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When It Comes to In-Flight Wi-Fi, Supply Far Exceeds Demand

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Rapid technology advancements keep driving in-flight broadband speeds and availability, but passengers seem less than eager to connect.

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That's where satellite links come into play: civil aircraft worldwide now rely on satellites to provide Internet (and sometimes cellphone) connectivity while in the air across the globe. Technology advances in the sector swiftly.

Satellite connectivity providers striving to deliver higher speeds are now adding additional bandwidth on proven L- and Ku-band satellites. They're also deploying brand new Ka-band satellite systems (Inmarsat Global Xpress, ViaSat), with promised speeds up to 50Mbps.

This type of Internet access with a promised bandwidth of 12Mbps or more for each customer will be featured this year on JetBlue (NASDAQ:JBLU) flights and Aer Lingus (LON:AERL) flights in Europe. GoGo plans to offer a similar satellite-based option in 2015.

Still a majority of carriers provide very limited in-flight connectivity service, if any at all. Air France-KLM plans to start its in-flight broadband trial this March with massive rollout in 2014-2016. Russian airline Aeroflot (FRA:AETA) plans to add 26 more airplanes to its current fleet of five Wi-Fi-enabled long-haul aircraft. All Nippon Airways (PINK:ALNPY) looks to introduce the service in summer.

Some companies move in the opposite direction. Australia's Quantas (ASX:QAN) in December 2012 dumped its in-flight broadband project because of weak demand. Its commercial trial on service to Los-Angeles and London attracted less than 5% of passengers, the company said.

Despite the challenges of humble demand and costly deployment, analysts foresee the bright future for the industry.

"Passengers can increasingly expect to have access to inflight connectivity, be it Wi-Fi or GSM, or in some instances both," says Mary Kirby, editor in chief of the Airline Passenger Experience magazine. "There is room for everybody to play – ATG, L-band, Ku-band and Ka-band."

However, "It's imperative that carriers manage passengers' expectations when selling in-flight connectivity sessions," adds Kirby.

IMS Research predicts the number of aircraft with in-flight connectivity equipment installed will grow nearly five times in less than a decade: from about 3,194 in 2012 to 15,351 in 2021.

The question is how fast the adoption rate will grow.
No positions in stocks mentioned.
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