The Airline Wi-Fi Market via Satellites: An Evolving Investment Opportunity in Space

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Overview: Wi-fight

The space industry's sub-sector of satellite companies offering internet service to commercial airlines is one of the most complex sectors I've encountered.

The demand for in-flight connectivity (IFC) is rapidly growing, with revenue estimates predicting a significant increase to more than $3 billion annually within the next ten years.

Last year, U.S. airlines began offering satellite-based Wi-Fi for free to frequent fliers. This year, they finished their Wi-Fi rollout. My desk neighbor and CNBC's airline reporter Leslie Josephs recently paid $19.99 for Wi-Fi on a cross-country Spirit flight, noting that the service was fast enough for an hour-long video call.

Over the past few years, airlines and satellite operators have announced numerous IFC deals. Examining the world's largest commercial aircraft fleets and comparing them to the satellites used by airlines, it is evident that Intelsat has a significant presence in deals with the top 25 or so global airlines, which collectively own over 7,000 planes.

Installing high-speed Wi-Fi on planes, particularly for U.S. carriers, is a lengthy process that necessitates FAA certificates for each aircraft type before terminals can be installed. This contributes to the complexity of the IFC market share, as agreements are typically centered on installing the service on a specific number of an airline's existing or ordered aircraft types.

Viasat offers service to United's numerous Boeing 737 aircraft across North America and Europe, while Intelsat, having acquired Gogo's commercial aviation business, provides service to United's Embraer regional jets over most of North America.

The newcomer to the IFC market, SpaceX's Starlink, is gradually gaining traction by providing Wi-Fi services to Hawaiian Airlines and taking over Viasat's position on Qatar Airways' entire fleet of 228 planes.

Icelandair recently struck a deal with Viasat, as satellite IFC services continue to grow while Starlink expands into more industry verticals.

The financial worth of these deals is often not revealed in corporate sales, but the length of these agreements may be more significant, especially in the airline industry where airlines are competing to purchase more planes and offer Wi-Fi. Qatar Airways and the IFC sector's service arrangements demonstrate the market's frothiness, which may be just starting to gain momentum.

What's up

• NASA has terminated the OSAM-1 satellite refueling project, which was projected to cost over $2 billion after years of delays. In 2020, NASA's Inspector General accused Maxar, the project's lead contractor, of "poor performance." The OSAM-1 project employed approximately 450 personnel. – CNBC
• After underwater Red Sea internet cables were cut, four of 15 cables in the maritime region were affected, causing about a quarter of internet trafficking to be disrupted. Operators turned to satellite services as backup.
• SpaceX's Crew Dragon capsule Endeavour is launched for its fifth mission, carrying Crew-8 to the ISS. This marks the company's 13th launch and the delivery of 50 people to orbit.
• SpaceX successfully launches Transporter-10 rideshare mission, transporting 53 satellites for various companies such as Spire, Satellogic, Lynk Global, Aerospacelab, Iceye, Atomos Space, Quantum Space, True Anomaly, and the Environmental Defense Fund.
• Apex has achieved a small satellite build record with its Aries SN1 spacecraft, which was launched on the Transporter-10 mission and enabled the company to progress from a clean-sheet design to space flight in just 12 months. The Aries SN1 spacecraft is currently carrying payloads for three unnamed defense companies.
• ABL is preparing for a second launch of its RS1 rocket at its Kodiak, Alaska launchpad.
• The first Ariane 6 rocket is being assembled. ArianeGroup released images of the rocket's main and upper stages in their final configuration. The rocket will then be launched vertically from the organization's Kourou launchpad, followed by the addition of the booster and fairing. – ArianeGroup
• Blue Origin is currently seeking crewed spacecraft development staff, which may indicate the company's plans to advance its previously announced work on building an orbital-class vehicle that will be launched on its New Glenn rocket.
• The Texas Parks and Wildlife Commission has unanimously approved a land swap with SpaceX, where the state will give 43 acres of Boca Chica State Park to the company in exchange for 477 acres about 10 miles away near the Laguna Atascosa National Wildlife Refuge.

Industry maneuvers

• The defense giant intends to acquire the small satellite bus company for nearly $600 million in cash, according to a nonbinding proposal.
• Iridium is acquiring Satelles for $115 million by buying about 80% of the latter company's shares that Iridium didn't already own from previous investments. Satelles' service effectively acts as an alternative to the U.S. government's GPS satellites, and claims to be more powerful and accurate. Iridium expects Satelles to generate over $100 million in annual service revenue by 2030.
• Boeing has been awarded a $440 million contract by the Department of Defense to construct WGS-12, a communications satellite, for delivery by January 2029.
• Astranis receives an order for a satellite from Thaicom, marking the 10th satellite ordered to date for launch in 2025.
• Rocket Lab has been chosen by Viasat to create a satellite bus and provide mission operations for a $80 million NASA Communications Services Project (CSP) award. The objective of the program is to evaluate whether commercial satellite services can meet NASA's requirements as the agency phases out the Tracking and Data Relay Satellite System (TDRSS). The demo spacecraft is set to launch in early 2026. – Viasat / Rocket Lab
• The Air Force Research Laboratory awards Terran Orbital a $15 million contract for supplying Ambassador Class satellite platforms with solar arrays and support equipment.

Market movers

• EchoStar has disclosed a cash crunch in its year-end results after the Dish merger, stating it has "substantial doubt about its ability to continue" unless it raises more funding. However, CEO Hamid Akhavan emphasized EchoStar's plan to be cash flow positive in 2024 through $1 billion in expense cuts via post-merger "synergies and other cost measures." – Via Satellite
• Spire reported revenue growth of 32% year over year, pulling in $105.7 million last year, and also made progress in reducing its annual net loss, which was $64 million in 2023, down from $89 million in 2022.
• To become part of the benchmark Canadian equity index, the S&P/TSX Composite Index, which comprises the largest and most liquid publicly traded companies in Canada, as stated by MDA.

Boldly going

• NASA is currently accepting applications for its next round of astronauts, with 48 active members in its Astronaut Corps.
• Orbit Fab appointed Jacob Geer as U.K. Managing Director, replacing Manny Shar who was promoted to Chief Strategy Officer. Geer previously worked at the U.K. Space Agency.

Ad astra

• The former NASA Administrator and astronaut of early Space Shuttle missions, Richard Truly, passed away at the age of 86.

On the horizon

• Mar. 10: Rocket Lab Electron launches Synspective satellites from New Zealand.
• Mar. 10: SpaceX Falcon 9 launches Starlink satellites from California.
• Mar. 10: SpaceX Falcon 9 launches Starlink satellites from Florida.
• Mar. 13: SpaceX Falcon 9 launches Starlink satellites from Florida.
• SpaceX aims to conduct its third Starship test flight from Texas, subject to regulatory clearance.