How business aviation connectivity is changing

Claudio D'Amico and James Person on how Viasat is addressing the challenge

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In this episode of the Viasat Podcast, host Alex Miller speaks with two leaders from our Business Aviation division: Claudio D’Amico and James Person.

 

For business and private aircraft, in-flight Wi-Fi has moved quickly in the past decade from a nice-to-have amenity on board to a necessity — especially for business travelers using their time in the air to be online and conducting business.

 

Similar to how our expectations of what our internet service can do on the ground have changed, air travelers’ idea of what constitutes good in-flight connectivity has increased commensurately. Where once the ability to send a text from 45,000 feet seemed miraculous, now it’s possible to get speeds good enough to stream video and engage in video-chat meetings.

 

Viasat has been steadily improving its service to these users, with download speeds of 30 Mbps and higher now the norm, and with more advances on the horizon.


Claudio D'Amico (L) and James Person

 

Topics discussed in this episode:

  • How the introduction of Viasat Select has given greater value and flexibility to customers on our high-speed Ka-band network
  • Some of the ways in which business and personal travel in these aircraft has changed over the course of the pandemic
  • Who are the people flying on these aircraft? It’s not just CEOs and high-net-worth individuals.
  • The importance of satellite capacity when it comes to delivering the bandwidth needed in flight
  • Viasat’s ability to match a particular type of connectivity solution with the needs of the end users and the type of aircraft upon which it’s installed, as well as how the company is looking to expand its offerings to other airframes and markets
  • How the increasing demand for more data is being met with our current fleet and how the upcoming ViaSat-3 constellation will vastly improve both capacity and coverage across the globe

 

Listen to the podcast:


Transcript

Alex Miller: Hello and welcome to the Viasat podcast. I'm Alex Miller, and in this episode, we're looking to the skies with two leaders from our business aviation sector Claudio Demeaco and James Pearson. All right, well, we're here on the Viasat pod today with Claudio D'Amico, who's the business area director for business aviation. Thanks for being on, Claudio. Great to see you.

Claudio D'Amico: Thanks, Alex. Good to be here.

Alex Miller: And we've also got James Person, senior director of Global Business Development for Business and VVIP Aviation. Great to see you too, James. Thanks for being here.

James Person: Of course, Alex. Great to be here, too.

Alex Miller: All right. So, you know, on the aviation side, whether it's commercial or business, there's been obviously a lot of upheaval in the last couple of years. The pandemic kind of threw everything into a tailspin, all kinds of metaphors there that'll apply. But on the business side, it's been a little bit of a different story and we'll get to that in a minute. But I wanted to ask, what do we mean when we say business aviation? So we might have this idea of what a business jet or even a private jet looks like and who those people are? And I'm sure some of them are probably true, whether it's Hollywood luminaries or business execs. But I think there's a lot more to that story. So I want to start out Claudio by asking, like, who are these people who fly privately and where are they going?

Claudio D'Amico: Yeah so there's really you can talk about general aviation and you can talk about business aviation. So when we are talking about general aviation, it is a very large market that includes everything from helicopters to piston aircraft to turboprops and then the jets. That's a market that has globally roughly around 400,000 aircraft. In terms of business aviation, really we're talking about 21, 22,000 of those aircrafts and they're made by, you know, the small jets enough all the way up to your Gulfstream large cabin aircraft, vessel large cabin aircraft, Bombardier, as well as some of the airliners converted into a private aircraft. That's a much smaller market. We here at Viasat, we address today a segment of that market, which includes the super mid aircraft and a large cabin aircraft. So we're addressing a portion of that market. That market itself has a very high demand for performance and connectivity when it comes to the cabin of those aircrafts. Those operators, they are investing millions of dollars on those assets to transport them from one place to another. And while they're on that aircraft, they're looking to have the best connectivity possible. But it's - back to your original question - it's not just around those high net worth individuals or corporations. So the bulk of business aviation is really the small and midsize aircrafts that fly all across the country. One statistic or fact here that I'd like to share is that when you think about the total number of general aviation or business aviation airports in the United States, it's about 5,000 airports compared to about 500 commercial airports that are in the U.S. What that does, that creates an opportunity for the operators of those aircrafts to bring and fly much closer to where they operate in all corners of the US. So their demand really is to have flexibility around where they fly and then while they do it, have really good connectivity.

