When Will Latin America Embrace In-Flight Connectivity?

Come the turn of the year, passengers flying on one of over 4,000 connected commercial aircraft will have access to in-flight connectivity (IFC). However, unless you’ve flown a domestic flight in the United States, chances are you’ve not yet experienced the wonders of the web at 35,000 feet. Thanks mainly to the continued dominance of Gogo, North America currently accounts for about 75% of total global installations. Fear not, other regions are playing catch up and the airline cabin – the last bastion of quiet in a world awash with chatter – really does now stand on the brink.

Europe, which is home to almost 350 connected aircraft today, will get a get a huge boost when Inmarsat provides inexpensive S-band capacity to the region in 2016. In Asia Pacific, growth is likely to be even more rapid. With many airlines in China and India yet to play their hands (or still in the trial phase), there is plenty of untapped potential. In the Middle East, penetration is now second only to the United States. But what of Latin America I hear you ask? Apart from TAM, which has 31 aircraft offering in-flight GSM mobile phone service, there has been precious little news emanating from the region. Aeromexico, which is installing Panasonic Avionics’ Ku-band technology on its new 787s as well as 2Ku from Gogo, contributes to North America’s installed base as far as Valour Consultancy’s statistics are concerned.

In 2012, Panasonic signed a long term contract for multiple transponders on the Anik G1 and Telstar 11N satellites to expand its aeronautical broadband service over Latin America and the North Atlantic. SES-10, meanwhile, is planned to launch in 2016 and will provide significant capacity expansion over Latin America. Both deals imply that there is a demand for Ku-band based IFC in the region but apart from the aforementioned airlines, there’s been an almost collective hush regarding roll-out plans from other big players there such as Avianca, LAN, Gol, Azul, Copa Airlines and Aerolineas Argentinas. The latter has, however, been carrying out line-fit installations of Panasonic’s eXW wireless in-flight entertainment (IFE) system on eight new 737s.

So when will we hear more? Given that Honeywell and Inmarsat have been pretty coy on customers for GX Aviation (Air China, Air Canada and Vietnam Airlines are the three that have been announced), it might well be that airlines in Latin America have been waiting for the arrival of less expensive capacity before taking the leap into the world of IFC. It is anticipated that the cost of global Ka-band capacity will be somewhat lower than Ku-band capacity, which is currently believed to be in the region of $0.10 to $0.20 per megabyte (new HTS Ku-band satellites will reduce this cost, however). Airlines located here could certainly be considered less “cash-rich” than some of the airlines based elsewhere and less able to absorb the fairly hefty costs involved. A relative lack of competition among carriers compared to Europe and North America could be another factor behind the slower roll-out of IFC. Indeed, our recent survey of airlines indicated that a desire to keep up with the competition was, more often than not, front of mind when deciding to invest in connectivity.

Another factor that may have dissuaded airlines in the region from making an IFC decision thus far is a lack of adequate satellite coverage. While SwiftBroadband coverage is almost global, it provides limited bandwidth. Panasonic likes to mention that 99% of all commercial aircraft fly routes served by its Ku-band satellite coverage. However, there is a rather glaring hole in coverage over the South Pacific. Obviously, connectivity service providers need to purchase capacity in those areas that have the air traffic to demand that capacity and the South Pacific is not the most heavily travelled air corridor in the world. That said, the likes of Qantas, LAN, Aerolineas Argentinas and Air New Zealand all operate long-haul routes in this region. Until GX Aviation comes along, none of these airlines can operate a high bandwidth service for the entirety of a flight from say, Auckland to Santiago or between Sydney and Buenos Aires. Air New Zealand has actually cited a lack of full satellite coverage on certain routes as the reason why it opted not to select line-fit IFC on its new Boeing 787-9 aircraft.

At this point, it is worth mentioning that there is IFC being provided on flights to and from Latin America by airlines based elsewhere. As it happens, I did have the opportunity to give Iberia’s new system a try on a flight from Lima to Madrid earlier this year (a review of this system will be posted soon). But…Iberia’s installations are counted in the European region in our statistics due to the location of its headquarters. That said, carriers based in Latin America will doubtless start revealing their plans soon. As such, we expect the penetration of connected aircraft in this part of world to increase from about 2% in 2014 to 27% by 2024. In terms of average annual growth in installed base, this represents the quickest growth rate of IFC equipage in the world over this time frame.

Valour Consultancy’s recently-published and very comprehensive report on the future of IFC on commercial passenger aircraft contains an unparalleled insight into how this market will unfold in various parts of the globe. It also tracks installations by frequency band (air-to-ground, L-band, Ku-band, Ka-band and combinations of), fitment type (line-fitment v retrofits) and aircraft type (narrow-body, wide-body and regional jet). Further information can be found on our website.