A report from Norther Sky Research (NSR) suggests that while the Inflight Connectivity (IFC) market has inevitably been hard hit by the Covid pandemic and the severe cancellation of air traffic, both for business and holiday journeys, recovery is now taking place.
As aviation traffic continues to bounce back following widespread vaccination programmes, the IFC market may now be on the path to recovery, says NSR. But other changes will also likely impact take-up and asks whether ‘free’ on-board Wi-Fi is a reasonable expectation. Either way, NSR suggests that available bandwidth to operators and passengers will boom: “With the free service model in mind, NSR forecasts that High Throughput Satellite (HTS) capacity demand alone will grow from 13 Gb/s in 2020 to 924 Gb/s by 2030. A free service model on a Wi-Fi network that actually works will increase user take-rates and bandwidth utilisation, driving the exponential growth of capacity demand.”
“The market is beginning to see a rebound in some regions, while other places with existing travel restrictions are not expected to return to 2019 levels until 2022/23. For example, the US market saw a massive uptake in domestic travel last summer due to pent up demand from months of staying at home; so did passenger appetite for onboard Wi-Fi. In fact, passengers had a stronger demand for inflight Wi-Fi due to the change in working habits orchestrated by the pandemic, where millions of people became accustomed to working remotely from anywhere,” states NSR.
NSR gathers that demand for inflight Wi-Fi is at an all-time high as passengers return to flying. This trend pushes airlines to a tight position of making the critical decision of defining their inflight connectivity strategy.
“One of the tough choices airlines have been battling is whether to offer free onboard Wi-Fi and how to bankroll the associated expenses. Before the pandemic, the industry consistently hinted at the promise of third-party sponsorship and opportunities in e-commerce. While the former has shown some fruition with new partnerships in recent years, the latter seems to lack reasonable prospects – who gets on the plane for a shopping spree? Meanwhile, since NSR’s Claude Rousseau published the article “Monetizing IFC: The 3rd Party Promise” in May 2019, not much significant progress has been made in onboarding third party sponsors for IFC. What then is the future of free onboard Wi-Fi?,” asks NSR.
NSR’s AERO9 report determines that free inflight connectivity is still feasible in the near term and will become more widely adopted by various airlines within the decade. “The pertinent question is, how will the industry get there? NSR sees three key factors as harbingers of that possibility: sufficient capacity supply, contract optionality and third-party sponsors. Unfortunately, the conversation has predominantly focused on the sponsorship factor, forgetting that the aero market needs adequate satellite capacity to power high passenger take-rates that will become available with a free service model. The good news is that the industry is on the verge of solving the capacity problem.”
“One major challenge facing the IFC market is limited capacity. Given that the IFC business was started and dominated by service providers who purchased capacity from satellite operators, it is not a surprise that capacity has historically been pricey and limited – just enough to meet contract service level agreements. As a result, capacity constraints arising from cost and limited coverage have been the bane of IFC take-off,” says the NSR report.
NSR says the IFC market has sailed from the meagre 5-15 Mbps throughput allocated per aircraft at the beginning of IFC 2.0 to north of 50 Mbps. “Some IFC providers claim to offer 100+ Mbps, with plans to more than double the number with new capacity coming on board and some equipment upgrades,” states NSR.
A new high-throughput satellite SES-17 will launch on October 22nd with a significant boost to available Wi-Fi bandwidth over the Americas.