Alex Miller: So can you give an example of a business, one of those kinds of smaller businesses and why they would use a private or business jet or even a smaller plane?

Claudio D'Amico: You can have a midsize business that has two manufacturing facilities in locations in, one in the Midwest, for example, and one on the East Coast, and they can use that aircraft to fly people across those two different facilities. So that's one example that we see commonly in. What we do see is that the makeup of our customers today is, really the majority of our customers are corporations. So 80 percent of our customers today, the business for Viasat's business aviation, are corporations. A smaller part of those customers are the high-net-worth individuals that own their own aircraft. One thing that we've seen in the last couple of years is really the growth of the fractional. So fractionals are aircrafts that are owned by a pool of people, and they're managed by fractional operators. And we've seen a lot of growth on that segment of the market, and some corporations are actually adopting that fractional ownership as well to have access to these aircrafts and at the same time optimize their cost in terms of not just having to own that asset all by themselves.

Alex Miller: So when it comes to this type of connectivity for business aviation, what kind of options do they have for inflight connectivity and where does Viasat fit into that?

Claudio D'Amico: We've been in this industry for quite some time, and there are several solutions out there. There's your traditional air-to-ground solution. There are L-band solutions. Those solutions have some limitation in terms of the capacity that they bring. There are some Ku solutions that are available today, Viasat does also offer a Ku solution. And there are Ka solutions. So there's several options out there. One of the biggest challenges that every type of connectivity provider has faced is the ability to bring enough capacity to meet the operational requirements of these aircrafts. So where we fit in today is we're delivering the fastest and the most reliable connectivity experience with our Ka-band solution today. We are able to do that because we have these massive amounts of capacity with our satellites that we design and build. And then with that capacity, now we have the ability to really change a little bit how the connectivity is being delivered across all of these aircraft platforms. Think about, for example, the way the service plans have been designed, right? They were somewhat designed by some of the limitations of what the other connectivity providers had, which was capacity. So they value those plans around pricing the fastest plans with the highest amount of dollars attributed to them. What we've done is we're providing the same really good experience across all of our service plans. So independent of the data allocation, how much data you need providing the same performance, and we're able to do that with the capacity that we bring. Last year, we talked about how we removed the speed limits on our plans, and all of our plans deliver a typical experience greater than 20 megabits per second. But we see a lot of customers sending screenshots of speeds of up to 80-90 megabits per second, which is really enabling them to do whatever they like to do inside their aircrafts, when they're moving from point A to point B.

Alex Miller: Right, yeah, and with Viasat's Ka-band satellites, which are the higher frequency ones, we're serving on commercial airlines, many, many customers with pretty high speeds. So if you're on a business jet with just a few people, I mentioned, that's even more of a good experience.

Claudio D'Amico: That's right, that's right, and we can definitely offer a differentiated experience there, but it's not just about the speed, right? It's about the flexibility and how these operators are utilizing that aircraft. So one of the things that we've learned in the market is that you have these different aircrafts or different air frames that have different operational profiles and then they have specific needs. So some operate those aircrafts regionally, some operate these aircrafts globally. Some aircraft operators have specific passenger needs, some with really high data demands and some that use that for some more basic applications, such as email or text. So the idea is how do we create plans and solutions that deliver a really good experience across any operational profile, but at the same time, match what those operators are looking for in terms of an overall connectivity, pricing and experience?

James Person: You know, we also see a whole new category of types of applications that are used on business aircraft that you typically don't see on a commercial airliner. So since it's usually one company that has their executives on the aircraft, they're using it as a time machine, right? As Claudio talked about heading out to the factory or heading out to one of their facilities. These executives are getting work done and so they can be having Zoom calls just like we're having here, or they can be doing voice calls. These are kinds of things you're not going to be able to do on a commercial airliner, but the capacity that we're providing on our network are what enables that and allows these business people to get work done on their business aircraft.

Alex Miller: Yeah, that's a really good point. And not too long ago, that was all just dead time. Well, you could be you could be working offline, but you can do a lot more when you're online.

