Aviation industry observers and investors have for years predicted that the crowded inflight connectivity sector would see consolidation. But while there has been some activity on the IFC hardware front, such as the 2017 acquisition by Astronics Corporation of Telefonix PDT, there has been little meaningful M&A involving IFC service providers, or indeed vertical integration scenarios, whereby a satellite operator would purchase a service provider. But top executives at SmartSky Networks and Panasonic Avionics believe some notable movement is afoot.
“I do think there’s going to be a lot more partnerships. Whether companies end up merging or not merging, I think you’re going to see a lot more closely-knit working together in the industry, even across the table, even with airlines,” said Nancy Walker, chief commercial officer of SmartSky Networks, which is gearing up to launch its next generation air-to-ground (ATG) IFC solution in the second quarter, and will use value added resellers, including Honeywell, to provide the service to North American airline operators.
“I think there could be some potential that even airlines could potentially acquire some of the service providers,” she said at the recent APEX TECH conference in Los Angeles.
Panasonic Avionics, which currently provides Ku-band connectivity service to airlines, is certainly taking a more collaborative approach, surprising the industry in 2018 with the announcement that it had become a strategic partner to Inmarsat, and with it adding the GX Aviation-branded Ka-band satellite service to its portfolio of offerings for airlines. It also recently forged an agreement with Inmarsat to sell its FX-branded offering to the maritime industry.
Company executive director, digital solutions and services Julie Lichty noted at APEX TECH: “I think every industry, especially when you’re in a time of disruption like we have now, is going to inevitably have consolidation.”
She said forthcoming networks, such as the hybrid networks being discussed in industry (for instance, on the satellite front, LEO/GEO or hybrid satellite/ATG) means that there “will be trade-offs on convenience versus quality”. And that type of environment is ripe for consolidation.
“So, I think that consolidation is inevitable. There’s a lot of new entrants that are coming in that are going to be again, disrupting the industry so we have to be prepared for all of that,” she said.
A big reason for the influx, especially of new hardware manufacturers, is that inflight connectivity is increasingly considered a must-have for airlines. Even some ultra-low-cost carriers are now looking to get connected. But current-generation IFC systems (whether satcom or ATG) have received mixed reviews from the flying public. It’s common for passengers to bemoan slow speeds, inoperable service, and high prices on social media. And airlines are regularly in trouble-shooting mode on Twitter.
During TECH, NetForecast director of marketing Rebecca Wetzel put some color around the problem, noting that her firm has been measuring the user experience of landline Internet services for more than a decade, and recently started to gather information on mobile connections and also inflight connections.
For latency, the roundtrip packet time from a personal electronic device to a service, you can expect an average of 25 milliseconds for a landline connection whereas for mobile it’s 75ms, and in-flight, based on NetForecast’s data sets so far, it’s 790ms, she said.
Regarding packet loss, which is the number of packets that don’t make it to their destination and need to be resent, you can expect .05% on landline, 1.5% on mobile and 13% on inflight connections, she said. Lastly, for throughput, NetForecast’s data thus far show an average 11.25 megabits per second on landline, 4.5 mpbs on mobile and “it’s 1.7 megabits per second” on in-flight.
“The expectation is that you should be able to get on [IFC] and it should work. But unfortunately, from what we’ve heard from many people today, it’s a struggle. As a matter of fact, sometimes it’s a nightmare. And you can spend most of your time on your flight trying to get on and when you’re on the service is, shall we say, less than perfect. And for those people who are used to a landline connection, it is a real adjustment to be in the air and have a very different experience,” said Wetzel.
SmartSky’s Walker is all too familiar with the headaches. “From my perspective of being a business traveler for a long time, and remembering long before there was connectivity, it’s still kind of a cumbersome process. And for me, just even to connect on board the aircraft, getting through the sign-ups and all the errors you get, and all that, and I’m thinking, I’ve been in this industry for a really, really long time, and I’m struggling. What of the people next to me, what are the issues they’re having? And I watch and they’re going through the same things. And to me, that’s really an issue that we need to improve on. As well as, because I fly out of a smaller airport, we need to get regionals up to the same type of performance that you get [on mainline] so that it doesn’t appear you’re a second class citizen when you have to take a regional to or from a destination.”
