The sky is the limit as Boeing and Airbus battle for internet supremacy

Want to email the boss from 35,000 ft? Or just surf the Web? Now you can, as on-board communication enters new era

The office in the sky took a further step towards becoming reality yesterday when Emirates announced it will be the world's first airline to offer its passengers wireless access to their e-mail systems.

The Dubai-based carrier is using a technology developed by a small company in Seattle and formed six years ago by two Australian entrepreneurs.

Tenzing Communications now has its in-flight communications system in service on more than 800 aircraft and, with yesterday's deal, Emirates became its eighth airline customer. The other seven, among them Cathay Pacific, United Airlines, Continental and Iberia, connect customers to e-mail through conventional fixed telephony points.

The market for in-flight communications systems ­ enabling passengers not only to send and receive e-mails and text messages but surf the internet and connect to company-run private virtual networks, could be worth $10bn (£6bn) by the end of the decade. As many as 4,000 aircraft could be equipped to offer passengers internet access, according to industry estimates.

If everything goes to plan, then Tenzing intends to capitalise on this airborne communications boom by floating in the next 18 months to two years, making multimillionaires out of its two founders, David Lowe and David Coe, who is now chairman of the company.

It would be tempting to see this as one more dot.com success story born of entrepreneurial endeavour. That would be true only in part. It is also about the continuing battle for supremacy between the world's two big commercial aircraft manufacturers, Airbus Industrie and Boeing.

Airbus became a shareholder in Tenzing two and a half years ago and is helping to bankroll its development. Boeing, meanwhile, is developing a rival system known as Connexion by Boeing. Time will tell whether there is a market for both systems or whether, rather like VHS versus Betamax and the CD versus Digital Audio Tape, only one technology is destined to survive.

The business models behind the two systems are quite different. Tenzing, which also counts Rockwell and Cathay among its shareholders, got into the market much earlier than Boeing because its system is simpler, cheaper and, for now at least, much more limited in its applications.

The Tenzing system entered service with Cathay more than a year ago and is now installed on more than 800 aircraft around the world. Although Boeing has so far signed up six airline customers, its Connexion system does not start commercial service until March, and then only on a handful of long-haul Lufthansa aircraft ­ ironically enough Airbus A340s.

Installing Tenzing involves the comparatively simple task of incorporating the company's software into an aircraft's existing in-flight entertainment and communications system. Passengers are then connected to their e-mail through the global Inmarsat network of satellites. Passengers can only send and receive e-mails or text messages. The charge for connecting a laptop to e-mail is between £5 and £10 a time depending on the length of the flight while the flat-rate charge for sending a text message is $2.50 (£1.40).

Boeing has opted for a much more ambitious system offering passengers full high-speed internet access enabling them to surf the Web, connect to their own private networks and even download films and music. To provide this broadband-in-the-sky service, each aircraft must be taken out of service for several weeks to be retro-fitted with a special antennae. Once in service, passengers on an eight-hour flight ­ say from London to New York ­ will pay a flat-rate charge of £20 for unlimited internet access.

The payment systems are different, too. In the case of Tenzing, passengers will be billed by whichever internet service provider (ISP) or airtime re-seller is making access available. This varies from PCCW in the case of Cathay to Verizon in the case of United and Continental.

Tenzing then shares out the revenues with the ISP and Matsushita, the installer of the in-flight entertainment systems.

Anyone who flies in an airliner fitted with Boeing's system must take out an account with Connexion by Boeing, which will then bill them directly.

The different approaches reflect two quite differing philosophies. Alan McGinnis, the chief executive of Tenzing, says: "All the market research we have carried out suggests that the priority for customers is access to e-mail and messaging services. There may be people who want to spend eight hours surfing the net but is it wise for airlines to spend millions of pounds installing very expensive kit only to discover that no one wants to use it?"

Boeing, however, believes that if the concept of in-flight communications is to take off, passengers must have access, from the beginning, to a system offering them the same capacity as their earth-bound broadband connection. Scott Carson, the president of Connexion by Boeing, says: "With the ability of modern jetliners to directly link cities that can be 16 hours or more apart, keeping in touch becomes increasingly important for productivity as well as a traveller's ability to maintain a healthy balance between work commitments and obligations to family, friends and community."

A spokeswoman for Connexion adds: "We believe that what the business traveller wants is an office-like experience in the sky once they are connected. Think where we are now at work and in the home with broadband connections compared with where we were 10 or even five years ago."

At the moment Tenzing, with its first-mover advantage, is ahead in the market. By the end of this year it expects there to be well over 1,000 aircraft using its system. Boeing, by contrast, has only secured orders so far to install Connexion on about 150 aircraft. Of these, only Lufthansa, SAS and Japan Airlines have signed definitive agreements. Its other customers ­ Singapore Airlines, All-Nippon Airways and China Airlines, which joined up this week, have only signed letters of intent. As the technology becomes more established, Airbus and Boeing will offer to fit it as standard on new aircraft, which is where Boeing could gain because customers will not have the inconvenience of passenger jets being taken out of service for long periods.

Not surprisingly, both companies are chasing British Airways hard. BA took part in a three-month trial of Connexion last year but Tenzing's Mr McGinnis remains hopeful of getting the airline on board. "They tried Connexion and they haven't rushed to get into it. They want to get maximum bang for their bucks so we are hopeful they will favour our model."

The idea of an office in the sky may sound just a little depressing to those business travellers who look forward to a long-haul flight as a rare opportunity to escape work altogether and relax with a drink, a meal and an in-flight movie. But its proponents are unrepentant. "Ten years ago no one would have envisaged that everyone would be walking around with mobile phones permanently glued to their ears," says a Tenzing executive. "Nowadays there is a new generation of business people who are used to being on-line and in touch all of the time."