So one of the things that we have noticed, you know with the pandemic is that some kind of trends have come out of that, especially on the business aviation side, both on the operators and how the passengers and crews are relying on connectivity. So I was wondering if you could talk a little bit about what we've seen in the last, what, almost two years now.

Claudio D'Amico: So, you know, one of the things that we continue to see is that the demand for data is increasing. So now that we have more capable devices with faster processing speeds, we have higher definition video, we're seeing that demand inside the cabin of the aircraft as well. So what we've been seeing is more and more of video streaming. As well as communication applications that have video as well, so video calls -- we've seen a lot of those requirements in our passengers using those types of applications to date very successfully. And the feedback that we're getting is that, whoa, this really works like we're on the ground or we're on our cell phones. So it's been a good feedback. I think the trend is for that to continue looking forward to what the new technology will be, that will demand more data. But I think we'll be in a good position to support that with what we're going to be bringing here with ViaSat-3, and the new constellations that we're working with.

James Person: Claudio and Alex, there was another very specific COVID trend we can talk about, and that was after the V-shaped drop in business aviation, which happened very quickly, right? Like what was that over just one quarter, right? But when we looked at the makeup of the passengers in those aircraft during COVID, it was much more of the families and leisure travel as people were trying to get grandma home to see their grandkids or move people and their families around. And it's interesting because it took a while for the business travelers to come back, and they are coming back. And in fact, it's higher levels of flight hours in business aviation than it was pre-COVID. But that's driven by a big uptick in personal travel. People using it for personal safety and security.

Claudio D'Amico: And I think that drove a lot of what we saw in terms of growth in the fractional owners we saw. There's a lot of demand now for that fractional ownership of the large fractional operators. They're no longer able to meet that demand, given the amount of people that are now that saw that benefit of business aviation and have adhered to it. So there's the growth in that specific segment driven by the things that James described was really interesting. And the concern was, is that really here to stay or is that just a spur of the moment during Covid? But what we're seeing now is that demand continues to grow and those business models are being looked at. And we have a lot of excitement around being able to support those fractional operators as well.

Alex Miller: So another thing I was wondering about was did we see businesses saying, Hey, you know, during this pandemic, especially before vaccines were available — If I can, I'm going to send our employees on these private jets rather than putting them on commercial just for safety. Did we see that driving some of these trends?

James Person: Yes, we have seen some of that happen as well, even before the pandemic. You know, business aviation, it might surprise people, but fewer than 50 percent of the flights have their top executives on it, and that's for those examples like Claudio was talking about earlier. But what we saw is corporations who have their own private jets allowing - or really requiring - a whole other tier of employees to use the private aircraft to fly for their own safety and to prevent spread of COVID. So yes, that did open up a private flying to a whole level of executives within companies.

Alex Miller: Yeah, it makes a lot of sense. So moving on, I wanted to talk a little bit about some new things. So there's a new option called Viasat Select, which I think does a lot to address some of the different connectivity needs, depending on the customers. So I want to ask a little bit about what that's all about and how it's meeting those needs.

James Person: Yeah, I'll take that one, so Viasat select is a combination of things, really an unprecedented offering that gives business jet owners performance, flexibility and value for their connectivity. And basically what it gives is, whether it's a super mid cabin aircraft or a large cabin aircraft, the business jet operators can now buy that Viasat Ka-band service directly from Viasat, along with the uncapped speeds that Claudio talked about and some new plans. So regional plans for business jet operators who might be based in the U.S. and typically fly only in North America, or based in Europe, and only fly within Europe. So we were able to combine all these things together because all the pieces came together — coverage where they needed it, this new advanced Viasat Ka-band hardware for the aircraft, everything from the super mid cabins like Claudio was talking about up through long range aircraft and then combining that with a new customer service team that we have and applications to support direct service. All that, taken together, is what Viasat Select is about.

Alex Miller: Ok, and so the difference is previously we would offer our service, our equipment through a value added reseller of sorts, and now it's kind of more of a direct model, is that best way to describe it?

