Satcom Direct discusses business aviation IFE play, M&A

Late last month, business aviation communications and avionics provider Satcom Direct (SD) announced it would acquire TrueNorth Avionics, a Canadian firm with experience providing connected aircraft solutions for VIP/VVIP aircraft. In Part 2 of RGN’s two-part interview with SD chief strategy officer Scott Hamilton, we get the low down on the firm’s next phase of growth.

Do you envisage more consolidation within the industry at this point? And is your growth going to be organic or M&A? 

SH: I do see more consolidation happening. I think actually … this industry is still ripe for more consolidation right now given where we are in this business. For us, our plan is to have a mixture of both organic growth as well as more M&A activity. What we don’t want to do is we don’t want go ramming up the bill where we don’t need to. And if we can find the right fit with another organization that seems to sort of fill a gap that we have, then we will do that.

Is there anything on the commercial airline side right now that we should be aware of? Or are you happy in the BizAv and military space?

SH: Right now we’re focused on this space right now.

You seem to have a rather dominant position in BizAv.

SH: We are very happy to be able to be in this position and we hope it is just because we found the right things for our customers.

When operators came to your stand at the NBAA convention in Orlando, what was your messaging?

SH: Data security is one of our [industry’s] significant threats; if you kind of look at different categories, that is one of the major ones.

And you guys are ahead of the game on that?

SH: We absolutely are. So we can with confidence go to customers and say, ‘here is what needs to happen for your data to be secure from the aircraft all the way into your corporate network’ and we are the only ones that do that today. And for a Fortune 500 company, that is a big deal [to hear].

So you saw the writing on the wall about InfoSec several years ago?

SH: We did, and that is why several years ago we invested in a data center – our own purpose-built data center for exactly that reason. We didn’t want to just put our data and our server in a commercial data center just like anybody else could. We needed to have that higher level security and certification. We have all kinds of certifications that are required in order for us to be able to handle data for many of our customers.

Obviously there is a lot of talk about what cabin connectivity means for the passengers that are on board these business aircraft, but the operational benefits of the connectivity pipe are pretty substantial. Do you have a messaging around that in terms of connectivity and the operational benefits for the business aviation community?

SH: There are two aspects to that. One is for the flight crew. They have a need for the data too, different from what the passengers have. They need operational data. They need weather data and they need to be able to update their flight plans. They need to be able to understand what’s going on wherever they are flying to and keep updated on those things. So that is one aspect of it. The other is just getting data off the aircraft about how the aircraft is operating. And today on most of the business aviation aircraft that is difficult or slow and it’s not real-time. And so if you want to be able to do better prediction on what’s going on with the aircraft, and the engines and the other systems on the airplane [and] you don’t have an AOG situation, you have got to be able to pull that data off the aircraft in real-time.

I understand that you also acquired flight scheduling software company AircraftLogs in September. How does that fit into the equation?

SH: AircraftLogs is in the business of aircraft scheduling for flight departments as well as financial reporting. So particularly here in the US where you have Fortune 500 companies – or any publicly traded company – has to abide by SEC filing rules and of course has to abide by IRS tax rules, there are a lot of very specific rules around use of aircraft and business versus personal use and you categorize that, and who pays for it. Passengers on the aircraft have to have some sort of imputed income based on that. So we acquired AircraftLogs because, in terms of the operational data for the aircraft, this whole replacing the [old-fashioned] white boards and everything, we could have organically developed that whole scheduling capability but we went out and looked at the market and we decided that AircraftLogs had a great head start on what we were trying to do. So we acquired them and now we are innovating them into our own platform.

QNA October 29 300-x-300What should business aircraft operators expect from your new SD Live television product?

SH: Well they should expect somewhere between five and eight channels of live television anywhere in the world over a broadband network. So that could be Inmarsat JetConneX; it could be Panasonic Ku.It could be ViaSat Ku and SmartSky when that [ATG] network becomes live.

And does SD forge the relationship then with content?

SH: Yes, we are doing the relationships with the content providers.

Alright that is interesting. Have those relationships been solidified at this juncture or you are in the process of?

SH: We are in the process of solidifying. We have solidified a couple of them but we are in the process of solidifying some more so we have a pretty comprehensive channel line up.

So in some respects, those direct relationships with content companies, is a real value add on top of everything else that you guys are doing. You able to say, ‘look I can also bring this package of entertainment to you.’

SH: Absolutely.

So you are an inflight entertainment provider?

SH: Essentially that is what is happening yes. Here we go.

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