Future of Aerospace analyzed three key trends that are emerging across the commercial aviation in-flight connectivity ecosystem. (Virgin Atlantic)
As the commercial aerospace industry prepares to enter the final four months of 2020, Future of Aerospace analyzes three trends you should be monitoring over the next 12 months within the connected aircraft ecosystem, which has been heavily impacted by the COVID-19 coronavirus pandemic.
Airline Business Models
COVID-19 has the potential to accelerate what was already inevitable: Changes to commercial airline in-flight connectivity (IFC) business models.
Right now, there is no real industry norm in terms of the cost charged to passengers for in-flight Internet access used by commercial airlines, they vary from region to region and airline to airline. A look at business models employed by some of the biggest names in Europe and North America provide some insight into this trend.
Air France for example, is on track to equip its entire fleet of aircraft with Gogo 2Ku connectivity by the end of this year. Passengers onboard use “Air France Connect” to Wi-Fi enabled iMessage, WhatsApp and WeChat messaging for free. Tiered access to the Internet ranges from three Euros on short-haul flights to five Euros medium-haul and eight Euros for an entire long haul international flight.
On a Virgin Atlantic trip from London to New York for example, passengers pay £20.99 for the entire flight or the option of £8.99 by the hour, enabled by Inmarsat’s GX Aviation network. Virgin passengers can also make calls or texts for standard roaming fees charged to their home cellular network operator by AeroMobile, which is featured on all flights.
In July, Lufthansa announced it would start giving access to Wi-Fi free of charge to Deutsche Telekom mobile network users on Eurowings and Austrian Airlines regional flights. Other airlines have established similar exclusive in-flight Wi-Fi enabled services with mobile network or phone companies such as American Airlines’ free access to Apple Music for iPhone users.
“There’s a price a point, around the 20-25 or even 30-pound mark,”Mark Cheyney, Virgin Atlantic’s head of in-flight entertainment and connectivity said in a Feb. 28 interview on the Global Connected Aircraft Podcast. “For a full flight around the 20-30 pound mark is about where you can go, at 30 you’re realistically kind of at the limit.”
How Air France charges passengers for access to in-flight Internet. (Air France)
North America also features a variety of business airline IFC business models. Alaska Airlines is in the process of upgrading its entire fleet to Gogo 2Ku, with access starting at $4.95 while the same free Wi-Fi powered messaging option is available.
United Airlines offers in-flight Internet access on all of its flights, with passengers offered a $49-per month pass for access on every flight they take or can pay by the hour depending on the length of the flight and the type of service - Gogo, Viasat, Thales or Panasonic - on that aircraft.
Air Canada is an all-Gogo fleet operator that charges $6.50 CAD by the hour or $21.00 CAD for the entire flight. Passengers enrolled in the carrier’s Aeroplan frequent flyer program and those that fly in first class also get free access to in-flight Internet, meaning Air Canada bakes the cost of providing bandwidth to those passengers into the premium cost of their seat and membership.
Gogo CEO Michael Small began the year in their first quarter earnings call warning that the commercial aviation IFC space has “too many competitors and nobody yet has enough scale to build a sustainable business for the long-term.” Competitors to Gogo include Global Eagle Entertainment Inc., Inmarsat, SITAONAIR, Panasonic Avionics Corp., Collins Aerospace, Thales, Viasat and Safran.
The typical business model in use today by Gogo and its competitors is to have the satellite operator sell capacity to the aviation connectivity service provider. Airlines then have to pay to install the connectivity equipment on their aircraft along with the bandwidth used by each of their connected aircraft on a monthly basis.
Small ended the second quarter of 2020 confirming his first quarter warning, with Gogo now in talks to sell the commercial airline side of its IFC business to focus on its spun-off business aviation division, where flight activity has recovered faster for operators.
“Recently, we received questions about whether we are in a process to sell our commercial aviation division, and we'd like to make the following comments in reaction to those inquiries,” Small said during their second quarter earnings call.
“We’ve been in extensive discussions with multiple parties and feel optimistic that a deal may happen. However, we cannot be sure that we will be able to consummate a transaction. We do not want to impact our negotiations by saying too much publicly.”
