Archive For The “Inmarsat” Category

Premium #330 – Connectivity keeps improving

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We have been tracking demand for aircraft connectivity for some time.  There are several news stories that further underscore the point that demand for connectivity seems to have no upper limit.

  • Icelandair will equip its 737 MAX fleet with ViaSat connectivity. The system will connect aircraft to the ViaSat-2 Ka-band satellite network over North America and the Atlantic, switching to ViaSat and Eutelsat’s Ka-band KA-SAT network over Europe.
  • Gogo business aviation unveiled a suite of smart cabin systems, SCS Elite and SCS Media, which are a highly integrated cabin, IFE and voice solutions that can be personalized to fit the specific needs of passengers on board a given flight.
  • Bombardier announced it is offering Ka-band technology on new Challenger 650 aircraft. The Ka-band high-speed internet system, the industry’s fastest in-flight Wi-Fi connectivity with worldwide coverage, is also being offered as a retrofit on in-service Challenger 604, Challenger 605 and Challenger 650 aircraft.

These data points must be seen in context.  It’s not just airlines.  Any operator is going to seek ways to add its aircraft to their existing IT infrastructure.  This concept may not have been pioneered by Embraer, but to our knowledge, they were the first to articulate it.

Icelandair already has a unique connectivity option on its 757s, it uses two systems.  Moving to the ViaSat solution the airline is following the choice at American.  ViaSat claims it does not have any bandwidth capacity constraints because of Ka.  Gogo has its 2Ku solution which it claims can match or beat the Ka.  The fact that operators have the choice of 2Ku or Ka is a tremendous improvement over what existed even just two years ago.

The Gogo solution being offered to business jets demonstrates that operators of even small aircraft desire the “always on” connectivity.  Bombardier’s selection of Ka underscores Gogo’s announcement.  Once again, we have operators being able to choose from the two approaches.

On a visit to Embraer, we were shown their approach to aircraft health management.  The system is impressive to an outsider.  But it must be truly special if a customer has added its non-Embraer aircraft to this system!

We have mentioned before the growing importance of connectivity at another airline deep into this solution, Norwegian.  Passengers receive this connectivity for free.  Norwegian utilizes the GEE solution which also uses the Ku system.  GEE’s solution uses Ku because it is said to be lower cost than Ka.  We reported on the Ka vs Ku battle in 2016.  Although dated 2013, here is another useful guide to this issue.  The chart below summarizes the tradeoff between these two.

Regardless of where one ends up in the debate about connectivity, we can be reasonably certain of a few things: satellite is the way forward, e-Enabled aircraft will demand connectivity to upload and download data in-flight and passengers are going to expect “always on” connectivity.  Even Southwest Airlines boasts about its “gate to gate” connectivity, even though while your bags fly free, your data connectivity is not.

Another source of connectivity is Honeywell, which offered this amusing video.

Connectivity is now a “nose to tail” issue.  Everything about an aircraft benefits from connectivity.  MRO and Flight Ops are able to monitor an aircraft and undertake proactive measures to keep it in service.  Flight Ops can communicate with the flight crew at much lower cost than using ACARS.  This decision support is not seen as important until it becomes critical.  Flights can be disrupted by many issues, and low-cost communications enables improved content and context.  Airlines, for example, can dispose of satellite phones.   There are even issues of tracking aircraft, which post-MH270, are obvious.  Then there are the more obvious cabin impacts with e-commerce in real-time and passenger entertainment.  While we do not spend much time on passenger experience, it is clear that given the increasingly uncomfortable airline cabins in economy and no frills classes, anything that transports the mind elsewhere is a benefit.

SITA offers a useful guide to how their solutions impact airlines and connectivity.  As we move towards modern ATC and see e-Enablement given full expression, the connectivity issue will come into full bloom.

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Connectivity demand keeps growing

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The airline industry seems to be pushing for ever more bandwidth on their aircraft. An early pioneer in this is Lufthansa which was among the first airlines to sign up for Boeing Connexion. Even after that program was abandoned, Lufthansa stayed committed to in-flight connectivity.  Recently the airline was again pioneering and pushing for more bandwidth, and is now a user of the Panasonic solution. It appears the airline is experimenting with other options collaborating with Inmarsat and Deutsche Telekom.

The move by Lufthansa is not unique. As airlines take delivery of ever more e-Enabled aircraft the pressure is on to exploit the promise of better data transmissions to drive efficiency. To extract the maximum value proposition of e-Enablement, connectivity is key and better bandwidth is the Holy Grail. Take a look at this 2012 document from Star Alliance on e-Enablement.

If the US, GoGo is the king of in-flight connectivity with 70% market share. It has a system based on terrestrial signals and is moving to satellite. Big customers like Delta (whose entire fleet has Wi-Fi from GoGo and is the world’s largest connected fleet) want to offer customers connectivity offshore. The terrestrial system stays connected only within about 100 miles of the US coastline.

Satellite signals are much faster than terrestrial. Faster means bigger bandwidth. As any Wi-Fi user knows, faster is better than just about anything else.