James Person: That's a big part of it, you're right. So previously, if you wanted Viasat service, you had to go through a value-added reseller — and we value our value-added resellers. We have them for a reason and a number of flight departments, the people who operate the aircraft on the behalf of the corporations or individuals, often like to get a single bill or have multiple services from a value-added reseller. But if you have a smaller aircraft and that's not something you need and you prefer to go directly to the source, we've opened up that option as well. And so you're right, that's a big part of Viasat Select as being able to go directly to Viasat, who not only design and build the satellites, as Claudio talked about, but we design and build the hardware in the aircraft, and we even have a router, our own router, inside the cabin. And with applications on that that allow the flight department to optimize that connectivity solution for their passengers on board.

Claudio D'Amico: And to complement what James was saying in terms of the flexibility, right, there's the flexibility for selection of specific service plan that meets that operational profile of the aircraft, but we also believe in the flexibility for the user's, right? To decide how they want to contract their service. There are a lot of value without doing that directly with Viasat, but there are some operators that do have other services that Viasat does not, and they procure that from the value-added reseller. So we want to give, at the end of the day, the flexibility for those operators to decide on what's the best plan and what's the best relationship that they want to establish in the marketplace.

Alex Miller: Yeah, yeah, it really ties into those options, but also the vertically integrated model that Viasat is becoming known for in the industry, in all of our different business areas where we're making the satellite all the way down to the modem and everything in between really gives you a lot more ability to kind of fine tune the system. So Viasat Select, does that differentiate Viasat in the industry or are there other companies do that, or is this kind of new?

James Person: There's really nothing like this combination in the industry. So people who are looking for connectivity options in business aviation before, if they wanted additional speed, they would have to pay higher fees per month. With Viasat Select, everybody gets the same speed, you're just paying for an amount of data combined with the ability to go all the way down, you know we harp on this because it's really the first time that these mid-size aircraft, what we call the super mid cabin aircraft, that are really reasonably priced can get the same type of connectivity experience that before was really only in the purview of people who bought the long range, large cabin aircraft. And those are typically, you know, the largest corporations getting those. But we've opened it up to a whole other segment of the market. And being able to come directly to Viasat, directly to the source, that's something that no one else is doing as well. And then the rates that we're charging for it, I mean, it's very impressive and very approachable for people to now get connectivity that's the best in the industry.

Claudio D'Amico: It also enables us to learn directly from customers what are some of the additional needs that they have? And with that learning leverage, the vertical integration that we've discussed to continue to iterate and create other value-added solutions to these operators.

Alex Miller: Viasat Select rolled out fairly recently. Was there a particular reason to do it now? Was it an important time to bring it out?

James Person: Viasat launched Viasat Select for Business Aviation because we now have all the pieces in place. So it's the Viasat Ka-band coverage, the high-capacity satellite coverage where business aviation happens. So that coverage is in place. The advance hardware for the aircraft, you know the antenna and everything else that we put on the aircraft from the large cabin all the way down to the super mid cabin aircraft. And the customer service and support and the applications that make it all together. All those pieces are now together and in place, and so that's what enabled us to launch Viasat Select now.

Alex Miller: So I wanted to move to a little bit looking at the future. So we have a new constellation of satellites, it's three satellites that'll cover most of the globe called ViaSat-3, and they're going to be launching over the next couple of years and covering all of these areas where all these planes fly, which right now is kind of a mix of different satellites, and this will give these operators a chance to kind of stay on one network. So what does that mean for the business aviation segment in terms of the future growth?

James Person: Right. So the Viasat Ka-band coverage, which is our high-speed network, while it covers more than 90 percent of where business aviation happens — and that's North and Central America and Europe and the flight paths in between, it's not global, right? We put our massive amounts of capacity in a concentrated area on purpose. But what ViaSat-3 does with those three satellites, they will cover the world, so it will give us that full coverage of the entire globe. And it also gives us additional capacity because as we know, whether you have a smartphone or thinking about your connectivity at home, your internet demands in terms of amount of data consumed never slows down. It always increases, and ViaSat-3 brings us additional capacity so that we can continue to provide additional speeds and additional services that business jet fliers require when they're flying.

Alex Miller: And so we're waiting for that one to launch, but we're still moving ahead, we've got all these other arrangements with other satellite providers and we just added some more business aviation in Brazil. So I wanted to ask how that came about and why that's important right now?

