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Aero IFC market facing slump due to COVID-19, but long-term fundamentals remain solid


Aero IFC market facing slump due to COVID-19, but long-term fundamentals remain solid

NSR’s Aeronautical Satcom Markets, 8th Edition report projects a viable long-term In-flight Connectivity (IFC) market, despite significant near-term challenges due to COVID-19. Coming off a challenging 2018 and 2019, 2020 has already seriously disrupted the IFC market, with air traffic down by at least 80% in most regions. However, longer-term opportunities remain – once air travel resumes, planes will still require ever more connectivity, yielding a market opportunity more than 2x larger than 2019, with $5B in annual retail revenues by 2029. The next 24 months will be a challenge, no doubt – but IFC plans are largely delayed, not cancelled. “COVID-19 has resulted in an unprecedented, sudden drop of capacity and service demand from grounded aircraft. With the pandemic impact likely to persist for at least 18-24 months, service providers are now forced to (re)visit their fixed leased capacity contracts/costs,” states report author and NSR Analyst, Vivek Suresh Prasad. “Right now, is an incredibly challenging time for all satellite mobility markets – and Aeronautical IFC has the most significant near-term headwinds,” adds Brad Grady, NSR Principal Analyst, Mobility. “Yet, NSR is largely optimistic on the longer-term uptake of Aero IFC services – passengers require connectivity now more than ever.” Overall, Business Jets continue to be a bright spot, and longer-term Commercial Aviation markets will be the revenue driver – in total generating $37B in cumulative retail revenues over the next ten years. The migration from FSS to GEO-HTS will continue, and adoption of “Free Wi-Fi” is a significant driver for long-term capacity demand. MSS/L-band will continue to fuel operational connectivity, while General Aviation is on a growth-path for greater adoption rates. Bottom Line, while today is quite challenging, and long-term fundamentals continue to point towards more IFC adoption – weathering short/mid-term uncertainty will be the key challenge for the Aeronautical Satcom sector.

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