Northern Sky Research (NSR) in its latest analysis of capacity pricing, says that several markets are approaching price stabilisation across regions – if only temporarily.
Report author Carlos Placido says that the industry’s Mobility applications (namely maritime and aero) that were the “star” performers driving pre-pandemic revenue growth for operators became the ones most adversely impacted by the pandemic from a demand standpoint.
“Supply-demand dynamics always influence capacity pricing, but under the conditions of a Covid-19-inflicted demand drop, expected to be temporary, it is also worth looking into other just as important factors affecting pricing for each application,” comments Placido.
He adds that post-Covid aircraft activity will see increased competition because of the emergence of LEO and MEO operators. The Aero segment, which has been much in the doldrums this past year or so, he says that wide regional differences exist in this segment, where leading regional airlines are at different stages in the IFC diffusion curve and supply-demand affects pricing: “Prior to Covid-19, Ku band demand was generally perceived ahead of supply in key battleground regions,” says Pladico.
“Aero will be a key target market for Non-GEO constellations, so current price stabilization led by integrated Ku- and Ka-band In-Flight Connectivity GEO ecosystems may give way to increasing levels of competition and price pressure,” he continues.
Satellite operators have moved towards High Throughput craft (HTS) and NSR says that enterprise VSAT networks are continuing to leverage the wide area statistical advantages of widebeam coverage. This is placing continued pressure on pricing.
As for the once lucrative Government/Military segment, NSR says that the continuous correction seen in the market towards the highest range of Gov-Mil pricing, though this vertical remains the highest priced. “Pricing decline slowed in 2021, but pressures will intensify once constellations complete coverage, and VHTS satellites are launched.”
NSR also looks at the Maritime/Oil&Gas sector, and says: “While price has generally stabilised, the pandemic seriously impacted the bandwidth-hungry cruise sector resulting in large-volume contract renegotiations and revenue losses for end users, service providers and operators. O&G also had a bumpy year, but oil prices returning to reasonable levels point to business recovery. While not expressed by every LEO constellations player, it is undeniable that most, if not all, will aggressively target energy and maritime segments to increase global fill rates, giving way to renewed price pressure during or after 2022.”