In-flight broadband advances with deal to provide satellite connections

Europe's largest satellite-services provider and the region's leading aircraft-electronics maker are teaming up to offer enhanced broadband-viasatellite connections to airline passengers.

After months of negotiations and decisions to scale back their initial plans, France's Thales SA and Luxembourgbased SES SA, with a global fleet of more than 50 satellites, on Monday will announce they are jointly entering the already crowded field of companies marketing such high-bandwith links.

By 2020, the partners hope to leapfrog competitors with a powerful new satellite designed specifically for efficient and low-cost cabin connectivity to airliners flying across the US, Latin America and busy trans-Atlantic routes. For passengers, the service aims to be "the equivalent of what you have at home with fiber connectivity," Thales Chief Executive Patrice Caine said in an interview. That would include streaming movies in high definition, videogames and live television.

But two entrenched rivals, Londonbased Inmarsat PLC and ViaSat, Inc. of Carlsbad, Calif., already have or soon will have significant capacity in orbit to serve the same fast-growing segment – and both can build on longstanding relationships with certain carriers. Current competitors also rely on capable satellites designed for global connectivity. Thales and SES likely won't be able to match such coverage until at least the middle of the next decade, even if they opt to invest in additional satellites.

The move comes as airlines, satellite operators and equipment makers are scrambling to shape a new market for airborne connectivity. Despite escalating passenger expectations for faster connections, many airlines worldwide are still struggling to figure out how to make money from such cabin features.

For years carriers around the globe have been offering in-flight connections to passengers for a fee, or in some cases for free.

But the connection speeds often have been limited, frustrating some passengers eager to do more than send text messages or emails. As a result, overall usage rates have been depressed, making a number of carriers ambivalent about investing in new satellite services and upgraded equipment on board.

But now, more powerful satellites, advanced antennas and other hardware are promising to change that dynamic, with airline managements increasingly viewing upgraded cabin connectivity as an important way to attract and retain customers.

Paris-based advisory firm Euroconsult estimates that the number of commercial aircraft with in-flight connecting will grow to 23,100 by 2025 from 5,300 last year. Sales from passenger connectivity would see a 23% annual growth rate over the period.

Yet "airlines don't know how their ultimate business models will work out," according to Tim Farrar, a Northern California satellite consultant. Faster speeds are expected to lure more customers. Industry leaders, however, "still can't agree what the best technology will be or ultimately how they can make back their investment," Mr. Farrar said.

Thales already serves the segment through its FlytLive broadband unit, as well as its Avant in-flight entertainment equipment installed on Boeing Co. and Airbus Group SE jetliners. Thales will begin offering its new connectivity for the Americas starting next year using two existing SES satellites. The service will be bolstered with the addition of the planned SES-17 aircraft three years later.

The new offerings are intended for planes coming off the assembly lines, as well as retrofits of existing fleets.

Inmarsat has launched three of its Global Xpress satellites to beam signals globally, with the first airlines including Deutsche Lufthansa AG already signed on. The system is due to go live soon.

ViaSat also is launching new, powerful satellites to service airlines. It counts American Airlines Group, Inc., the US biggest airline by traffic, among its customers.

But SES CEO Karim Sabbagh said the SES-17 spacecraft, to be built by Thales Alenia Space, a Franco-Italian joint venture majority owned by Thales, will have an advantage because it will be designed to optimally serve flight routes. It is part of a growing trend with satellites becoming ever more tailored for particular applications, he said. The satellite, which can provide bandwidth through almost 200 separate beams, will be designed to deliver more capacity where air traffic is particularly dense to avoid service disruptions.