The business aviation segment shows strong signs of recovery, leading inflight connectivity provider Gogo to a certain amount of optimism as it reports Q3 earnings. The company still lost money in the quarter, but with the private jet market rebounding and demand for wifi on board holding strong, CEO Oakleigh Thorne sees an “encouraging, continued service recovery” on the horizon.
We look forward to relaunching the new Gogo as a profitable provider to the business aviation industry.– Gogo CEO Oakleigh Thorne
On the commercial aviation front the losses remain wider, even as traffic rebounded somewhat from Q2. Thorne observed that flights in the Northeast dropped as infection rates increased in recent weeks while flights across the South and West have held steady. This is in line with what other parties, such as Allegiant, are observing in terms of consumer response to the pandemic.
But outside of commercial aviation the company sees optimism at nearly every turn.
Average stage length for the BizAv market is up about 10%, for example. This alone does not dramatically shift demand for a wifi connection on board, but it helps.
Total ATG aircraft online hit 5,577 in Q3, only 2% down from the January 2020 peak. Plus the planes coming (back) online are generally paying for a higher tier of service. Average revenue per aircraft per month hit $2,996 in Q3, just a few dollars (6%) short of the Q4 2019 peak.
Gogo also says that October 2020 saw 83% of the flight count of a year prior, with larger fleet operators running at par to the 2019 numbers. Demand for hardware is also increasing, with more than 150 AVANCE ship sets out the door last quarter. And the AVANCE systems deliver a higher monthly revenue margin than the satellite options Gogo also sells into the market. The company is not ready to declare that the challenges are over, but the optimism is clear.
Smack-talk for SmartSky
Thorne showed little restraint when asked about competition in the BizAv market, happily talking some smack about ATG competitor SmartSky, which he does not see as a strong challenge to the Gogo business.
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