Inflight connectivity specialist Aircell has enjoyed a fourfold growth in its business aviation division over the past four years as inflight Internet is becoming commonplace in fractional, charter and other operations.
This growth comes as the business aviation market, particularly at the light end, has remained in a prolonged downturn. But at the same time, the market has shifted its view toward inflight connectivity services. Once viewed as a luxury geared to only the largest jets, inflight Internet has become much more affordable and accessible for even the smallest jets with the greater availability of broadband Now, it’s viewed as a necessity for business travel, says John Wade, Aircell executive vice president and general manager. “We have seen an ongoing rapid adoption of Gogo Biz,” Wade says, adding that this adoption point to a “pent-up demand for broadband on airplanes.”
Among the most recent to contract for Aircell was Travel Management Company (TMC), which in June announced a deal to expand its Aircell’s Gogo Biz offerings to its entire fleet of 70 aircraft. TMC in 2012 began to equip its midsize Hawker 800XPs for Gogo Biz inflight Internet, and is now adding the service to the smaller 400XPs.
TMC is among a number of operators that are in the process or already have added the services to their fleets. Fractional ownership providers Flight Options and NetJets were among the first to incorporate Wi-Fi services into their fleets, and Wade notes that now all the major fractional operators have added it to their fleets. In fact, the initial NetJets order in 2010 was the largest business aviation broadband had received since launching the service.
Beyond fractional, major charter operators such as Xojet, Avjet and Clay Lacy have also adopted the technology. And that interest has begun to spread throughout the charter market, particularly in the last year, Aircell executives say.
TMC General Manager Scott Wise calls the service a “must-have amenity – you have to offer it or you’re going to lose business.” Wise says this is important for the midsize aircraft, and adds, “it’s now practical [and] affordable enough for light aircraft.”
Wade stresses the trend is extending beyond charter into corporate and business aircraft operations. “We’re seeing it across all segments,” he says, adding the service has “migrated its way from heavy iron into the very light jet. There’s no single sector that has not embraced Wi-Fi.”
Aircell in 2006 won an exclusive air-to-ground broadband frequency license in an FCC auction. The company in 2009 rolled out its High Speed Internet service (now called Gogo Biz) using that frequency. At the same time Aircell also added SwiftBroadband services using Inmarsat constellations. This gave Internet access to all business jet operations.
The company, which also offers Iridium services, calls itself “network neutral,” providing a range of offerings depending on needs, capabilities, and where they fly. In the U.S., Gogo Biz is the overwhelming choice of most operators for new installations. But since Gogo Biz is currently a U.S. network, Aircell’s access to satellite options enables it to provide international services for customers who fly abroad. The number of Aircell satellite-equipped aircraft still eclipse the air-to-ground aircraft by more than a factor of three.
Now that the U.S. is in place, Aircell is planning a rollout of its services early in 2014 over portions of Canada. The rollout, expected in the first quarter, will enable travel between U.S. and portions of Canada with uninterrupted Internet access. The Canadian coverage initially runs coast to coast along the southern portions of the country and up the western coast linking to Alaska. Many of the most populous regions will be covered.
As Aircell expands its reach into Canada and grows its customer base there, the company is also enlarging its service options and customer base through the recent acquisition of the Airfone business unit from LiveTV. The purchase, completed in April, included LiveTV’s 1 MHz air-to-ground spectrum license, as well as the Airfone inflight communications service and network infrastructure.
Wade says a primary reason for the buy is that Airfone operated on frequencies adjacent to Aircell’s own spectrum slice. Having that piece will enable Aircell to expand its capabilities and services, although Wade wasn’t yet ready to discuss any new offerings as a result.
Another factor in that acquisition is the fact that nearly 1,000 customers were equipped with MagnaStar units that relied on Airfone service. Aircell plans to discontinue the Airfone service at the end of the year, meaning those customers must look for other options for equipment and service. Aircell has been offering incentives for those customers to move over to its own service, and many have opted for it. “The vast majority see incredible value in making the transition,” Wade says.
But others have adopted a wait-and-see attitude, since the Airfone service has been under threat of shutdown before. Aircell has been trying to get the message across that the cutoff date is a hard deadline, and warning to avoid a backlog at installation shops. “It is not a trivial install,” he says of the equipment switch.
As those customers switch over, Aircell’s customer base continues to grow, and so does its sustained linear growth. By June, the number of aircraft equipped for the air-to-ground broadband service had grown to 1,684, up 44% from a year earlier. And its second-quarter report, released Aug. 7, showed a 55% increase in business aviation service revenue overall.
Wade is satisfied that the company is well positioned for the future, particularly since it just completed a long-planned initial public offering in June. That move provides Aircell with access to new capital resources for its growth initiatives, although Wade says the pieces are in place for its current growth plans.