In its latest research, Prospects for In-Flight Entertainment and Connectivity, Euroconsult provides a strategic review of the market reset resulting from the COVID-19 pandemic and its significant impact on the aviation industry. In-Flight Connectivity (IFC) has been a key driver for the entire ecosystem and constituted a $1.4 billion market in 2019. Current restrictions on travel and health concerns, however, are expected to decrease service revenues by 20-30 percent in 2020.
The research found that roughly 9,200 aircraft were equipped to provide in-flight connectivity worldwide at the end of 2019. Despite the COVID-19 crisis, that number is projected to increase to between 15,000 and 18,000 aircraft by 2029.
Almost 110 airlines provide connectivity with the largest market in North America where only a few remaining aircraft are yet to be connected. The European market is gaining maturity in terms of penetration with the biggest airlines currently committed to an IFC solution. India could be a growth market for IFC as its regulatory environment changes following the recent grant of licenses authorizing IFC.
Euroconsult’s findings are based on in-depth analysis with a focus on the strategic issues, technologies and services that are driving the industry. The research reviews prospects for both the commercial airline market as well as the business aviation market with facts and figures for year-end 2019 and projections for 2020 to 2029. It also includes an assessment of the Smart Plane concept and breaks down the value chain by network operators, service providers and equipment manufacturers.
“Intelsat’s recently announced acquisition of Gogo’s commercial business is an example of the reorganization of the In-Flight Connectivity industry following the COVID-19 crisis,” said Xavier Lansel, Senior Consultant at Euroconsult. “While Gogo needed to take action, with its business in North America dropping by about 90 percent, Intelsat justified its acquisition on the basis that the commercial aviation business will rebound and ultimately grow. It also benefits from the ownership economics resulting from having its own satellite capacity.”
Competition among IFC service providers was already intensifying even before the COVID-19 crisis, but it is likely to accelerate the reshaping of the industry. Airlines were already looking for alternative business models to lessen the financial burden of connectivity while providing a full broadband experience to its passengers. At the same time, the market for satellite operators is also becoming more competitive with evolving technologies and a massive increase and change of nature of the capacity supply in the next five years.
As a result, Euroconsult predicts that the average cost of satellite capacity will decrease dramatically, and the IFC consumer experience will improve in the coming years. These dynamics will benefit service providers. The report also investigates the impact of new technologies, such as the coming low earth orbit communications satellite constellations and the uncertainty around their implementations.