What's the trend to monitor here? What type of business model will take hold as new networks become available and the data charges billed to airlines by service providers becomes cheaper? Will airlines eventually take a hotel or coffee shop model of infusing the bandwidth cost of enabling Internet access to customers into their overall operational cost?
Next Generation Satellite Networks
A computer generated rendering of a Viasat-3 satellite. (Viasat)
Every major satellite network operator or service provider has a next generation network planned for availability within the next two to three years.
And the way that in-flight Internet is sold, installed and operated means that if airlines follow the track of economic experts from IATA that anticipate a two-to-three year recovery back to pre-COVID-19 passenger demand levels, on the other side of that demand curve there will be a number of next generation satellite IFC networks available to airlines.
Typically, when an airline actually commits to a particular IFC network for a fleet of aircraft that is either already in-service or on order, the upgrades and actual switching-on of the service may not occur for as many as two to three years and the wait could be even longer when considering the entire fleet. Looking at the industry in 2020 from a commercial airline satellite IFC purchasing plan perspective, in the next two to three years, a number of next generation options will become available.
Viasat has been one of the most active IFC service providers, experiencing tremendous in-service pre-COVID-19 growth to the tune of 1,379 commercial in-service aircraft as of Feb. 6. While the global communications company just introduced its Viasat-2 generation network in 2018 with 300+ Gigabits per second (Gbps) capacity, it is already in the process of launching Visat-3, which promises more than 3-terabits per second of total network capacity from its satellite trio.
Airlines already featuring Viasat connectivity will have forward compatibility with the next generation network. According to comments made by Viasat CEO Mark Dankberg on their first quarter 2021 earnings call Aug. 8, they’re testing “larger and larger subsets of the payload” and that they would have a more definitive date on shipping the Viasat-3 payload by next quarter. Dankberg also emphasized that they have seen no reduction in interest for IFC among operators who had orders prior to the outbreak of COVID-19.
“We are still seeing really robust activity. And we have a lot of virtual meetings now mostly, lots of virtual meetings with airlines,” Dankberg said.
Not to be outdone, Inmarsat is moving forward with its plans to launch seven new satellites by 2023 as part of its future roadmap. Inmarsat’s current Global Xpress (GX) network features five geostationary Ka-band satellites in orbit, with GX 6A and 6B launching by 2021. Their GX 7, 8, and 9 satellites are on track for availability by 2023 and will feature the ability to dynamically adjust capacity and service support based on changes in demand with in-orbit repositioning and direct capacity shifted to high-demand airports and routes.
In a June 4 press release, Inmarsat also confirmed it would be testing the ability of a Boeing 777X to use a technology it describes as the “smart pipe,” capable of independently allocating connectivity bandwidth provided by GX Aviation and SwifBroadband-Safety to third party applications used by both passengers and pilots. Boeing is evaluating the use of the technology on the latest installment of its ecoDemonstrator 777X flights.
Other next generation networks in development include Panasonic Avionics Corp.’s Dec. 5, 2019 multi-year agreement for Ku-band capacity on two multi-beam payloads on the EUTELSAT 10B satellite, due to be launched in 2022. EUTELSAT 10B will be the second XTS satellite to join Panasonic’s connectivity network.
Additionally APT Mobile Satcom will operate APSTAR 6D — the satellite behind XTS that will become the first Ku-band high throughput satellite providing coverage over Mainland China. Co-designed by Panasonic Avionics, the anchor client to APT Mobile Satcom, the new XTS service will provide 30 Gbps of dedicated high throughput capacity over Mainland China, with commercial availability in 2021.
Elsewhere, Canadian low earth orbit (LEO) satellite operator Telesat LEO has plans for 300 satellites, and aims to place 78 in orbit in 2022, and 220 more in 2023. According to a Feb. 2019 white paper published by Telecast, the advantage they’re leaning on is the distance between their satellites and the earth – 35 times closer than traditional satellites. That could greatly help reduce latency for connected in-flight streaming applications.
