ViaSat Eyes Future Growth in Connecting Commercial, Defense Aircraft

Computer rendering of ViaSat’s second-generation satellites. Image courtesy of ViaSat

ViaSat estimates an addressable market size for more than 25,000 fixed- and rotary-wing U.S. military aircraft to be equipped with its in-flight connectivity technology in the next several years. The company is well known for its growth in providing in-flight internet to commercial airlines in recent years. However, there are sizable opportunities for equipping defense aircraft in the near term as well, according to ViaSat CEO Mark Dankberg.

“Think of the U.S. Defense Department as the world’s largest aircraft operator,” Dankberg told analysts during the company’s second quarter fiscal year 2019 earnings call.

“We estimate about 25,000 fixed- and rotary-wing aircraft that are candidates for broadband satellite connectivity. Of those, we estimate about 5,200 we could serve with our current suite of in-flight connectivity products,” he said.

Dankberg presented fleet equipage analysis showing U.S. rotary-wing combat aircraft as the highest addressable market in the near term. That segment is followed by U.S. VIP tankers and intelligence, surveillance and reconnaissance (ISR) fixed-wing aircraft. If ViaSat does win contracts for those 5,200 airframes it has identified, it would be an expansion of their existing presence in the U.S. defense segment.

In September, the U.S. Defense Information Systems Agency (DISA) awarded ViaSat an eight-year contract to provide U.S. Government Senior Leader and VIP aircraft with in-flight broadband and connectivity services. The award was an extension of the company’s ongoing AMSS IIa contract, which equips select U.S. Air Force and Foreign Military Sale (FMS) VIP and other military aircraft with access to a Hybrid Adaptive Network (HAN) that allows users to seamlessly operate across government and private sector networks.

Some of the biggest differences in connectivity needs for commercial and defense aircraft is that airliners fly scheduled routes and more hours per year, said Dankberg. In contrast, the missions flown by defense aircraft are substantially more demanding in terms of how broadband is being used on those flights.

On the commercial side, ViaSat estimates demand for 28,000 airliners requiring broadband over the next five years, using projected commercial aircraft sales from Boeing’s 2018 commercial market outlook data. Dankberg said commercial in-flight connectivity services will be the biggest individual driver of financial revenue growth in 2019.

El Al Israel Airlines began flying with ViaSat, and Finnair began passenger in-flight testing with ViaSat during the period. The company also won new contracts to equip 100 American Airlines Airbus A321neos, 18 Boeing 737 MAX aircraft for Aeromexico and a new contract for La Compagnie, an all business-class Boeing 757 operator whose only route is New York to Paris.

The company also recently picked up major wins in business aviation, becoming the line-fit option on the new Embraer Praetor 500 and 600 aircraft that are scheduled to enter into service by the third quarter of 2019.

Dankberg believes a major differentiator for ViaSat in the in-flight connectivity market has been its ability to design and build its own in-flight connectivity, wireless IFE systems and terminals. To enable the type of satellite-based connectivity provided by ViaSat, aircraft need to be equipped with an antenna, power supply, modem, IFEC server and wireless access points.

The company’s approach to winning installations on more commercial airliners has focused on establishing enough bandwidth, capacity and speed to enable operators to use business models that give passengers access to the internet on their mobile devices free of charge.

“We believe our share has more than doubled in two years to 20% and could grow to over 25% by this time next year. We believe we’ve taken share across the board and while establishing a reputation for performance yielding exciting regional and global growth opportunities. We see more airlines coming to believe that full, fast, and free Internet access is going to be the benchmark and we’re the only service provider that can do that at scale,” said Dankberg.