What else is going on with connectivity? Airlines have converted to the ancillary revenue model. They want to sell everything and Wi-Fi is seen as another salable item. It is rare to see anyone on an aircraft without some sort of device that can’t exploit Wi-Fi. From smartphones to PEDS, everyone wants connectivity. Facebook alone is probably the biggest boost to demand for in-flight connectivity.

The problem for airlines has been a mix of issues: the cost for the service is a hurdle. But even so when you get online, the bandwidth has been spotty.   Nothing frustrates a consumer more than seeing an uncertain value proposition get turned upside down in seconds. GoGo sees demand skyrocket during the holidays when their service is sponsored by big brand firms encouraging online shopping.  So demand exists, if the value proposition is guaranteed not to disappoint, it should be a great ancillary business.

The rapid growth in personal devices is also impacting how airlines see the future of in-flight entertainment. Delta already encourages passengers to download an App to handle movies before they fly. Qatar Airways CEO dropped something of a bomb bound to get the seat-back hardware firms unsettled. Saying: “Traditional IFE systems are heavy, not reliable and suffer from excessive costs from the manufacturers. And there are only really two suppliers – Panasonic and Thales. In my opinion, people will bring smart devices and get content via the internet. Qatar will continue to provide access to exclusive content but this is a better option than an expensive IFE system.”  The connectivity he can sell, the seat back content is provided at no charge on expensive hardware that is frequently broken.

So the case for connectivity is growing from the cabin even as installed devices may not have a bright future as it was once thought to have. Any MRO shop will tell you broken IFE is a major issue on aircraft shop visits. Besides the speed of the embedded technology is slow. These systems require approval from the likes of the FAA. If you want to slowdown progress, bring in the government regulators. As a service industry, an airline is better off getting out of the hardware business. And this is coming.

We think the business case for airlines offering connectivity and focusing the cost recovery on passengers is too risky. Passengers want to as closely as possible enjoy in-flight what they have on the ground and this is typically free Wi-Fi. Even airports offer this, and being stuck in an airport is the best place to charge for a signal since the audience is captured and can’t go anywhere.

Which brings us back to e-Enabled aircraft. We expect to see strong demand for connectivity rise from behind the cockpit door. Already some airlines (Lufthansa again) use the in-flight connectivity signals on the flight deck, and this is bound to grow. Norwegian famously noted that they don’t care if passengers get the signals for free since the airline recovers the cost by giving its pilots the connectivity.

So because of the growth in flight operations demand, we anticipate to see aircraft connectivity to grow fast. As an example of why this is needed, take the Pratt & Whitney GTF engine. This new technology engine has some 5,500 parameters being measured continuously.   The new Rolls-Royce Trent XWB also is rich in sensors as part of its Engine Health Management system. The Bombardier C Series and Embraer E2 are aircraft that will acts as nodes on the airline’s IT network. We believe the Boeing 737 MAX and Airbus A320neo will work the same way. The 787 already delivers real-time data to Boeing.  Airlines have bought into e-Enablement and this means they require connectivity as they do fuel.

It is therefore clear that the next phase in aerospace will drive demand for more bandwidth. Even as firms start to offer better data throughput via satellites, we expect to see demand outpace supply. The reason for this is that just as we have seen on the ground, there is never enough bandwidth.   While e-Enabled aircraft can easily connect to airline IT networks as they pull up to a gate and perform data exchanges, this probably will not be enough. Already there has been a big push to ensure aircraft are continually sending their locations to airline OCCs. The shadows cast by AF447, MH370 and MH17 are long.

Airlines are going to embrace aircraft and engine monitoring. These require, in an ideal world, exploitation of real-time connectivity. But there is a longer food chain that benefits. For example, a lessor benefits by knowing where their assets are at any time. Moreover, they can monitor the use of these assets – is it being flown hard or gently? This information is crucial to the residual value. Presently lessors make calculated guesses and in future they could have much better knowledge of the asset. Another interested party is an insurance company with an equal interest in the risk they are covering. Had Allianz known the daily flight path of MH17 over Ukraine, might they have anticipated trouble and asked the flight path to be moved?  These questions are not as theoretical as you might think.

The Bottom Line

It should be clear that more bandwidth is only beneficial. For those who are skeptical of this assertion, consider one final point. Airlines run into trouble every year – no year is without some sort of aviation disaster. With each disaster the legal profession comes forward to extract maximum damages. When an OEM, airline and lessor are facing some future lawsuit we know the lawyers are going to ask the timeless question: “What did you know, when did you know it and what did you do about it?”

Ignorance of the potential of accessing flight operations data will not protect anyone. If anyone (OEM, airlines, lessor, etc.) pleads that they knew the data existed or could be accessed but chose not to, the lawyers will have a field day.

With technology currently available for advanced satellite communications and additional operational applications available, a revolution in communications is underway, and higher bandwidth, with more sophisticated applications, will change airline operations.  Not to embrace this evolution adds to risk.  What you don’t know could cost a lot of money in damages.

