Northern Sky Research

U.S. Passenger Aircraft Satellite Connectivity is Flying High

Nov 8th, 2011 by Claude Rousseau   More from this Analyst | Profile

In announcing on November 7 that it would outfit its entire fleet of aircraft with Ku-band connectivity by 2015, United/Continental Holdings confirmed a trend underlining NSR’s aeronautical market forecast for the next ten years: connectivity to commercial passenger planes is here to stay. After agreeing to previous incarnations only to drop orders in the wake of major financial difficulties post-9/11, U.S. airlines are stepping back on the bridge to connectivity and not just for regional routes but overseas routes as well.

Aeronautical markets are still continuing to install narrowband L-band solutions at a fast pace, and these will drive in-service units. However, broadband L-band and Ku-band access is here and in the mid-term, high throughput satellite (HTS) units will foster the fastest growth among all mobility platforms.

The stringent requirements and the difficult environmental conditions (low pressure, large temperature ranges) of the aeronautical MSS business would seem to make it a difficult and slow business to address. However, the market shows strong inroads made by Inmarsat already in Europe, the Middle-East and Asia through OnAir, while Ku-band aeronautical services offered by Panasonic and Row44 are no longer just a theoretical business plan but now count real installs in North America and Europe. Actual hardware is flying, which provides passengers access to voice, data and Internet connectivity via a growing base of airlines.

The market driver for the aeronautical market take-up is chiefly the airlines increased purchase of services (and associated) equipment to address crew and passenger connectivity needs. The airlines have put more thought and refinement into their requirements for connectivity as they realize that crew and passenger demand for applications such as email, Internet access, VPN, and electronic communications is showing no sign of fatigue.

The manufacturers have also helped by bringing technology with smaller and cheaper flat panel antennas to the market, and government and military aircraft as well as business jets have made use of commercial capacity for years now, which has allowed service providers and network operators to fine tune their capacity outlay.

Broadband satellite capacity over continents will still be in greater demand rather than over oceans, even if the supply over oceans is growing, but with shorter maintenance stoppages to install equipment, the industry is likely to see higher rates of activations in the short- to mid-term.

It remains uncertain how persistent difficult economic conditions will impact the market, but it is true that competing ground-to-air broadband solutions have slowed the North American market for satellite connectivity, even if a soft rebound helped close deals in 2010. With the addition of HTS starting in 2014, the pressure on airtime will increase, and the risk of taking away portion of the L-band and FSS Ku-band broadband markets is real.

Bottom Line

The Ku-band connectivity market is a key segment for the industry, and it is no longer serving only business jets and government airframes. Additionally, the timing of the U.S.-based airlines crossing the connectivity bridge is critical for FSS providers as they will face increasing competition from HTS and L-band services in the coming years.

Information for this article was extracted from NSR's report Mobile Satellite Services, 7th Edition