What does 2023 hold for providers of inflight connectivity? Euroconsult’s Vishal Patil attempts to predict how the industry will shape up in the future

Inflight entertainment and connectivity (IFEC) has been at stake for many airlines in the world. The COVID-19 pandemic has forced some of the airlines to rethink their IFEC strategies. We assume that it may have delayed their plans, but certainly, the plans have not been taken off the table.

Airlines around the globe have gone through unprecedented times recently and nobody would have imagined the extent of the difficulties caused by the pandemic. The pandemic also impacted different parts of the world in different ways or rather different countries reacted to the pandemic differently.

Consequently, today, after two years, some of the regions are back to normal whereas some are still struggling. So has the airline industry. North American airlines have seen passenger traffic surpassing pre-COVID levels at least domestically, whereas some of the Asian countries have yet to catch up with a resumption in passenger traffic. Overall, domestic traffic returned comparatively quickly to normalcy compared to long haul international traffic.

The growth in passenger traffic and increasing demand for IFC are helping airlines to rethink their IFC strategies once again. Euroconsult assumes that the pandemic acted as a catalyst. Passengers are increasingly looking for means to stay connected with their loved ones even when they are midair. As a result, airlines focused on bringing back their IFC-equipped fleet online leading to the number of IFC-active aircraft jumping 10% to around 9,900 at by the end of 2021 especially after witnessing a slump in the previous year.

To ride on this demand tide and to cater to passenger expectations, airlines providing a ‘free chat’ option as a part of their IFC offer, if not ‘free for all Wi-Fi’ is on the rise. Euroconsult expects that the trend towards free IFC, either complete or partial, will continue as more airlines will follow the suit. The reasons to offer free internet – complete or partial – on board an aircraft are numerous. Some airlines may offer it for free to protect their brand image while others may offer it due to sheer peer pressure.

Capacity Costs

Apart from passenger demand, another deciding factor for the increased IFC adoption by airlines is the decreasing capacity costs. The development of newer technologies such as HTS, VHTS and flexible satellites, along with the entry of multiple non-geostationary orbit (NGSO) satellite constellations that are aiming at catering to the IFC market is expected to increase the capacity supply tremendously in the near term.

The scheduled launch of the Viasat-3 constellation in 2023 will provide an unprecedented 1 Tbps per satellite and a few other geostationary orbit (GEO) satellites launched and in the pipeline that can provide hundreds of Gbps per satellite are expected to increase the capacity supply. On the NGSO side, OneWeb and Starlink have already started offering their capacity for land-based applications and have shown interest in serving the IFC market. Their entry into the IFC market is still uncertain though as both the forerunner NGSO operators must deal with many technological and regulatory hurdles before they can start serving the IFC market commercially.

The aviation industry is highly regulated. It is difficult to enter as a new entrant. The service provider must obtain a Supplementary Type Certificate (STC) for each aircraft type they are planning to serve. Being also highly fragmented, in terms of aircraft types, the service provider needs to obtain multiple STCs depending on the airline, aircraft type, aircraft configuration, and region in which the airline operates. Both these NGSO operators have been dealing with this situation differently. OneWeb seems to have chosen to partner with service providers whereas Starlink has chosen to go directly with the airlines. On the equipment side as well, OneWeb is working with equipment manufacturers to develop the new IFC terminal whereas Starlink is developing an antenna in-house.

Once commercially available, Starlink will be the most vertically integrated player in the IFC industry on the NGSO side. On the GEO side, Viasat is the most vertically integrated company present in the IFC market. Many other existing service providers are actively partnering with OneWeb or upcoming Telesat Lightspeed constellations to enhance their service offers. Euroconsult expects to see many more such partnerships happening in the IFC market.

The COVID-19 pandemic has once again highlighted the volatility of the IFC service market. Many service providers went through financial restructuring to align their focus. Eutelsat’s investment in OneWeb, Anuvu partnering with Telesat, and more recently, Panasonic’s partnership agreement with OneWeb are a few examples that indicate the direction of the IFC industry. Viasat has also entered the procedure to acquire its competitor Inmarsat, but the process has now been halted by the UK government under the pretext of studying the impact of this deal on the competition.

Business Models

Both Viasat and Inmarsat have expressed their interest in NGSO constellations on individual levels. It denotes that the IFC ecosystem is welcoming every business model from the most vertically integrated GEO and NGSO players to non-vertically integrated and multi-orbit service provisions through the partnerships.

Even though the direction taken by the industry is yet unclear, some of the service providers are betting high on the multi-orbit solution for the future. It involves complications on the equipment side where the antenna system must be able to scan multiple satellites at the same time and manage seamless beam switching frequently while ensuring the minimum power consumption and form factor with efficient heat dissipation.

Euroconsult estimates that more than a dozen antenna manufacturers are heavily invested in developing such systems. ThinKom has managed to successfully test the multi-orbit capabilities of its existing antenna solution. Some others have been testing multi-orbit and multi-frequency solution that will provide airlines the required freedom to choose the IFC solution and the provider. Airbus has stepped into it with its HBC+ programme where the aircraft manufacturer is working with different solution providers to include their offers as a standard line-fit option. Inmarsat is the first service provider chosen by Airbus for the HBC+ programme.

The IFC industry is highly dynamic and advancing on different fronts. Developments are happening throughout the entire ecosystem to make IFC a standard service. It will be interesting to see how the industry will shape up in the future.

Vishal Patil has expertise in the satellite communications sector related to the mobility market, with particular focus on aero and maritime connectivity. He has been actively involved in a variety of research and market assessment projects and due diligence missions for various clients from the entire satcom mobility value chain.