American Airlines may be switching providers for its in-flight Internet service.
The Fort Worth-based company has notified Gogo, its current provider, that it has found a faster Internet service offered by ViaSat, according to a lawsuit filed in state district court in Tarrant County on Friday. Gogo said that it intends to submit a competing proposal.
The news sent shares of Chicago-based Gogo plummeting on Wall Street. Gogo stock [ticker: GOGO] declined 27 percent, or $3.81 to close at $10.08 on Tuesday.
In the lawsuit, American says its contract with Gogo allows it to renegotiate or terminate its agreement if another company offers a better service. The airline is asking a judge to declare that it provided proper notice under its contract and that Gogo’s rejection is without basis.
“After carefully evaluating the new technology and services in the marketplace, American has decided to exercise its rights under the Agreement and recently notified Gogo that ViaSat offers an in-flight connectivity system that materially improves on Gogo’s air-to-ground system,” the suit says.
American says ViaSat offers a faster service that is currently installed on United Airlines, Jet Blue and Virgin America planes. American uses Gogo for its regional aircraft and on domestic flights, primarily Boeing 737s. The carrier uses Panasonic to provide satellite-based Internet services for international flights on its wide-body fleet, including Boeing Dreamliners and 777s.
“American continually evaluates in-flight connectivity service to determine what best meets our customers’ needs and wants,” American said in a statement. “We’ve notified Gogo of a competitor’s offering, and we will evaluate all of our options.”
Gogo said American notified it earlier this month that a competitor’s service is an improvement over its early generation air-to-ground service that is used on about 200 American planes.
“We have no comment on the merits of this litigation, but we would like to note that American is a valued customer of ours and that we look forward to resolving the disagreement regarding contract interpretation that led to this declaratory judgment action,” Gogo said in a statement late Monday night.
According to its contract, Gogo is allowed to submit a competing proposal which Gogo said it intends to do related to its satellite technology, 2Ku.
“We believe that 2Ku is the best performing technology in the market and look forward to discussing our offer with American,” Gogo said.
Star-Telegram reporter Max Baker contributed to this article.