Mahata Aero Technology (MAT) secured an additional $21 million in funding to help accelerate the growth of its budding inflight connectivity business. MAT is the integrator and financier behind the connectivity contracts for Garuda Indonesia and its LCC arm Citilink.
The $21 million cash infusion will “accelerate the installation of inflight connectivity infrastructure in all Garuda Indonesia Group aircraft,” said Mahata Aero Teknologi president director M. Fitriansyah in a statement.
Shifting The Business Model
MAT Executive Director Iwan Setiawan describes his company’s approach as “a unique business model” that is proving successful in its preliminary state for the company and for Citilink. “With one aircraft at the moment the statistics are proven. It moved from theory to preparation to execution and now it is a proven success with this business model.” When pressed he confirmed that this means the revenue so far is sufficient to cover the expenses and his company’s profit margins.
Part of this is attributed to Citilink being a first mover in the inflight connectivity market in Indonesia. “With sponsorship-based wifi the airlines can expand their market share. When you give improved facilities to the passengers it carries over to the airline as well.” Setiawan and Garuda are convinced that the deal will not only pay for itself from the sponsorship revenue, but that it will also drive higher fares and yields for the airline.
Many others have also tried to build similar sponsorship and ad-supported business cases around inflight connectivity. Nearly all have come up short thus far. MAT now has some additional capital with which to test the markets in Indonesia. Perhaps it can break the trend and find long-term success.