5G Aviation Market Could Exceed $4 Billion by 2026, Analysts Forecast

This potential boom comes from a lot more than just the need to stream movies.

“How is the Wi-Fi?”

Aside from fuel costs and hangar fees, that’s the question jet owners are asking as they take delivery of their new equipment. Indeed, while industry leaders and wireless companies are at an impasse about the rollout of 5G, a report by Research and Markets predicts that the 5G in aviation market cap could grow to more than $4 billion by 2026. 

In 2019, the aviation connectivity market was valued at only $0.2 billion, which means that for it to achieve the 2026 figure, it would have to grow at a compound annual growth rate (CAGR) of 53.46 percent each year.

For context, the worldwide 5G Industry is expected to expand with a massive CAGR of 58.70 percent from 2020 to 2026, and become a $65 billion industry, according to the same Research and Markets report. 

With the way the pandemic has shifted much of our activities online, customers now expect their ability to connect to the internet as a given. This is reflected in the healthy amount of avionic sales recently reported by the Aircraft Electronics Association.

Air-to-ground vs. Satellite

When it comes to in-flight connectivity (IFC), there are essentially two main types of networks available today: geostationary (GEO) satellite and air-to-ground (ATG). 

Many airlines normally and primarily use ATG networks to provide connectivity for passengers, and some offer satellite services as a premium, especially on over-the-water flights. Satellite-based connectivity systems are much faster and have the advantage of satellite connectivity around the world, unlike the ATG systems. But the cost of the hardware involved in satellite-based systems makes them much more expensive to install and maintain compared to ATG. 

With the way the pandemic has shifted much of our activities online, customers now expect their ability to connect to the internet as a given.

On the commercial aviation side, no market standard exists yet, so passengers might find themselves paying whatever the airline dictates based on their contracts with their IFC provider. Meanwhile, in business aviation, operators are more likely to afford to have both options, and more times will opt for both so that there is no drop off in service when one network lags.

Before 2020, Gogo was the leading ATG provider for both commercial and business aviation aircraft in North America. But in a 2020 Q2 conference call with shareholders, Gogo’s CEO Michael Small announced that the company would sell the commercial airline side of its IFC business to focus on its spun-off business aviation division, where flight activity has recovered faster for operators. That business was sold to Intelsat, another player in the IFC market.

Big players in the IFC for the international jet market are Viasat and Satcom Direct, of which the latter operates its own solutions and products such as routers and antennas for aircraft with a range of 3,000 nm and above.

More Players Join The Growing Market

While Gogo has a head start on the ATG market, its CEO also predicts much growth in keeping with other forecasts. In his Q1 call of 2020, Small implied that the commercial aviation IFC space had “too many competitors” and those players need to gain scale to operate a sustainable business. Aside from players like Gogo, ViaSat, and Satcom, this market is dominated by a few key companies such as Global Eagle Entertainment Inc., Inmarsat, SITAONAIR, Panasonic Avionics Corp., Collins Aerospace, Thales, and Safran. 

These companies have a wide footprint presence and are scaling up operations through:

  • Extensive R&D
  • Consolidation
  • Joint ventures
  • Data contracts
  • Segment products to capture the new consumer demand

What else is driving demand?

Beyond in-flight connectivity, the growth of the 5G sector in the aviation industry comes from many places and provides many opportunities for new entrants. These include:

In and around airports: There’s passenger demand for improved airport connectivity and overall experiences such as check-in procedures, security checkpoints, gate monitoring, and terminal services, and aircraft communication.

Airport authorities also look to leverage it to support ground operators to improve baggage handling, runway monitoring, building management, security, and more.

Infrastructure and technology: The NextGen air traffic system requires modern airport facilities geared toward improved monitoring, traffic management, and communication services by control towers.

The growing advanced air mobility sector, including eVTOLs and drones, need real-time data to operate efficiently.

Manufacturers and maintenance programs: High-speed data streaming and real-time health monitoring is needed by operators, along with hourly engine programs, and by OEMs for parts and engines in keeping with regulatory requirements.

While 5G technology offers many improvements, industry groups and regulators will have to work together to resolve their concerns before pilots and operators can see the benefits.

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