Analysts paying close attention to JetBlue’s next IFC move

Analysts covering the uber-hot inflight connectivity market in the United States are eager to know if JetBlue will continue to work with Thales on connectivity for its forthcoming re-engined Airbus A320neo family narrowbody deliveries; whether it will instead seek to work directly with ViaSat – whose Exede Ka-band satellite service powers JetBlue’s current ‘Fly-Fi’ branded offering, though Thales is prime on the contract – or if the airline will go in another direction entirely.

Obviously we won’t know until we know, and the devil is likely in the details of the contracts between Thales and ViaSat and obviously between JetBlue and Thales (which acquired the carrier’s then LiveTV unit in 2014).

But following Thales InFlyt’s recently announced partnership with SES to supply high-capacity Ka-band connectivity via a new satellite positioned over the Americas – SES-17 – in the 2020 timeframe, it’s clear the firm hopes to continue selling Ka solutions in the Americas without depending on the ViaSat satellite infrastructure. Just how well it can do that remains unclear based on capacity and coverage available from the existing SES satellites.

SES-17 will offer both spot beam and wide beam coverage for the Americas and Atlantic Ocean crossings. The payload will be focused entirely on the mobility segment and wholly dedicated to Thales’ operations, giving the company a base on which it can support new airline partners in the most dense connectivity market today.

The architecture of the satellite may sound familiar; it is similar to what ViaSat has described for its ViaSat-3 satellites expected to launch starting with the Americas in the 2019 timeframe. And Panasonic Avionics has six custom payloads currently in the design phase, though these are understood to be in the Ku spectrum (at least at this juncture). That is a competitive challenge that Thales and SES must overcome, and SES president and CEO Karim Michel Sabbagh addressed the issue during last month’s joint Thales/SES briefing, saying:

Not all HTS capabilities are equal. We have spent considerable time making sure that the way this aircraft is designed, the way that we’re thinking about the beams, the technology interface, the economics of the solution provides an optimal addition to the capabilities of Thales Avionics so that when they are serving the airline each and every element is serving that purpose, there is no waste on the satellite.

Alas, there are scant additional details available as to just what will be different about the SES-17 offering, with the exception that it is full funded. When pressed for technology specifics, Sabbagh declined to answer citing the competitive nature of the industry and a need to keep certain details from the other vendors. Elias Zaccack, SES’ senior VP commercial Americas, did confide that the company expects the SES-17 system to integrate into the broader coverage portfolio including the O3b medium earth orbit (MEO) network.

While Zaccack acknowledged the technical challenges related to network switching and satellite tracking, he believes it can be accomplished using mechanically steered antennae on aircraft, with testing already underway. “We are not there yet, but we have the recipe,” he assured. An electronically steered antenna solution is expected to follow 2-3 years down the line (see RGN’s “phased array wake-up call” piece).

The need for Thales to seek a new partner arises in large part from a current partner, ViaSat, choosing to sell direct to airlines (El Al, American Airlines, Finnair and SAS are all direct customers now). Thales is also heavily invested in the Inmarsat Global Xpress program, with a linefit solution, though Inmarsat has similarly pressured resellers and service providers of GX by going direct to customers.

Sabbagh explicitly stated that Thales need not worry about SES going direct, saying, “We do not intend to serve the customers of our customers. Our commitment to Thales is to provide this capability so that when they approach the airlines they can do this with the confidence that they have the most robust infrastructure solution and ancillary services that [SES] is providing as part of this agreement.”

This is a bit of a turnabout from a year ago when SES executives indicated to RGN that the company didn’t “want to be the invisible guy. We want people to be able to call us. We want to be able to get in there and get our hands dirty.”

Thales InFlyt’s regional Ka-band connectivity product, powered by ViaSat Exede, is, as mentioned, currently installed on JetBlue as well as a portion of United Airlines’ fleet. Thales Group chairman and CEO Patrice Caine says his company is already in discussions with many US airlines about implementing solutions based on the new partnership. Given the existing customers and mature market in North America, it is not too surprising that the companies are focused on delivering in the Americas first. Dominique Giananni of Thales InFlyt notes that Thales is the lead supplier on the JetBlue and United contract and that it “sees many options on the table” when it comes to delivering that service, implying that it could part ways with ViaSat so long as it is able to deliver the connectivity to the airlines at the agreed upon price and performance levels.

At the same time, however, the Americas is also the most competitive market with significant future capacity set to come online before SES-17 reaches orbit. That’s a big risk for the companies, especially as US-based airlines have recently shown a willingness to switch providers if a new or better offering comes along. Yes, the new solution is focused on the aero mobility market, but so are other satellites going up in the next three years; it is not clear what makes SES-17 special in this context. Moreover, with thousands of uncommitted aircraft across other regions of the world a focus on the Americas will require the most aggressive pricing and service levels from the two companies.

As the anchor tenant for aero mobility Thales has secured the full aero capacity allotment of SES-17. Panasonic and Gogo, which signed major SES capacity agreements earlier this year, are still focused on Ku-band connectivity. Global Eagle, on the other hand, has a Ku capacity deal in place with SES, but has also been investing in development to ultimately support Ka.

Meanwhile, concerns about spectrum overlap with the recently finalized 5G bands in the Ka range may prove a challenge for this project.

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Featured image credited to Jason Rabinowitz