Northern Sky Research

Gung-Ho on Aero

Aug 14th, 2013 by Claude Rousseau   More from this Analyst | Profile

The expansion of the aero connectivity market with new satellites planned over ocean regions in the coming years, and the entry into emerging markets such as Asia by in-flight connectivity players, shows how multiple-frequency approaches are needed to address narrow-body and wide-body commercial airlines.

On one hand, the replacement of IS-27 (to be named IS-34) by Intelsat demonstrates the belief that one of the key areas of focus for the satellite operators’ aeronautical market development is over the North Atlantic routes, where mostly commercial wide-body aircraft fly.  Until it launches its IS29e high-throughput satellite (HTS), which will feature dozens of powerful beams over the Atlantic Ocean, IS-34 will serve as a stepping stone to customers wanting more bandwidth on that busy route.  It also means that traditional as well as high-throughput Ku-Band capacity in aeronautical markets will live side-by-side in the coming decade since not all customers will want large amounts of capacity. 

And when the operator lifts its IS-33e bird in 2016 with coverage over Asia, there will already be an Inmarsat HTS Ka-band network operating in this market, which is seeing action from providers in recent months.  

Indeed a few weeks ago, Panasonic and China Telecom Satellite Communications (China Telecom Satellite) signed a deal that set the tone for the Ku-band provider to move into the untapped inflight-connectivity markets of China.  The agreement allows non-Chinese airlines to use Panasonic's Ku-band network when flying in and over China starting later this year. 

This follows on the heels of a first Chinese airline flight, an Air China Airbus-330, connected via Swift Broadband services by MCN, the Inmarsat Chinese distributor.  It most certainly is not the largest deal, but it echoes the string of recent deals that show the desire of Asian airlines to have any kind of connectivity.  And watching the growth of air traffic in Asia, a region where more than 75% of flights are completed within the region, one can only admit that it makes sense given the project increase in South and Southeast Asian air travel.

On top of that, Asian airlines are leaning towards shorter range wide-body aircraft for their fleets to maximize revenues. Airbus and Boeing understand this, and they are both offering lower performance long-range wide-body aircraft at a lower price that allows them to have more seats, thus more revenues.  This means they can be economically deployed on regional routes and compete head-on with narrow bodies, a market expected to take the early lead in the satellite connectivity market.  The likes of Viasat and Row44 are bathing in narrowbody connectivity with both Ku-band and HTS Ka-band services but with a focus on North American and European carriers.   

For the underserved oceanic and Asian markets, the operators will need deals such as the ones signed by Panasonic and Inmarsat and satellites such as those planned by Intelsat.  Even Gogo’s CEO admitted recently that air-to-ground is near its upper limit and that in the long-run, satellite solutions will be predominant. 

Bottom Line

The aeronautical wide-body and narrowbody satcom markets will likely walk in step in terms of demand over the coming decade.  On regional routes, they may compete more in the booming Asian market, but the focus for each airframe will require that they use Ku-band and high-throughput capacity to meet the demand of airlines for in-flight connectivity.

Information for this article was extracted from NSR's report: Aeronautical Satcom Markets