With more than half a million of its newest Astrova inflight entertainment screens now under contract, Panasonic Avionics is ready to massively ramp up production. The company officially opened its revamped manufacturing facility in Osaka last week, part of the effort to ensure its hardware is not the supply chain constraint for airlines, seat manufacturers, or aircraft OEMs going forward.
[Astrova’s] rapid adoption shows there is real demand for a seatback experience that combines outstanding hardware with the flexibility to keep evolving throughout the life of the aircraft.
– Ken Sain, Chief Executive Officer at Panasonic Avionics
n.b. – Panasonic Avionics covered airfare and hotel costs for PaxEx.aero to visit the newly expanded facility, along with other media outlets. As always, opinions remain our own.
The reinvigorated space is no stranger to innovation. Nearly 50 years ago Panasonic faced declining demand for its radio products as television rose in prominence. In 1979 the Matsushita Avionics Systems Corporation was founded, taking over the radio division space and adopting the “RD” prefix for its components (a detail that does not matter at all, but is a nice bit of geekery, a nod to the program lineage, and something the team in Osaka takes pride in).
Early IFE was still radio, building on that heritage. One of the first components was an AM receiver installed in the 1980s. The intervening years, however, have led to the fully digital, on-demand experience of today, now powered by Astrova.
PAC shared that roughly 80 planes are actively flying with the Astrova system installed. That number is expected to hit a “couple hundred by the year’s end and…over the next year increase to about 1,000, and then significantly more after that.” Meeting that scale is everything for the company.
To address that challenge the facility footprint nearly doubled in size. Combined with the change in product mix (i.e. more Astrova, less eX3/NEXT), the company says it can deliver 6x the volume of its Astrova screens going forward, to the tune of ~180,000 units annually.
More Than Just Space
Successfully delivering the needed hardware means more than just expanding the space. Filling out the new floorspace with equipment, for example, leaned heavily on other groups within the Panasonic umbrella of companies.
Much of the precision assembly work on the circuit boards is automated today, via Surface Mount Technology (SMT) Assembly machines. The new factory doubled the available SMT lines, with four now in service. It sourced those machines from another department at Panasonic.
It is worth noting that, even with all of the automation available, a number of precision assembly roles continue to be filled by the ~1,200 workers (both direct employees and contractors) within the division. Some components are still soldered by hand, owing to their size or shape. Similarly, the OLED screen films are attached to the mounting frame by hand, at least for the largest models.
Scale to Solve Supply Chain
Critical to Astrova’s success is ensuring that the company can deliver product to its customers on time.
Conversations about supply chain challenges have dominated the industry for six years now. Even a highly confident United Airlines was forced to reckon with delays in screen deliveries from PAC as part of the United Next IFE retrofit program.
And, yes, those delays were four years ago, before the expansion. That program is now running pretty smoothly. So are other efforts from PAC in the market.
But Astrova is the fastest selling IFE platform ever, outpacing PAC’s eX series over its first five years on offer by a 3x margin. There are half a million screens committed with low 5-figures deployed today. That’s a huge backlog that the company needs to be sure it can get out the door on time, every time.
Supply chain is still a risk, and avionics companies are impressively small. PAC relies on the larger Panasonic brand to make sure it can source components to keep production running smoothly.
As SVP of Product and Strategy Andy Masson explains, “[The Panasonic parent company relationship] means that we’re not an avionics company the size of the biggest avionics company. It means we’re an avionics company that also happens to build millions of laptops every year and millions of other consumer goods. So our access to things like memory during the current issues sourcing memory … ours is a better access than perhaps some of the others out there, which has been a blessing. An expensive blessing, but a blessing.”
Planning for Growth
One advantage the company sees in ramping up production is a relatively transparent visibility into the demand curve. Aircraft delivery timelines from the OEMs rarely accelerate, for example. Masson is confident that the next decade of aircraft delivery slots is pretty well defined. That gives the company the ability to plan for that pacing. “We know exactly when the airplanes are coming in, for the most part,” he shared, “and we can plan for that.”
Moreover, the company has room to grow within the line. The facility operates two shifts today. A third shift can be added with a few months’ notice, enabling a further boost in capacity in the same footprint.
Separately, Masson reiterated the timeline challenges of delivering products to seat manufacturers for eventual integration into cabins, a longstanding issue for the industry. The majority of shipsets leave PAC’s facility in Osaka not destined to an airline, but to a seating manufacturer for integration before eventual installation in the aircraft. For a premium cabin the seating companies require those 12-18 months before they’ll get anywhere close to a plane. The fancier the seat, the longer the lead time. Masson did note that PAC has pushed back as some manufacturers sought a 24 month advance delivery (among other reasons, concerns about the high-value screens being lost in a warehouse somewhere awaiting installation). Still, those timelines apply pressure at the factory to keep production running smoothly.
No one wants to be named as the reason an aircraft is delivered late to an airline.
A Different Sort of Growth
PAC is also accounting for a different sort of growth in the IFE market: average screen size on board continues to rise.
Roughly 75% of the committed order total so far covers the economy class cabin. Those 13-inch screens are about as large as can be fit in the seatbacks; there is not much room for them to grow, even if Masson would love to see the ever narrowing bezel around the edge fully disappear. In premium cabins, however, a growth battle continues among airlines in the name of improved passenger experience and product differentiation.
“Screens are getting bigger,” Masson explained matter-of-factly during the conversation in Osaka. “It wasn’t that long ago where you would see screens smaller than 13 inches in business class… But now, what you’re seeing is we’ve kind of jumped the 16-inch screen and 19 is something of a standard, if not on the small side and 22s and 27s are becoming more and more kind of regular occurrence in business class seats.”
The company is not worried about the shifting screen size mix in terms of its production plans, nor in terms of profitability.
The assembly line can flex between the different screen sizes relatively easily. The underlying control board electronics are the same, regardless of screen size. Other bits shift, of course, but those changes are handled smoothly within the factory. Daichi Kato, Division VP for PAC and Managing Director of the Avionics Business Unit in Osaka, shared that the floor produces roughly 40 different systems models each day. The high mix, low volume approach is supported through dedicated kitting setups for each model, ensuring the correct components are present at the appropriate time on the line.
Masson shared the details about the shift in size more as a commentary on the market direction. The line will flex to produce the needed screens as orders come in. And margins across the different screens are “much more flat” than the relative numbers between economy class and premium cabin seating by comparison.
Break-even on the investment to develop Astrova was 250,000 screens, Masson says. Having already doubled that, with plenty of life left in the program, Astrova seems to be on pace to deliver solid profits for the company in the years ahead. And with the production facility now humming, PAC expects to meet its delivery targets and realize that revenue – and the associated passenger experience improvements – without too much trouble.
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