Specialist
Former VP at Eagle Entertainment Inc
Agenda
- Operating environment for in-flight connectivity (IFC) providers and airlines' perception of IFC
- Competitive dynamics – Gogo (NASDAQ: GOGO) vs Global Eagle Entertainment (NASDAQ: ENT) vs Viasat (NASDAQ: VSAT) and others
- Evolution of switching costs, considering ATG (air-to-ground) vs satellite
- Outlook for 2020 and beyond – potential consolidation, winners and losers
Questions
1.
What is your industry-wide overview of what we’re seeing for in-flight connectivity? Which key trends or drivers do you think investors should be paying the most attention to?
2.
You mentioned how monetisation and commercialising in-flight connectivity has been a slight challenge for the service providers. Why do you think that is, what has brought us to this situation?
3.
If the total market opportunity is growing for players, as you suggest, presumably it will saturate to annual fleet replacements – when do you think that could happen? How should we assess total market opportunity growth, at least in the immediate term?
4.
You say there will be winners and losers in this space and it also seems that growth will hit a bit of a saturation point and might skew a little more towards in-line fits. Do you think anyone is executing better on the strategy of partnering with the likes of Boeing or Airbus? Is that where industry growth is headed?
5.
If you were to estimate how many airplanes are getting connected on average per year, is it six per day? Would there be some incremental connections not just coming from in-line fit?
6.
How would you assess non-US vs US fleet growth contribution? If the US is at 80% penetration and ARPA [average revenue per aircraft] might come in at a different level, is there an apples-to-apples basis we can think about?
7.
Thinking about ViaSat’s partnership with China Satcom, is there still a chance that everyone gets shut out? How do we think about the pushes and pulls with how the regulatory environment evolves? What does it mean for service providers being able to meaningfully penetrate?
8.
When would you estimate getting the regulation in place? Do you think it is a few years or months away?
9.
You mentioned how cost of coverage sometimes looks misaligned, especially for the long-haul wide-body. Do you think the LEO [low Earth orbiting] constellations due to come online will have any impact on the competitive environment, perhaps impacting capabilities or lowering the cost base?
10.
What cost savings could the LEOs provide, when thinking about the cost to carry in terms of the flight? Would any players be in a bit of a bind if LEOs are a successful business case?
11.
Considering how Delta and other airlines are increasingly offering free wifi, do you think in-flight connectivity is more of a cost-line item to drive loyalty vs potential profit hub for airlines?
12.
Technology appears to be rather commoditised, do you think it is a differentiating factor at this point? Is there any looming technology risk, whether it’s bring-your-own-device, 5G or otherwise?
13.
Do you assess Delta as a scalable concept in terms of the doing-it-yourself? What sort of challenges are likely in moving to more in-sourced?
14.
You already named your losers and winners but what led to your conclusion? What is happening with the competitive dynamics, what are you force ranking the players on?
15.
How sustainable do you consider Gogo’s leading share to be in business aviation? Is ATG [air-to-ground] the long-term future, or is there any disruption to be had for business aviation in the years to come?
16.
It appears to be a pretty challenged industry on a margin basis, is there any sort of a ceiling for what is achievable? Thinking about Gogo’s 2020 plan and Global Eagle's efforts, do you think either is able to reach the free cash flow positive that has been targeted over the next 6-12 months? Are they challenged from a profitability and cash standpoint, especially in the near term?
17.
Do you think Global Eagle’s maritime business and that potential opportunity will be a sizeable improvement in terms of achieving profitability? How are you thinking about likely buyers there?
18.
You say satellite operators will also be losers – is that fixed and mobile? How are you thinking about that?
19.
Thinking about investments on the actual plane equipment but also the ground stations as it relates to ATG, is that still being invested in well across the industry?
20.
Is there anything you wish to highlight about in-flight connectivity, perhaps some closing remarks?
