation of $1.5 trillion. He first hinted at the possibility during Tesla Inc. (TSLA)'s annual shareholder meeting last month, and now it seems increasingly likely to happen.
For American Airlines, the question isn't just about which satellite provider offers better service today. It's about betting on which company will have the infrastructure and investment to keep improving that service for years to come. Musk's warning might be self-serving, but it's not entirely wrong either.