The company was the highest of four bidders for a license in the spectrum during a recent auction by the US Federal Communications Commission. AirCell paid $31.3m for the 3-megahertz license, said the FCC, in a statement.

But pundits have pegged the market to provide airborne broadband in the as much as $500m in revenue.

I think over time that’s a fairly conservative estimate, said AirCell chief executive Jack Blumenstein.

After all, of the 600 million or so passengers that get on and off an airplane in the US each year, about 20 million of those are business travelers, of which roughly 6 million are hardcore road warriors, Blumenstein said.

AirCell’s in-flight WiFi service is slated for deployment by early summer in 2007 and promises to work with all standard WiFi-enabled equipment, including laptops and PDAs.

Unlike current in-flight calls, Blumenstein said AirCell’s airborne service would be affordable. He said it was too early to commit to how much users would pay as a premium to use the service, but that AirCell is targeting the mass market of broadband users.

We expect to see a tremendous amount of business utilization, Blumenstein said.

Privately held AirCell is working to negotiate deals with wireless providers in the US, so that their customers would be able to access WiFi through their regular authentication mechanisms, Blumenstein said.

Blumenstein envisions users would then be billed a premium by their wireless provider for the in-flight usage.

Security will be in the network and that is very much like the other public access WiFi networks, he said.

AirCell will negotiate deals with airlines during the next year to implement AirCell’s system.

The economic arrangement with airlines may vary somewhat, Blumenstein said. In the past, we’ve talked with them to be provider for that airline, and we then provide a service that is offered to passengers.

But, in some ways, this is going to be like so many other areas of wireless where we will make customers aware of [the service] as they come on board the aircraft.

So users may also be able to initiate WiFi sessions on board and become a subscriber of AirCell on that particular flight on airline, he said.

Initially, the service will be WiFi-based because WiFi has already been approved the US Federal Aviation Authority. Cellular voice frequencies have yet to be approved and Blumenstein reckons they lag WiFi by about 18 months.

In Europe, however, the use of cellular phones on aircraft may happen as early as the first half of next year, he said.

But there is not a similar WiFi frequency band available for the air in Europe. Instead, in-flight broadband will likely happen via satellite, which Blumenstein said involved more expensive infrastructure than the direct air-to-ground service AirCell is planning.

AirCell has no plans to enter the satellite broadband market to provide in-flight broadband in Europe, Blumenstein said.

Of course, WiFi VoIP calls would be possible with AirCell’s forthcoming service. However, Blumenstein said it would not yet clear whether VoIP would be part of its initial offering.

It may end up varying from airline to airline, he said.

Blumenstein said airlines likely would decide when users would be permitted to make VoIP calls on their WiFi phones, if at all. It likely would range from flight class, time of flight and other variables, he said.

Initially, AirCell’s network would cover the continental US and will later be expanded to the rest of North America, including Canada, Mexico and the Caribbean, said the company.

AirCell also said it would receive an undisclosed amount of venture capital financing in the coming months from investor Ripplewood Holdings LLC and unnamed affiliates of existing AirCell backer Blumenstein/Thorne Information Investors.

Ripplewood partner Ron LeMay, who becomes AirCell’s chairman, said the money would take AirCell through its airborne WiFi launch and well out into the future, in a statement.

Blumenstein declined to comment on specifics on the investment, but said AirCell, which launched in 1992, had been profitable for a number of years.

We needed a stronger war chest to approach the FCC auction and then the deployment of the broadband network and the ramping up of that business, Blumenstein said of the recent investment.

The company would be required to pay for its new license within the next 30 days or so, he said.

Louisville, Colorado-based AirCell, which employs about 50 people, currently sells voice and data service products to the business, government, transport and general aviation markets.