When assessing where the next big leaps will come from in terms of In-Flight Connectivity (IFC) adoption, it is hard to look beyond China. For starters, there are approximately 3,700 active commercial aircraft operated by Chinese carriers today; of which just 280 (7 percent) offered an IFC service to passengers at the end of 2018. The country also has a booming aviation sector. IATA estimates China will replace the U.S as the largest aviation market in the world with annual passenger numbers expected to hit 1.6 billion in 2037 (up from 0.6 billion in 2018). The vast majority of these passengers will board with internet-enabled Personal Electronic Devices (PEDs).
In January 2018, the one major barrier that had prevented local airlines from equipping sizeable domestic fleets with IFC was lifted when the Civil Aviation Administration of China (CAAC) gave the regulatory nod to PED use onboard aircraft operating in airspace over the mainland. Despite this, the wait goes on for the anticipated surge in new IFC announcements. So, why the current stand-off and will the market live up to the expectation of being the next major growth hub?
The findings of our latest deep dive report titled “IFC in China, India and Russia — 2019” points toward prohibitive regulation, which has slowed the formation of the IFC value chain in mainland China. The biggest challenge has been at the capacity level, where international operators have been kept at bay by a regulatory framework designed to champion the country’s space program. This has led to the current scenario where any aircraft wishing to provide IFC services to passengers in airspace over mainland China must source capacity from one of three sovereign operators; China Satcom (Ka-band), APT Satellite (Ku-band), and AsiaSat (Ku-band). This might not seem like an issue, but at the time of writing, only half of China Satcom’s Ka-band network is operational, and the existing approved Ku-band capacity is not sufficient to support the expected demand from domestic and international aircraft.
The lack of clarity at the capacity level has had a ripple effect down the value chain, especially for Ka-band vendors. China Satcom has shown little intent to follow Viasat’s lead in building its own hardware and yet hadn’t announced hardware vendors for its network, leaving airlines without a complete end-to-end Ka-band solution to mull over.
Whilst the above only scratches the surface of the complexities involved with IFC in China, it does help build the case for why, so far, airlines on the Chinese mainland may have been hesitant to commit aircraft to one IFC solution or another. But there are several indicators that point toward the value chain now coming together which is expected to lay the foundation for new announcements.
First and foremost, the existing Ku-band capacity over mainland China will be boosted by the arrival of the country’s first HTS Ku-band satellite, APSTAR 6D, operated by APT Mobile Satcom (a subsidiary of APT Satellite). The satellite is scheduled to launch in late 2019 and was co-designed by anchor client, Panasonic Avionics. It will provide a much needed 30Gbps of dedicated high throughput capacity to mobility applications over mainland China. Similarly, China Satcom will complete its nationwide High-Throughput Satellite (HTS) Ka-band coverage in Third Quarter (Q3) 2019, when it launches the ChinaSat-18 satellite. The operator has also established key strategic partnerships in recent months with both Viasat and local service provider, Air Esurfing. Both partnerships will bring separate end-to-end Ka-band IFC solutions for airlines to choose from, with the former leveraging its own Gen-2 In-Flight Entertainment Connectivity (IFEC) hardware and the latter being the exclusive distributor of Honeywell Aerospace’s JetWave kit in China. It is worth noting that Air Esurfing airline customers will be equipped with Gilat Satellite Networks’ Gilat SkyEdge II-c platform (and associated Taurus modem).
It also looks increasingly likely that sovereign satellite capacity will be supplemented by the launch of a China-owned ATG network. In December 2018, China Mobile Intelligent Mobility Network Technology Co, a subsidiary of China Mobile, and Airbus China Innovation Center, formerly began developing a 5G-based ATG solution. Valour Consultancy understands the network will use a sizeable portion of spectrum in the 4.8 to 4.9 Gigahertz (GHz) range, will consist of approximately 150 cell towers (built by China Mobile) and leverage a Huawei-based antenna. It should be noted that the network still needs to overcome stringent frequency interference assessments, but this is expected to slow down, rather than prevent, the company from establishing an ATG network on the mainland. Those close to the network suggest a realistic commercial launch in 2021 or 2022.
Finally, IFC adoption may actually be given a boost by regulators in the coming months. In 2018, the China Air Transportation Association (CATA) wrote to a select group of major Chinese airlines seeking a consensus on IFC adoption targets for the years ahead. The Ministry of Industry and Information Technology (MIIT) is due to build the consolidated feedback into new guidelines aimed at driving IFC adoption on domestic aircraft and the expectation is that airlines will be set a target of installing IFC on 60 percent of narrow-body aircraft serving Tier 1 and Tier 2 cities by 2022. These guidelines are not expected to be enforced as hard targets, but the overall initiative is linked to the government’s overarching goal to serve 500 million passengers with in-flight Wi-Fi by the end of 2022 and should therefore act as a natural driver.
Coming back to the original purpose of this article, there can be no questions around whether China will live up to the expectation placed upon it and become a major source of growth for IFC vendors around the world. Whilst 2019 looks like being another quiet year, in terms of installations, the arrival of fresh HTS capacity, certified hardware and China Mobile’s ATG network are all factors expected to kick-start adoption on domestic aircraft in 2020 and beyond. By the end of 2028, Valour Consultancy forecasts more than 4,000 Chinese aircraft will be installed with IFC. VS