Shares of Gogo Inc. fell Friday on news that American Airlines picked rival ViaSat Inc. to provide Internet access on new Boeing jets and might drop Gogo on many jets that use it now.
Airline passengers have increasingly come to expect Internet service so that they can read email, browse the web and stream entertainment during flights. That has heightened the competition among broadband providers.
Gogo has relied on air-to-ground technology but is developing faster satellite-based broadband service so that passengers can stream Netflix and YouTube.
ViaSat said Friday that it will provide satellite-based service on the Boeing 737 Max jets that American expects to begin receiving in September 2017. The Carlsbad, California-based company said the era of passengers paying high prices for slow Internet service was coming to an end.
Chicago-based Gogo said in a regulatory filing it will continue providing Internet on more than 500 American planes, and about 140 will switch from Gogo's air-to-ground technology to its new satellite-based service.
But, Gogo added, it expects that American will exercise an option to remove Gogo's equipment on many or potentially all of those planes over the next several years. Fort Worth-based American is the world's largest airline.
In afternoon trading, Gogo shares were down $1.58, or 14.3 percent, to $9.49. They are down 47 percent in 2016. ViaSat shares gained $2.20, or 3.2 percent, to $72.11 and are up 18 percent for the year.
