ViaSat talks up line-fit, aviation backlog as ViaSat-2 nears service

In the first few seconds after ignition the engine releases a blinding amount of light as the Ariane 5 rocket begins to move towards the sky
In the first few seconds after ignition the engine releases a blinding amount of light as the Ariane 5 rocket begins to move towards the sky

As the Ariane 5 rocket launched into space on June 1st, carrying ViaSat-2 into orbit, a new era of connectivity took flight. The satellite continues in the testing protocol before entering service but its successful placement in orbit means a heavy focus on what the additional capacity means for consumers, both on the ground and in the sky, as it prepares for entry into commercial service. During this week’s quarterly earnings call ViaSat CEO Mark Dankberg highlighted a few key metrics and milestones for the company.

Line-fit is here

Boeing customers who want the ViaSat hardware installed are in luck. The 737MAX is now available with ViaSat hardware installed during the assembly process. Dankberg confirmed that during the call, also mentioning the A320 family which makes sense given the significant order backlog there as well.

So the 737 MAX is going to be the, probably the single most popular mainline single aircraft going forward. So that’s great that we got that one done first. We’re on a bunch of Airbus 320 series, which is kind of the Airbus analogy to that. We’re not line-fit on that one yet, and that clearly would be valuable to a number of our existing airline partners. So that’s an example of one that we would target. Those two, from a line-fit perspective and an STC perspective, cover a lot of the markets that we’ve been going after, which are sort of North American markets, intra-European markets, the Australian market, for example.

Dankberg continued on the line-fit topic, suggesting that long-haul aircraft are also important, especially with ViaSat-2’s larger coverage area and the eventual ViaSat-3 launch. Getting the ViaSat hardware on to 787s is important in the near term, for example, as ViaSat is understood to be the provider for EL AL’s new Dreamliner aircraft.

But with ViaSat-2, we’re really getting in position for the transatlantic market and with ViaSat-3 for these global long-haul markets. So that’s going to be an increasing focus with the timeframe for getting those STCs and line-fits kind of lining up with the ability of us to serve those airplanes.

Confirmation that the EL AL 787s are committed to ViaSat remains elusive and it is not clear that the hardware is actually installed on the first frame; that might be an empty radome flying for a while pending certification of the kit.

Customers hate caps

Dankberg also spoke to the provisioning of bandwidth to consumers and the many challenges the company faces. While he was focused on terrestrial subscribers at the time the concept carries over to the aero market as well. Selling the service based on bandwidth consumption allows for better control over costs but it leaves travelers frustrated, especially when translating from megabytes to a usage action is so hard to do. Will sharing an image to Twitter take 100KB or 10 MB? What does refreshing an Instagram timeline consume?

Most subscribers don’t relate to gigabyte volumes but they’re still unhappy if they reach their usage cap. Per capita consumption increases over time so if those caps remain constant, more subscribers will reach them each year. … But when you think about that, average bandwidth consumption is a terrible way to think about usage.

Avoiding this problem in the sky is similar to avoiding it on the ground. The bandwidth costs must continue to drop so that the same end-user spend (either direct or via sponsorship models like JetBlue’s FlyFi offers) can continue to increase the total bandwidth available to an aircraft. And that has to happen without crushing the earnings for the company. That is a timing and balance issue more than a technical one, “If we can improve bandwidth productivity on our satellites and bring them into service at the right tempo, we can earn an attractive return while delivering competitive services to a big market.”

In ViaSat’s case that balancing act must also include the terrestrial users as the same satellite transponders are serving both uses. Most other high-capacity satellite coverage coming on line for aviation these days is dedicated to the mobility segment, not shared.

Big, beautiful backlog

Getting planes equipped with the hardware is key to increasing revenue. ViaSat has 840 aircraft currently pending installation according to its latest numbers.

Counting the existing installs that should have the ViaSat kit flying on approximately 1,400 aircraft when the current backlog clears. Dankberg also mentioned that the company is handling “close to three million devices a month on our existing fleet of 568 aircraft, which we believe leads the industry.” Turns out that fast, free service is compelling to a lot of users so the JetBlue implementation via Thales InFlyt has a lot of users connecting. Gogo‘s much higher install numbers are countered with lower take rates, delivering ~2.78mm sessions per month in North America. Adding in the rest of the global fleet and the numbers are likely close.

Looking at other backlogs for connectivity installs across the industry:

  • Gogo currently has commitment for 1,600 2Ku planes, ~250 of which are already installed. Gogo also has its existing Ku and ATG portfolio, though ~600 of the 2Ku installs come from the existing Delta ATG fleet.
  • Inmarsat says 1,200 planes are committed to its GX service and another couple hundred to its hybrid satellite/ATG EAN platform in Europe.
  • Panasonic Avionics leads in installs with 1,700 complete and expects to increase by ~600/year for the next few years.
  • Global Eagle has a larger install base than ViaSat today but that is expected to shrink in the coming years as some Southwest Airlines planes shift to the Panasonic platform.

Earnings call quotes via

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Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, and LinkedIn.