There’s no better way to boost optimism in a market than to see a major deal signed. With more than 1,000 regional jets in North America poised to upgrade their in-flight internet service in the coming years, Intelsat scored a major win, signing Alaska Airlines up for a new satellite-based solution on the Embraer E175 fleet.
There’s this huge group of airplanes in the US that need an upgrade and it’s a bit of a battle over who can get their act together fastest and with the most credibility to pull it off. The first deal is not the last deal. We need all these deals to come together with all the airlines, but I’m really excited about the fact that Alaska felt good enough to take a first step with us.
– Dave Bijur, Intelsat
Both Intelsat’s Dave Bijur and Stellar Blu‘s Tracey Trent described this deal as “breaking a log jam in the market,” teeing up the rest of the regional jet operators to make a decision. Bijur notes that “all of those aircraft have our stuff on it today, the legacy ATG gear,” and sees that as a strong starting point for conversations with the airlines.
Trent similarly notes the airlines “clearly want to do something” to upgrade those aircraft, “making sure the passenger experience is the same as on their mainline aircraft.”
Bijur also sees the multi-orbit, multi-constellation approach as critical for delivering reliable service across the entire market footprint, though one of the advantages Intelsat highlighted with the Alaska Airlines deal may not carry over as well to the others.
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Regardless of which antenna and satellite constellations are selected, it is clear the next generation of connectivity for regional jets will be a step change from the current offerings. And there’s probably room enough in the market for multiple players to succeed.
More on IFC’s recent evolution:
- Zipair pick SpaceX Starlink for IFC update
- Delta confirms fleet-wide commitment to Viasat inflight internet
- Alaska Airlines picks Intelsat for E175 streaming WiFi upgrade
- AirBaltic picks Starlink for inflight internet
- Is Allegiant ready to add inflight WiFi?
- Intelsat goes multi-orbit with OneWeb LEO option for airlines
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70-76 seat Regional jets typically fly 2-3 hour flights. All of the North American Regionals have connectivity and streaming IFE available. Current take rates for Regionals are in the 3-5% range, but take rates for (free) streaming IFE are typically 10-15%. Now free connectivity will definitely increase take rates, but will it be enough to justify a cost of $300-$350 per ship set? The decision for the connectivity solutions reside with AA, AS, DL and UA, not the Regional operator. The Regional operators current agreements with the Mainline airline does not include getting any of the connectivity revenue. Those Regionals that operate under multiple contracts (Republic and Skywest) will likely be equipped with multiple IFC provider solutions which will make maintenance and sparing of parts a big challenge, all while not seeing a dime for IFC/IFE. IMO- An enhanced ATG solution such as GoGo Biz jet 5G or SmartSky makes more sense for Regionals than SAT solutions.
There are very, very few aircraft that fly for multiple majors, even on the regionals that serve both. They typically only fly for one airline. And the mainline airline covers the costs for fitting the gear on board, so it doesn’t really matter that the regional doesn’t get any of the revenue.
As for whether an advanced ATG or satellite solution makes more sense on those planes, I can see plenty of reasons to pick the ATG, even with a few of the E-Jets operating overwater routes. But Intelsat holds the exclusive reseller contract for the Gogo on commercial airlines and it is favoring satellite. SmartSky also sees itself as a secondary solution in the market. I covered some of these options in a lot more detail last month.
“ And the mainline airline covers the costs for fitting the gear on board, so it doesn’t really matter that the regional doesn’t get any of the revenue.”.
It’s matters to the Regional. The Regional has to maintain the Wi-Fi, update the IFE via USB sticks and are held to SLA’s which impacts the flying they are awarded. They get some compensation for maintenance from the airline or IFC, but it’s usually a flat rate which many times doesn’t cover their costs. It may come down to just being competitive that drives SAT solution, but I’m not sure there is a really good business case for SAT on Regionals at this time.
The regional carrier has zero choice in the matter, though. Mainline sets the standards and determines which hardware will be on board.