We had a brief conversation with Don Buchman, ViaSat’s VP Commercial Mobility.
- What is the state of the US airline industry connectivity?
The industry is almost fully outfitted. This makes it the highest concentration worldwide. But we are moving to “second gen”, where it is no longer good enough to have WiFi. It has to be good WiFi. Bad WiFi hurts an airline brand.
- How about outside the US?
It’s definitely lagging. There’s a different demographic. Europe is very similar to the US. The catching up is on long-haul. For example, Qantas chose to wait for a service that was similar to that of JetBlue. They experimented with several solutions before they made their selection. On the other hand, British Airways has two solutions, one for intra-EU flights and another one for long-haul service.
- Looking five years out, how might the market evolve?
Market forces will make an impact – either the revenues won’t meet expectations forcing some out of the business or technology products won’t keep up. For ViaSat, they are taking a long-term view, with a 15-year horizon. You want to ensure your customer will still be in business in 15 years’ time. For the most part, the airline industry seems to be in a different place than it was ten years ago – Monarch notwithstanding. Consolidation has helped. Most airlines are going to try reach where JetBlue was five years ago. The APEX event in Long Beach is an interesting example. Two social media people shared their takeoffs, one on a JetBlue flight and one on another airline. The JetBlue passenger was able to live stream his video on Periscope. The other had to wait until he got home and had fast enough internet to share this video.
- Looking at the economics of the business – unless airlines utilize the connectivity the business model struggles.
Definitely, in the next five years, flight ops will see that connectivity is the “killer app”. Airlines may be at different paces. A lot of value is going to come out of the flight ops. We think more than the value of connectivity will come via flight ops – it could take five years or a bit longer. Over the long term more of the value of connectivity is going to come out of flight ops. We are already seeing several airlines using ViaSat technology, simple ones like content loading. There’s a lot of value in the cockpit like avoiding weather. It’s the tip of the iceberg. Before the cost of the bandwidth was so cost prohibitive. As the crew sees what can be done it sets the wheels turning. They are going to find innovative ways to use bandwidth.