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Missing Airplanes – Why Real-Time Tracking of Airplanes Won’t Happen Quickly

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Air travel is a very safe mode of travel, with few accidents and a trend line that points to increasing safety year by year.  The following chart shows worldwide airline fatalities per million passengers from 1976 through 2014.  The trend line shows that safety is continuing to improve for the industry as a whole. (more…)

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The Ku vs Ka battle

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In the US market, which is by far the largest for in-flight WiFi, there is a looming battle between traditional market leader Gogo and upcoming ViaSat.  Gogo has the largest footprint with “10 airline partners, 6,000+ connected aircraft, 67 STCs obtained, 55+ million inflight internet sessions to date.” By contrast, ViaSat offers a “high-capacity Ka-band network hosting in-flight broadband for commercial airlines, with JetBlue and United as inaugural customers”.

Gogo pioneered the business of in-flight connectivity, starting with an air to ground solution (ATG).  More recently they have developed a Ku solution they call 2Ku.  Gogo argues that its solution uses a much larger network of Ku satellites to enable passengers and airlines to exploit high speed data links.  Man of Gogo’s airline clients want to offer and exploit connectivity over water away from the US mainland, where the ATG system works.  The ATG system does not offer the bandwidth of a satellite solution.  So Gogo wants to transition as many aircraft to the 2Ku standard.

The challenge is that ViaSat has a very disruptive business model.  As they explained to us, they do not want to charge passengers for connectivity.  “What do you pay for a Coke now? Nothing. You should pay the same for connectivity.”  There is a fee paid by the airline of course.  But, ViaSat offers much more bandwidth because it uses Ka.  They believe they have so much bandwidth passengers will never experience what they do now with Gogo’s ATM.  Moreover, ViaSat says they easily trump any Ku option.

Which brings us to the recent spat between Gogo and American Airlines.  Clearly it looks like American could be swayed by the ViaSat proposition.  Here is a more detailed background story.  When the American Airlines vs. Gogo story first broke, Gogo’s stock price dropped sharply.  It has recovered, but the threat from Ka is clearly understood by the market.  Ka is apparently a better technology that has been developed to focus a beam on a moving target.  Ku was developed for static beams and is best used for TV signals.  This is the explanation given to us by Inmarsat, a market leader in satellite networks.

Gogo is going to fight to keep American.  Meanwhile ViaSat will likely grow its market share.  JetBlue and United clearly are not unhappy with their connectivity. The JetBlue situation is especially compellingGizmodo ranked JetBlue’s solution the industry’s fastest and its free.

But, don’t think Gogo hasn’t thought this through.  Here’s their response to the question about competing with the ViaSat model: “We offer our airline partners different models to choose from that fall into to two basic categories – retail or airline directed. 

  • Retail basically means turnkey for the airline.  We set the pricing and offer a revenue share back to the airline.
  • Airline directed is more wholesale where the airline charges what they want (including choosing not to charge passengers) and they pay Gogo for the data consumption.

We believe in giving our airline partners choice.  Sure, it’s compelling to say it will be free, but to Gogo it’s a decision that will be made on an airline to airline basis.  For example, you ever get a free Coke on Spirit Airlines?  Take baggage fees as another  example.  Most charge something for checked bags, some don’t.

In sum, we are building flexibility for our airline partners to do what they want to do with the service.  One thing is for sure, though, there is no such thing as free Wi-Fi.  Whether the airline pays for it, passengers pay for it or a third party sponsor pays for it, someone ultimately has to pay for it.”

So the story continues.  Microwave Journal offered this analysis. The winner here is the traveler because competition is only going to improve the bandwidth.  And, ultimately, its bandwidth that’s worth paying for.  If you can get real high speed Wi-Fi in-flight, with stability like you experience on the ground, that is worth something.  It doesn’t matter who’s paying for it. Travelers don’t care if its a Ku or Ka signal.  Just make it fast and stable.  That said, let the technology battle continue because it will drive improvements that would not exist absent competition.

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2015 EFB Survey Report

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Our fourth annual EFB survey report will be available from Monday January 18.  The 34 page report (PDF) includes six sections (Airline Operations, Connectivity, Business Case Drivers, Future Planning, Cyber Security, Tablet EFBs) with 46 charts and a foreword by IATA. The survey has input from 80 airlines, making it one of the broadest sources on this subject.

If you are interested in getting your electronic copy on Monday please email us.

We are also offering clients access to the survey data (without airline identifications). The data set is from surveys undertaken in 2012, 2013, 2014 and 2015.   The data is in Excel format and enables unlimited analyses.  If you are interested in this option, please use the email link above to contact us.  Delivery is available now.

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Inmarsat and their Ka connectivity solution

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Inmarsat is a global connectivity provider focused on mobile connectivity solutions.  They have three Ka satellites that cover the entire globe.  VP Business Aviation Kurt Weidemeyer explains how they do this and why Ka is a better solution of aircraft than Ku.

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