NSR’s Aeronautical Satcom Markets, 7th Edition report forecasts inflight connectivity (IFC) will be a $36 B market over the next decade, as more airlines outfit fleets with high throughput satellite (HTS) services. However, the IFC market endured a challenging 2018 due to delays in installing equipment, indecisions by airlines, and uncertainty on business models, on top of technical and regulatory hurdles. Overall, the market lost a bit of its shine as aeronautical connectivity grew in 2018 by $400 M – about 40% less than expected – but on the bright side, passenger aircraft retail revenues reached more than $1B for the first time. NSR expects 2019 revenue growth to be the same with a faster pace of inflight connectivity hardware installs to catch up on backlog.
Globally, all major airlines are signed up for some form of connectivity, and the remaining ‘greenfield’ opportunity now shifts to smaller airlines where passenger experience is not a major preoccupation, but connecting aircraft is seen as inevitable. “New and future customers have watched and learned from early adopter mainline carriers and understand better what they can get today from an IFC service onboard aircraft,” said Claude Rousseau, NSR Research Director and report author. “As a result, the expectations of cheaper and better IFC with higher capacity and more reliable service is a deeply-rooted impression amongst airline customers,” he continued. To amortize the still-high cost of IFC hardware and installation, the delivery of a quality service will become paramount for airlines who have growing needs across fleets for different types of connections for both cabin and crew. Over the next decade, NSR believes capacity pricing will decrease substantially and the associated savings passed to customers such that service providers will need to grow their value-added services to maintain margins.