High Stakes As Starlink Enters The Race For More Wi-Fi On Planes

Starlink has recently gained some footing in the highly regulated and somewhat conservative in-flight connectivity market, but how much room is there in this tightly controlled space for growth and competition?

In their report, The Future of In-Flight Connectivity – 2023, Valour Consultancy, analysts in the in-flight connectivity and in-flight entertainment space, predict that more than 22,000 aircraft will offer Wi-Fi onboard by 2032. There’s a high-stakes race to supply the connectivity on those planes.

Starlink Gets Onboard Qatar Airways

Qatar Airways was the first major global airline to announce a partnership with Starlink, offering free high-speed Wi-Fi on long-haul flights. The airline’s deployment of Starlink is under development. But when it is live, Starlink promises it will give passengers Wi-Fi speeds of up to 350 megabits per second, which they can use for gaming, VPN access, sports streaming, and other high-demand activities onboard.

Qatar Airways Group Chief Executive H.E. Akbar Al Baker said the “collaboration is not only in line with our industry-leading approach to technological adoption but also serves as an unmissable opportunity to connect Starlink to our global passengers.”

SpaceX’s Vice President of Starlink Commercial Sales, Jonathan Hofelleras, highlighted the seamless ground-to-air advantage of Starlink connections. “As soon as passengers step onboard the plane, the internet works seamlessly throughout their flight from gate to gate, and all from the comfort of their seats,” he said.

According to David Whelan, author of the Valour Consultancy report, how vendors position themselves over the next couple of years will be vital to how the market grows in the long term.

“You have a really interesting contrast between Starlink and its disruptive portal-less, direct-to-airline, pure connectivity approach, and fellow low Earth orbit satellite operator OneWeb, which has taken an indirect approach, choosing to work with longstanding service providers and partner with geostationary orbit satellite operators. The aviation industry is typically cautious, so OneWeb’s approach seems a sensible way to enter the market. But Starlink comes with a huge amount of hype and has had some impressive early wins.”

Starlink is new to the market, with three airlines and two private jet charter services signing up before the Qatar Airways announcement. Flexjet and JSX have deployed their Starlink connections. Hawaiian Airlines, airBaltic in Latvia, and ZIPAIR in Japan have also announced they will implement Starlink connectivity, though they still need to be activated.

“Starlink will quickly increase its market share,” Whelan predicts. “However, many airlines will want to wait and see what happens with Starlink’s Qatar and Hawaiian rollouts. Starlink will undoubtedly act as a disruptor. They are going directly to airlines with a portal-less, free Wi-Fi business model. In the short term, they have succeeded in appealing to airlines that have been typically unhappy with the status quo in the IFC market.”

The State Of The IFC Market

By the end of 2022, the installed base of connected aircraft had surpassed the milestone of 10,000. Valour Consultancy expects connectivity service providers to generate $1.1 billion in revenue by 2023, up from $0.6 billion in 2020.

Passengers and airlines will need consistent and quality connectivity as equipped aircraft increase. The challenge for the industry is keeping up with demand. As a result, the IFC market is experiencing one of the most disruptive periods in its history, leading to consolidation.

After acquiring Inmarsat this year, Viasat now holds a 35% share of the global installed base, overtaking Intelsat as the leading IFC provider.

Panasonic Avionics Corporation, which, according to Valour Consultancy, holds a 23% market share of IFC, recently announced Airbus had selected them as a managed service provider for its premium Airspace Link HBCplus Ku solution.

Intelsat’s multi-orbit network offerings, relying on low Earth orbit and geostationary satellites, will be available to airlines and aircraft lessors through Airbus’ Airspace Link HBCplus solution. Intelsat has a 28% share of the IFC market and will be the largest provider listed on Airbus’ IFC service catalog.

Air Canada and Intelsat recently announced that an additional 95 aircraft in the airline’s fleet will have connectivity systems to support in-flight Wi-Fi. These aircraft will be equipped with Intelsat’s new electronically steered array antenna.

At the same time, IFC capacity is increasing, now augmented by constellations in medium Earth orbit and low Earth orbit, a trend that has led to new players like OneWeb and Starlink entering the market.

Why The U.S. Leads On In-Flight Wi-Fi Coverage

The top four airlines by aircraft share equipped with IFC are all based in the U.S. American Airlines takes the lead worldwide with 1,388 aircraft equipped with Wi-Fi. Delta Air Lines
DAL
comes second with 1,253, and United Airlines is a close third with 1,234. In fourth place, globally, Southwest Airlines
LUV
has equipped 806 aircraft.

Whelan explains it’s not that other parts of the world are less interested in being connected in flight but somewhat less expectant. “Lots of U.S. aircraft use air-to-ground connectivity, which is different from the satcom offering of Starlink, Viasat, etc.,” he says. “This created a higher expectation of connectivity in North America, and airlines needed to keep up with the competition. At the time, this was cheaper and easier to install. However, U.S. airlines will begin transitioning to satcom over the coming years.”

Meeting Passenger Expectations

“On the GEO side, Viasat’s acquisition of Inmarsat has put the company in a powerful position, particularly given the firm’s share of the global backlog for IFC orders sits at approximately 70%,” Whelan says.

Viasat recently published its Aviation Passenger Experience Survey findings, revealing the Wi-Fi preferences of over 11,000 air travelers around the world.

A significant 83% of travelers are likelier to choose an airline that provides quality Wi-Fi. Connectivity takes precedence in the onboard experience for 81% of those surveyed.

Free in-flight Wi-Fi matters more to 22% of passengers than airfare. Wi-Fi also beats other airline amenities in persuading passengers to book. That includes food and beverage offerings (18%) and legroom (13%).

Beyond just offering essential in-flight Wi-Fi, airlines must offer enhanced online experiences like live sports and TV shows, which require faster Wi-Fi. Viasat found 81% of sports fans would pay extra to view live broadcasts on planes. Additionally, 47% of passengers want unlimited social media access, and 22% want to enjoy live gaming.

Half of all passengers surveyed believe Wi-Fi should be free on short-haul flights, and 82% expect free Wi-Fi on long-haul flights.

This is a market opportunity all IFC providers are eager to capitalize on, and market disruptors welcome.

“The impact of LEO satellite operators such as Starlink and OneWeb will be huge,” Whelan says. “Free and Freemium Wi-Fi onboard will become increasingly common. Airlines are getting better at packaging connectivity, better portals, easier access, etc. Declining data costs will open the market to different types of airlines, such as Low-Cost carriers.”

The ViaSat
VSAT
survey confirms Whelan’s findings that market demand for freemium Wi-Fi exists. As much as 89% of passengers would compromise, with 42% open to viewing advertisements and 33% willing to give up loyalty program rewards in exchange for Wi-Fi.

Nowhere Near Market Saturation

Whelan says market saturation is “a long way off. Only a third of commercial aircraft are connected, and retrofit opportunities will also be possible on these aircraft. There is a sizable addressable market for new vendors such as Starlink.”