James Person: Well, one of the business aviation manufacturers is Embraer and they're a Brazilian company, and it's important to have our connectivity where those aircraft are made. But also Brazil on its own is a big business aviation market. It's a big country and similar to the U.S. where, you know, as Claudio was talking about companies having to get to their factories, you can imagine that on an even much larger scale that need to do that in a country like Brazil. So it's an important market for us and it begins our focus in South America.

Claudio D'Amico: It also enables operators that eventually fly down to that region to continue to use our Ka system while flying over Brazil, which has a huge landmass, as James described. But it doesn't just open up the market for business aviation within Brazil, right, for high-capacity connectivity, but it also enables those operators that have our system equipped to transition and fly into Brazil and continue to experience that connectivity that we offer elsewhere.

Alex Miller: Well, it sounds really exciting, and, you know, with all these improvements, both in the service and some of the equipment, the satellites, what's the outlook for the business aviation team going forward in the next couple of years?

James Person: Well, it's certainly an exciting time at Viasat in general and in our business aviation team, so I'll start with what's on my list and I'm sure Claudio will fill that out. So of course, with Viasat Select, we are reaching more customers directly. So that's the big part of what we're doing in addition to what we do through our channels. We also have an increased global focus with ViaSat-3, and the other satellites that we're using in the interim, a lot of new markets for us to cover business aviation. More applications for use on the aircraft, so that's something we're always working on to augment the connectivity that we provide. And then, I would say, an expansion into different sizes of business aircraft and what we cover today. As Claudio talked about, we cover about a third of the market today, but with new hardware and new satellite networks, we can open that up and cover many more sizes of business aircraft.

Claudio D'Amico: Yeah, and I think you covered the majority of the important points there, James. And there are just two things that are really high on my list right now. One of them is really learning from Viasat Select and understanding how can we further enhance the connectivity solution to the operators. So I think we made a very important step in that direction to meet some specific needs for operators, giving flexibility, performance and value. But there are other things that I believe we can unlock as we develop those relationships and learn more from our customers directly. So value-added services is something that we're looking to further explore. The second point is really how can we provide solutions for segments of the market that we're not addressing today? I think that some of the trends that we've seen recently with COVID and the growth in the business aviation market, I think there's opportunities for us to expand into new airframes and continue to bring that connectivity across new platforms and markets. So those are the two exciting things for us.

Alex Miller: Well, you know, one other thing I want to ask about was connectivity for the crew. How big a factor is that?

Claudio D'Amico: Yeah, and so today, the crew actually does use the connectivity that's available in the cabin at some point. They don't use for flight safety issues or cockpit data link, which there are a lot of specific requirements around that connectivity and our system does not address that today. But in terms of productivity, maybe being able to access certain information, the crew already uses our connectivity to an extent. Part of what we'd like to understand and learn is how can we further enhance that productivity for the crew? So one of the things that we've done with Viasat Select is create what we call a crew application. So there is an application that enables the crew to look at the performance of the connectivity and then address if there's any issues with the connectivity. So that's something that we're looking to do and continue to enhance on so that they can have more time to focus on what's important in terms of the flight and safety aspects of transporting their passengers. So if they don't have to worry about the connectivity piece and they have the information around how connectivity is performing and then be able to troubleshoot the connectivity, then that frees more time for the crew to do what they're really meant to do on the aircraft. And what we've seen, why this is important, is that more and more connectivity is a flight critical for those passengers, right? Back many years ago, if you if you didn't have connectivity, you know, that's OK, you can continue to have a flight. But in some business jet flights today, if you don't have connectivity, the passenger will abort that mission, will fly a different aircraft if that's available because of connectivity. So creating these tools and to the crew and developing enhanced management tools for the group to look at the connectivity is something that we feel is important and helps with their productivity as this becomes more and more important for those aircraft operators.

Alex Miller: All right, well, Claudio D'Amico and James Pearson, thanks so much for giving us an update on Viasat business aviation and all the cool stuff that's going on and a look into the future. It's been great talking to you and appreciate your time.

Claudio D'Amico: Our pleasure.

Alex Miller: Thanks for listening to the Viasat podcast. If you know someone you think would be interested in what you've heard on this episode, please share. You can always find the latest episodes on our blog at Viasat and you can subscribe at Apple Podcasts, Stitcher, Spotify, or just about anywhere you get your podcasts.

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