In-seat power market hot as passengers crave juice

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Now that inflight connectivity has become an expected amenity to passengers and wireless inflight entertainment is growing in popularity, the market for in-seat power has never been hotter.

I recently interviewed the leading provider of in-seat power, Astronics, to find out just how big is this market, and where we might ultimately see power appear (hint, Astronics believes Southwest Airlines will consider a power solution).  Mark Peabody, executive VP & general manager of Astronics Advanced Electronic Systems, answered my questions.

QUESTION:  As a passenger, I’m a huge fan of on-seat power on all aircraft, widebody and narrowbody, as I rarely get time between flights to juice up at the airport. But analysts are curious if the market for narrowbody installs will be robust. What do you say to them?

ANSWER:  A few significant things happened in the last year that indicates a shift in the narrowbody in-seat power market.

First, the FAA regulation changed, allowing airlines to permit their passengers to enable their personal electronic devices (PEDs) gate-to-gate.  This has added almost an hour of additional battery usage for the passenger, incurring the need for charging on shorter-haul flights.

Also, several narrowbody airlines, such as Alaska, Air Canada, Continental/United, JetBlue, and Delta have announced nose-to-tail installations of in-seat power on some of their narrowbody fleets.  This has created a competitive market differentiator in which it is likely several other narrowbody operators will follow.

Or course the ever-increasing tablet and smartphone usage is also driving the demand.  IDC predicted that 2013 would be the first year tablet sales would exceed laptop sales. According the recent SITA survey, 76% of passengers now carry smartphones on board; most people use them, draining their batteries.  In addition, an independent survey concluded that 65% of passengers carry multiple devices on board (e.g. laptop and smartphone).

Finally, Wi-Fi has become more proliferated on narrowbodies with over 3,000 aircraft installed between Panasonic, Gogo, Row 44 and other connectivity providers. Passengers use their devices significantly more when they have Wi-Fi, and the last thing they want is a dead battery after paying for the service.

QUESTION:  Southwest Airlines now offers PED use and inflight Wi-Fi gate-to-gate, yet the carrier has held off on offering power to customers. Do you think this will change?

ANSWER:  We’ve been working with Southwest for years, and from time-to-time the discussion around in-seat power comes up.  They have installed Row 44, which drives PED usage, which then drives depleted PED batteries.  Our belief is that with passengers paying for the W-Fi and competitors installing nose-to-tail, someday Southwest will consider some form of power solution. We’re just not sure when.

QUESTION:  Is the majority of your widebody growth linked to Panasonic IFE installations? And what of Thales?

ANSWER:  We have several different types of customers for our cabin power products.  We supply in-seat power directly to airlines, through IFE suppliers, and through aircraft OEMs.  We do have several different systems that combine in-seat power with power for the IFE, which we provide to the IFE companies.  As you know, Panasonic is the largest of these and Thales is the other main IFE provider.  We are seeing additional IFE vendors enter the market.  With our product lines, power conversion technologies, and high reliability, we believe we are in a good position to win additional business.

QUESTION:  You’ve been on a major trajectory; what are the main drivers?

ANSWER:  I’m assuming you are talking about our revenue growth, and the associated growth in our market valuation.  Over the last several years, our growth has been due to several factors.  First the aerospace market itself has been growing.  Revenue passenger miles, aircraft OEM build & order rates, and airline profitability are all growing, and we have risen with that too.  Secondly, as addressed in your first question, the narrowbody demand for in-seat power has increased.  In addition, we have introduced new products which have had success in the market.

The latest of these is our new EmPower® high-power USB system (both stand-alone and combined with A/C power).  We are currently shipping this to three large narrowbody airlines, and several smaller operators.

Finally, last year we acquired PECO, AeroSat & PGA Electronic, all aerospace companies with good opportunities for growth and excellent product lines that fit within the Astronics family.

QUESTION:  Astronics and Airbus KID-System essentially split the in-seat power market; what’s your market share?

ANSWER:  There are many ways to look at the cabin power market, but if you are specifically talking about in-seat power for passenger electronic devices, we believe we have over 80% of the installed market today.

QUESTION:  Have you seen anyone else try to edge into the market?

ANSWER:  Yes, other players have entered the market and then exited.  There are still a couple out there.

QUESTION:  Do you have arrangements with all the IFE providers?

ANSWER:  We have been successful in providing some kind of solution, albeit different in each case, to the major IFE suppliers.  Some have been in-seat power only, others some form of combined in-seat power and IFE power, and others just IFE power.  The largest customers are Panasonic and Thales.  Astronics is also a power systems provider to many customers that are not IFE OEMs.

QUESTION:  So KID-System doesn’t automatically get installed on Airbus aircraft?

ANSWER:  KID-System has systems on both Boeing and Airbus aircraft, but no, they are not automatically installed on Airbus aircraft.

QUESTION:  I haven’t had great success with the KID-System on Lufthansa widebodies when flying to Germany.  And I’ll always remember the time Lufthansa re-launched FlyNet Ku-band connectivity (with Panasonic) and the in-seat power system couldn’t support a full business class cabin of users.

ANSWER:  That’s interesting.  We were not aware of that with Lufthansa.  I would say this – most of the aircraft flying today cannot support powering every seat with a laptop charging simultaneously.  There just isn’t enough power from the generators.  That’s actually where our EmPower® patent comes in.  Astronics patented the technique of monitoring the total power used for cabin power comparing it to the power available, and limiting usage to be within the power available.

QUESTION:  Like a number of other companies in the market, you’ve recently been on a bit of an acquisition spree.  Tell me about the acquisition of French firm PGA?

ANSWER:  PGA is a great company, and we are very happy it has become a part of the Astronics family.  Their products can be broken down into three primary areas:  seat motion, lighting, and VVIP IFEC.  The actuation of first and business class seats include motors, controllers, and power.  Clearly Astronics is going to integrate our power management expertise into these systems some day in the future.  The lighting is primarily seat lights and specialty cabin lighting.  Finally the IFEC is typically custom installations done on commercial transport aircraft that have been purchased by high-wealth individuals and are being customized by a modification center.

QUESTION:  Last year Astronics acquired AeroSat, which is providing the Ku-band antenna for Gogo’s system.  As you’re aware, the FAA’s heightened scrutiny of bird strike testing of antenna radomes has delayed the roll-out of Gogo Ku on Delta Air Lines (the radomes are provide by Saint-Gobain).  Are you comfortable with where everything sits on the AeroSat antenna program right now?

ANSWER:  Yes.  The bird strike issue threw a wrench in the plans for Gogo’s Delta installation.  We are all past that now, and moving forward with the program.

Editor’s note: WestJet has chosen Astronics as part of its newly announced retrofit program.

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