NGSOs Thrust Airlines Toward a Free-for-All IFC Dream

Today, air passengers expect not only the ability to stay connected at 30,000 feet above sea level, but also to access streaming-grade, home-like connectivity free of cost. Airlines around the world have been exploring in-flight connectivity (IFC) for almost two decades. In the beginning, the technology could allow a few kilobits per second to single-digit megabits per second data speeds and was good enough for simple messaging or web browsing.

As technology advanced, IFC progressed to a few megabits per second in the last decade. To a certain extent, affordable bandwidth to provide free IFC to passengers was a distant dream for the airlines. Airlines found various ways to subsidize their spend on IFC. One such example was the sponsorship model where IFC was sponsored completely or partially by a sponsor. But finding the right sponsor was not easy either.

Since Starlink launched IFC services in 2022-23, bandwidth is no longer a limiting factor. The service provider wants airlines to provide “free-to-all” streaming grade IFC to all their passengers.

Starlink's approach to IFC represents a significant shift for airlines. Airlines have long been exploring ways to meet user requirements as passengers are unwilling to pay high fees for internet access while flying.

As per Novaspace research, the IFC market surpassed 11,000 connected aircraft at year-end 2023. At that point, Non-Geostationary (NGSO)-based services provided by Starlink were yet to make the splash they did in 2024 by signing contracts with WestJet, United Airlines, and Air France. As of September 2024, Starlink has more than 1,500 commercial aircraft in its backlog.

Intelsat, on the other hand, launched its hybrid services in 2023 offering services with Geostationary Orbit (GEO) and Low-Earth Orbit and (LEO) from Eutelsat OneWeb. Intelsat signed the first few hundred aircraft quickly with American Airlines, Air Canada, and Alaska Airlines. However, the service launch has been delayed multiple times due to issues with Eutelsat OneWeb’s ground network. The service availability is now scheduled for the spring of 2025.

Even though most of the aircraft contracted for NGSO-based services are already equipped with other solutions and will be upgraded to the new services, Novaspace anticipates that the NGSO-based services will trigger the higher adoption of VSATs in the coming decade.

The free streaming service for all passengers will soon be a norm and other service providers will be compelled to follow to remain competitive. Bandwidth will not be a limiting factor as Starlink advertises 220 Mbps down and 25 Mbps up as maximum speeds per aircraft which is significantly more than typical. These speeds are sufficient to cater to all single-aisles and most of the twin-aisles demand depending on the specificities of the flight.

Free streaming services will typically see a take-up rate above 50 percent leading to massive increases in the capacity demand per plane. The average data consumed per aircraft varies depending on several key parameters. However, Novaspace estimates that it can grow from ~10 GB in 2023 to 150 GB per aircraft per flight in the next decade. Consequently, the capacity demand generated by the IFC segment is expected to multiply more than 20 times in the next decade. Considering the exponential increase in the capacity supply, the demand should be served without much of an issue, except potentially around major airport hubs.

The IFC business remains highly volatile. Since the pandemic, we have seen a higher level of vertical and horizontal consolidations in this market and Novaspace expects that this trend will continue. Existing stakeholders primarily involved in the GEO side of the business are partnering with new and upcoming NGSO suppliers to remain relevant in the market. Intelsat and Panasonic’s partnership with Eutelsat OneWeb and Anuvu’s collaboration with Telesat are examples of it. The exponential growth in the capacity supply from the latest GEO and NGSO very high throughput (VHTS) systems is expected to further intensify the competition.

The new generation of VHTS technologies such as software-defined satellites, flexible satellites, real-time beam forming and switching, and optical communication along with NGSO satellite constellations which use smaller, yet powerful satellites, will bring the cost of capacity significantly down. The competition is expected to compel existing GEO technologies to match up with the new pricing reality.

The satellite communication industry has seen some prominent GEO stakeholders such as Viasat-Inmarsat and Intelsat-SES merging to face the competition. Airlines will expect to get more bandwidth and better services at the same price or slightly higher prices or the same services at a reduced price. In any case, the average revenue per aircraft (ARPA) for IFC services will see stagnation and is eventually expected to stabilize in the second half of the next decade. Novaspace estimates that the service ARPA will increase merely 15 to 20 percent as compared to 2023 before stabilizing. This will pressure service providers to innovate newer avenues to generate revenues and airlines to innovate and explore new applications to monetize the investment. The use of IFC for operational benefits is one such avenue that remains unexplored to its full potential.

In addition to the bandwidth-related benefits of NGSO-based services, electronically steerable antennas (ESAs) used with these services are assumed to produce less drag due to their low profile and lighter weight and therefore have indirect benefits such as saving fuel cost as compared to existing terminal solutions. Those terminals are easy to install and have fewer or no moving parts and are intended to be maintenance-free.

There are several direct and indirect benefits of NGSO-based services over existing VSATs. It will be fascinating to observe the future trajectory of the IFC market. Will it lean towards a model focused solely on NGSO, adopt a dominant hybrid approach, or see both coexist and share the market? VS

Vishal Patil is an analyst for Novaspace specializing in mobility and IFC

Lead photo: Via Satellite archive illustration