Ensuring a seamless experience
At Panasonic, said Lichty, “we’re really trying to move away from the conversation around megabits per second. We’re trying to talk about quality of experience. And so, for me, that’s what I focus on as a passenger – what is the quality of experience? And how do I leverage a frictionless experience in getting connected? How do I then leverage the kind of services that I want to consume as a user of that connected service and how easy is that going to be able to transact? And I think that today, we’re not quite exactly where we need to be. I think there is still room to grow. I think there’s challenges around regulatory aspects of the business, you know latency, certification, etc. So, it’s about expectation setting and I think we as an industry could do a lot more to help set that tone.”
Walker agreed, saying, “Well, I echo what she said in that, it is really about having a seamless experience and really getting the user experience up to where it needs to be, much more than about speeds. Because we don’t care how fast something tests; if you’re not having a good experience, you don’t care what the speed test says. “
Solving the latency problem is SmartSky’s specialty; customers who demo its system in-flight are urged to play Fortnite, the third-person shooter game, which exposes latency very quickly. “If you really want a snappy Internet experience you have to keep your latency down because your latency is going to drive far more of your experience than is your speed. And online gaming is just one of those instances that really requires a very low-latency system,” said Walker.
Gaming is clearly important to digital natives, including Gen Z and millennials. But they are not the only flyers interested in such. Walker noted that at least 11% of baby boomers go online and spend at least some time everyday gaming, whereas roughly 43% of Gen Z do so. At the annual business aviation expo known as NBAA, one of the top questions that Walker fields is from grandparents who game with their children on the ground and want to bring that functionality on board their business jets.
She noted that social media “is so incredibly important for Gen Z”, and they’re “trying to push data off of the aircraft and that’s where we see that the real need is going to be because they want to upload their data, they want to upload their pictures and share with their friends, it’s not just about pulling it into the aircraft anymore.”
So, the conversation around IFC is shifting from a focus on speeds to a focus on whether the service works well and is seamless. Panasonic’s Lichty noted that millennials, in particular, “are going to give us a run for our money as an industry because they have an expectation about the experience. They are looking for an authentic, very seamless end-to-end experience. They love to do a lot with their social network and they really count on that network to help guide them in their decision-making. And, if we stay focused from a product-centric perspective, we’re going to completely miss the mark. So, we as an industry really need to shift into being much more experience-centric in order to address them. By 2025, they’re going to be the largest traveling population as an age group. And so we have to hold onto our guns here folks and get ready to shift because if we don’t, we’ve completely lost that market.”
As IFC stakeholders make improvements in capacity, hardware and software, there is pressure to be able to support free inflight Internet browsing, especially to meet the needs of digital natives and indeed digital immigrants. Some carriers are offering free inflight Internet through sponsorship or a free connectivity tier, such as messaging. And others are looking to move in this direction. But as Delta Air Lines chief executive officer Ed Bastian said recently, service degradation is a big concern in implementing free inflight Internet browsing.
“Do we think that free is something that airlines are going to have to offer? Absolutely. They are going to expect it to be free. It’s like the air that they breathe. So, I think that’s going to happen,” said Walker. But, she cautioned, if you look at coverage, cost and capacity, there isn’t one solution that does well across all of those. That’s why SmartSky expects to see hybrid ATG/satellite solutions brought on board aircraft. She noted that if you look at the business aviation sector, there is often “two, three, four connected systems and the value added resellers are already working on their modems and routers as to how to best route” the traffic. So commercial aviation will continue to advance, with Walker noting that “when you’re trying to balance all three of those things” – coverage, cost and capacity – “it takes multiple systems to be able to do that”.
In the meantime, NetForecast’s Wetzel urged airlines to improve how they manage passenger expectations. Noting that it’s time-consuming to upgrade to new systems that will give you better performance, she said airlines could proactively warn passengers if there will be a gap in coverage on a particular route, for instance, or admit that passengers may get substandard performance from time to time.
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