Going offline? Viasat targeted for Chinese sanctions

Making the top five list as a major government supplier might seem like a nice win for a company. But when that list is compiled by a foreign government as part of announcing sanctions the results are likely less good. Viasat is about to find out, as it was targeted for sanctions by the Chinese government as part of a response to recent US military deals with Taiwan. The deal could affect multiple satellite communications deals and service authorizations for the company.

Things quickly become confusing, unfortunately, in trying to determine exactly what sanctions are being applied and when. CNBC quotes Chinese officials as saying assets in country will be frozen and it will “ban people or organizations in China from engaging them.” That’s a significant potential hit to the operations.

For its part Viasat released a statement:

We are aware of the Chinese Foreign Ministry statement regarding sanctions. We are in the process of gathering information to better understand any potential impact of these sanctions and will provide further updates when we know more.

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Viasat’s Inflight Internet over China

Five years ago Viasat announced a deal to bring China Satcom’s Ka-band capacity over China to its inflight connectivity portfolio. It took a few years, but eventually that “roaming” agreement activated, and the company even secured approval from Chinese regulators for installation of its antenna terminal hardware on both the A320 and 737 families.

Those certifications were needed to provide service to Sichuan Airlines, a deal announced late in 2022. Should Viasat be prohibited from selling its hardware or contracting for services in China the Sichuan Airlines deal could fall apart.

Viasat has also suggested the China Satcom capacity could be used to augment its in-house Ka-band capacity as foreign airlines overfly China. That might be more palatable than adding ground stations in China to handle the traffic from its own satellites. But, again, with sanctions in play that might be a moot point.

The company also now owns the GX Aviation network, formerly of Inmarsat. That system has been active over China since it launched, thanks in large part to Inmarsat’s longstanding regulatory relationship with the country. Viasat hopes to eventually combine the GX coverage with its ViaSat-3 constellation, further reducing the need for the China Satcom capacity. But if truly cut off from operating in the country Viasat may be cut off from operating over it as well.

In country operations likely matter less, at least for now. The Chinese commercial market has been a tough one to crack. The long-haul market is dominated by Panasonic Avionics and installations for domestic and regional routes remain near nil, despite years of optimism from various stakeholders. Losing the roaming overflight access likely is a bigger deal in the near term. Longer term, losing out on potential deals could add up.

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Safety Services via L-band

Perhaps more significant for the aviation industry is what this means for safety services operating on the “Viasat London” (f/k/a Inmarsat) SwiftBroadband L-band network. This is a network relied upon by airlines around the globe; losing that coverage over China would be a significant hit for many carriers.

An outage of the L-band coverage over the Pacific last year led to contingency plans and some shifts in airline operations. Blocking that service over China would have a much smaller impact, but still a notable one. The move could also impact Chinese airlines as they subscribe to the services for operations even when not in Chinese airspace.

Losing the SB-Safety connection does not mean the flights are unsafe to operate. But it does reduce communications options for those trips.

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There’s also the chance this is just bravado from the Chinese government trying to influence elections in Taiwan. It could blow over once those are complete. But we won’t really know until it happens.