SES is another player to monitor, as they prepare to launch seven satellites for their 03b mPOWER medium earth orbit (MEO) constellation next year. The new constellation will have 30,000 fully-shapeable and steerable beams that can be maneuvered in real time to adjust to changing bandwidth needs.
And the position of SES within the global IFC ecosystem shows why the commercial airline business model problem has yet to be resolved and will become further complicated by COVID-19.
They sit at the top of the commercial aviation IFC broadband spectrum food chain, counting many of the previously mentioned companies as customers including Panasonic, Gogo, Thales and Global Eagle which filed for Chapter 11 bankruptcy two weeks ago.
What’s the trend to monitor here? How much merger and acquisition activity will COVID-19 introduce among commercial aviation IFC satellite service providers and what satellite companies find the sweet spot between the capacity and data charges they apply to airlines moving forward.
Flat Panel Antenna Technologies
The AeroMax electronically steered array shown in an industry-standard radome. (NXT Communications)
On most modern commercial jets, airlines traditionally operate fleet types for 10 to 15 years or more before retiring them. That can make costly antenna system upgrades for every new generation of IFC network problematic for airlines, which is why most companies try to make aircraft enabling technologies adaptive to new networks.
However, there have been several compelling developments across the antenna supplier side of the IFC equation. Including a trend toward the introduction of designs that are lower in profile and adaptable to new satellite networks and constellations as they become available.
This trend was demonstrated by NXT Communications, the Atlanta-based supplier of a disruptive new high-capacity, flat panel satellite antenna that they promise can enable lower price points. That antenna is on track to start live in-flight testing later this year, according to a June 29 press release published by the company.
Leveraging advancements in RF and semi-conductor packaging and manufacturing technology, the AeroMax antenna "optimizes a highly integrated silicon-based chipset and sub-array design, which serves as the building block for a portfolio of next-generation, lower-cost commercial satellite antennas," according to NXTCOMM.
“The efficiency of our antenna is driven by the better math and better design of the antenna part that faces the satellite. We’re more efficient because we start from the side that faces the satellite. NXTCOMM’s antenna is unique in that it allows for the full two gigahertz on the face of the antenna. So, we offer dynamic, instantaneous bandwidth, 2 ½ GHz wide,” Dave Horton, CEO and co-founder of NXTCOMM said during an interview featured in the upcoming August/September edition of Avionics International.
Several weeks prior to the public debut of NXTCOMM, another emerging flat panel antenna supplier, Phasor, made headlines when it was acquired by South Korean aerospace and defense manufacturing company Hanwha Systems. Phasor in recent years had provided annual updates on its progress toward the development of an electronically steerable antenna. Last year, the company established a productization agreement with Gogo.
Hanwha sees the enablement of wireless in-flight video streaming for aircraft as a major market opportunity. “Our company made a swift decision for the investment as this market has the big potential for the growth and this technology is of strategic importance for Hanwha Systems,” CEO Youn Chul Kim said in their June 18 press release confirming their acquisition of Phasor.
ThinKom, which makes Gogo’s 2ku antenna, has also been testing new Ku and Ka-band antennas that have confirmed “seamless interoperability across low-Earth orbit (LEO), medium-Earth orbit (MEO) and high-throughput geostationary (GEO) satellite constellations. The live on-air testbeds included OneWeb LEO, Telesat LEO 1 and SES’ GEO and O3b MEO satellites,” according to a June 24 press release.
What’s the trend to monitor here? When considering the continued advancements being made in disruptive new flat panel antenna designs, ThinKom CTO Bill Milroy’s comment during an antenna panel at the 2019 Global Connected Aircraft Summit remains more relevant than ever:
“The best antenna is no antenna, the best radome is no radome, we’re in that sort of business,” Milroy said. “The antenna is an important enabler. It’s key as suppliers that we don’t become disruptive in a bad way.”
Monitor those disruptive next generation designs that cause little-to-no impact on aerodynamic drag and can adapt to multiple different constellations and generations of satellite networks for five to ten years after the equipment is actually certified and enters into commercial passenger carrying service.