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Consolidation Key for IFC Market Profitability

Photo: Via Satellite

The In-Flight Connectivity (IFC) market has taken off in recent years. But, will the trend continue? According to reports published by both Euroconsult and NSR, the forecast looks good, but consolidation will be necessary for the market to become profitable for the satellite industry.

According to NSR, there were 7,200 commercial aircraft connected via satcom in 2018. By 2023 this number is projected to hit 17,000, and in 2028 it will grow to 24,400.

Euroconsult reported similar numbers. There were 8,200 connected commercial aircraft by Year End (YE) 2018, and this number is expected to grow to 20,500 by 2028. “The penetration of IFC solutions for commercial aircraft is estimated to have reached more than 32 percent at YE 2018 and is expected to reach about 50 percent by 2028. The main regions in terms of air traffic are Asia, North America, and Europe,” Euroconsult’s report continued.

NSR reported that currently, the most important markets for IFC include North America, Europe, and Asia. As for aircraft under contract, which are aircraft with IFC capabilities already installed or will be installed in the next 2 years, North America accounts for 46 percent of aircraft connected via satcom. In second is Asia, which accounts for 22 percent. Europe comes in third at 14 percent. The remaining regions, Middle East, Africa, and Latin America, account for the rest.

Euroconsult agreed – its report stated that “the Middle Eastern market shows limited potential as the main local carriers,” and “the African and Latin American markets present a lower short-term potential for In-Flight Connectivity providers.”

As for service providers and satellite operators, Euroconsult said that revenues associated with connectivity are predicted to “drastically increase” in the coming years. “Despite the uncertainty that may have to be considered when looking at satellite constellations, these assets may have a significant impact and disrupt the amount of satellite capacity available for IFC,” the report said.

According to NSR, IFC isn’t currently a profitable market for the satellite industry – it’ll take consolidation and cost cutting measures and more aircraft on the airline-directed model to have the industry turn a profit.

Euroconsult’s report elaborated on this sentiment. “Consolidation among service providers has a high probability in the next five years. The ability to provide airlines flexibility so they can master and customize their offer to find the perfect answer to their passengers’ needs is one of the key criteria when opting for a connectivity solution. The financial equation for IFC remains a challenge for airlines, and they are looking for alternative business models which could lighten the financial burden of connectivity while improving the passenger experience.”

With growing numbers of connected aircraft, consolidation will be key for the satellite industry to take advantage of the blossoming IFC market.

The post Consolidation Key for IFC Market Profitability appeared first on Via Satellite.

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