Eutelsat Group expects to start gleaning meaningful revenue in aero from the summer onwards, as more inflight connectivity systems are certified and fitted to aircraft to support Eutelsat OneWeb Ku-band Low Earth Orbit (LEO) satellite-focused and multi-orbit LEO + GEO services for passengers.
“We have a backlog of around 1,000 aircraft that are scheduled for installation,” company CEO Eva Berneke said during a conference call to discuss Eutelsat’s second quarter and first half (1H) FY2024-2025 earnings results.
“You’ve probably seen – I think we put that out on LinkedIn — some of the very positive early installations with Air Canada but we also have American airlines, Alaska and Japan [Airlines]. It is not us direct. We are working with distributors.”
Intelsat and Panasonic Avionics are key distributors of Eutelsat OneWeb LEO in the aero market, she noted. Each are bringing multi-orbit LEO/GEO IFC to airlines. As mentioned, the former has already started to install its kit on Air Canada’s regional jets, whilst the latter is gearing up for its first installations this spring.
Berneke also noted that Gogo Business Aviation has “started to fly with our capacity” as it rolls out its Galileo LEO and hybrid LEO/air-to-ground offering on business jets.
But, intriguingly, she also suggested on the call that “even Viasat are using our LEO capacity for their aero services”. We are seeking clarity on this point. (Viasat provides high-capacity Ka-band GEO satellite connectivity in commercial aviation, though its cadre of business aviation solutions includes a near global Ku-band service for large business jets. Is Viasat using Eutelsat OneWeb LEO for its Ku-band IFC service for bizjets? Eutelsat OneWeb LEO is already playing a role in a Viasat maritime offering, as previously reported.)
GEO headwinds, LEO opportunities
During the second quarter, whilst Eutelsat Group’s overall connectivity segment saw 12.7% revenue growth, mobility connectivity within that segment declined 4.5% year-over-year, and by 20.4% quarter-on-quarter. The company cited a number of factors including lower GEO revenues in mobility.
On the B2B front, Berneke said, “We expected that Starlink would also start addressing the large B2B market; so that’s seen in mobility, especially in maritime mobility and you also see some of the announcements on aero, where we also have a very strong backlog on aero and Starlink is starting to come in there as well. So, it is clear we do see some of that also being a switch between GEO and LEO in the connectivity market. We still expect to see the connectivity market being a very strong growth market in total.”
Starlink has made clear gains in commercial aviation of late, snagging United Airlines, Air France, SAS and several other carriers as direct customers, not to mention a laundry list of business aviation clients. When Air France announced the news, its press statement said: “Over time, this Wi-Fi service will be made available on board all the airline’s aircraft, replacing the current offer.” But, Berneke suggested on the call that she believes it’s “more that they’re bringing Starlink into the mix, but not a full replacement”.
She anticipates that some aircraft operators and IFC service distributors will want to take in different LEO capacity, just like in the maritime market where players are ingesting Eutelsat OneWeb LEO and Starlink LEO and mixing the two. (Does Eutelsat see an opportunity to secure some LEO aero service business via distribution partners to Air France?)
Berneke also identified clear headwinds in GEO for the B2C consumer broadband market in Europe, as its moves towards LEO, mainly because of Starlink. Facing what Eutelsat describes as “a temporary cessation of revenue recognition from a specific customer in the second half of the year” on its very high capacity (500 Gbps) KONNECT VHTS satellite, the firm plans to repurpose capacity on this satellite to address a broader range of applications, notably including mobile connectivity.
Indeed, KONNECT VHTS is expected to be pressed into service for aero. “So, we have a very strong backlog actually in aero for our LEO services. And then for Europe, we will be able to put some KONNECT VHTS on top of that and that will be even stronger,” said the Eutelsat CEO.
All in, Eutelsat feels confident that aero revenues, specifically, will pick up “in next financial year, so from the summer. It’s going to be very small over the summer and then it will start ramping up with installations on the fleet over the next financial year,” said Berneke.
This is an admittedly later timeline than originally envisaged, with Berneke noting that US FAA approvals for IFC terminals, test flights and installations take time.
Moreover, the full buildout of Eutelsat OneWeb LEO’s ground infrastructure is not yet complete with five gateways, some in complicated places like Senegal and Martinique, still needing to be established. These last five are “still dragging their feet into second half of the year”, she said.
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Featured image credited to Eutelsat Group
