Routes to Market Report Broadband to Aircraft

Transcription

1 Routes to Market Report 03 - Broadband to Aircraft

2 Contents 1. Introduction and Scope Overview: Areas of opportunity: Case studies for the areas of opportunity Market Overview and Opportunities Overview: In-Flight Wi-Fi: Aircraft Health Management Automatic Dependent Surveillance Broadcast (ADS-B): Customer and Value Proposition to the Customer and End-user In-flight Wi-Fi: Aircraft Health Management: Automatic Dependent Surveillance Broadcast (ADS-B): Market Competitiveness Overview: In-flight Wi-Fi: Aircraft Health Management: Role of UK ccompanies In-flight Wi-Fi: Aircraft Health Management: Automatic Dependent Surveillance Broadcast (ADS-B): Revenue projections Swot Analysis In-Flight Wi-Fi Aircraft Health Management: ADS-B: Opportunity Blockers and Enablers Overview: Inflight Wi-Fi: Aircraft Health Management: ADS-B: Market Dynamics... 16

3 9.1. Aviation procurement in general: In-flight Wi-Fi: Aircraft Health Management: Automatic Dependent Surveillance Broadcast (ADS-B): Market Trends In-flight Wi-Fi: Aircraft Health Management: ADS-B:... 17

4 1. Introduction and Scope 1.1. Overview: This paper presents a market opportunity assessment on the use of broadband within aircraft, focusing specifically on applications which make use of digital connections. Today, the focus on broadband within an aviation environment is on customer services and entertainment where naturally there may be an expected price premium to be paid for convenience. However, as aviation itself moves from a paper-based world to a digital data based world, the demand for (digital) communications via broadband is also expected to increase. Aircraft with advanced communication capabilities (so-called connected aircraft or e-enabled aircraft) are being used for commercial flights. Near real-time data communications will enable a whole host of performance and service improvements Areas of opportunity: This report sees three areas of opportunity: Safety-critical services: Air Traffic Control (ATC) including Voice over IP (VoIP), 4D trajectory management, Space-based NAV / SUR (e.g. Automatic Dependent Surveillance Broadcast (ADS-B)), System Wide Information Management (SWIM), live streaming Search and Rescue, etc. Services that deliver operational improvements: basically Airline Operational Communications (AOC), including aircraft health monitoring, electronic flight bag, real-time MET(eorology) / Notice to Airmen (NOTAM) / Aeronautical Information Publication (AIP), etc. Passenger services: where the main need is much increased bandwidth, given a tolerance for a lower quality of service, than more safety and operational critical services. However, improved passenger services are a major driver for connectivity. Some use of low-bandwidth SATCOM is already utilised in oceanic airspace or areas of limited terrestrial infrastructure. The applications listed above are not all fully developed yet and the amount of data that will be required for transmission to support these applications (e.g. SWIM) is not fully developed as the specifications of the service and the way in which it will be utilised operationally are not yet known. Whilst exact future applications are impossible to predict with any certainty, the collective potential for improved broadband to aircraft is clear Case studies for the areas of opportunity Figure 1 presents an illustration of the relative expectations of market demand for a selection of the above listed applications which will be dependent upon airborne broadband in the future. The level of demand placed on these will be estimated noting that this represents a limited subset of what would eventually be expected.

5 Figure 1: Broadband to aircraft opportunities coloured green are explained in this study This market opportunity analysis has chosen the following case studies to explore the areas of opportunity in more detail: Safety-critical services - ADS-B Services that deliver operational improvements - Aircraft Health Monitoring Passenger services - In-flight Wi-Fi These opportunities were chosen because they are expected to have high market value and either currently operate requiring a high bandwidth or would operate more effectively with a higher bandwidth. Note: This report focuses on the UK and Europe but has not actively excluded any region around the world. Also, no opportunities have been deliberately omitted. 2. Market Overview and Opportunities 2.1. Overview: Airline Operational Control (AOC) has traditionally supported simple applications that automate some elements of the airline operation. As airlines have become used to the availability of datalink, there has been an explosion of AOC applications, particularly in recent years, as airlines seek to optimise flight operations and fleet management. AOC applications are traditionally based on pre-defined message sets which are limited in terms of content (e.g. no graphics). New AOC applications require IP connectivity and much higher bandwidth to support a much richer message set. There is an overarching opportunity here in that take up would be higher if the total operating costs associated with communications were lower and a higher capacity.

6 Today, on average, 400kB of data related to AOC operations is transmitted per flight through a mix of SATCOM and other terrestrial data links. An additional 33kB is transmitted per flight for a single weather update as well as incremental weather reports transmitted back to the ground. Given just the flights flown in Europe out to 2020, this is an average of 4.7TB of data per year. In addition, Air Traffic Control (ATC) applications have not used satellite based communications except where needed given the frequency of high bandwidth voice communications that would be required. As airspace users and Air Navigation Service Providers (ANSPs) seek new ways to reduce ATM service costs, there is increasing demand for new datalink applications and provision of dynamically updating aeronautical data. These new ideas are beginning to generate bandwidth but are not fully understood in terms of the value proposition. Depending on their business models, each player in the aviation chain will have a different perspective in regards to the economic and capacity impacts of any decisions made by them In-Flight Wi-Fi: Currently, it needs to noted that demand is ahead of supply. A 2016 SITA IT report stated that 89% of airlines see inadequacy of Wi-Fi and Internet access in-flight as an issue with 55% believing it to be a major challenge. In-flight Wi-Fi is an increasingly common offering on budget and flagship airlines alike. Demand for Wi-Fi on board for both crew and passenger usage is rising, and leading to a decline in traditional Inflight Flight Entertainment (IFE) as airlines seek to provide connectivity and entertainment through the passenger s own device. It can be assumed that by the early 2020s all airlines will provide multimedia streaming to the passenger s own device and wireless internet access. In the short-term, inflight Wi-Fi offers potential extra revenue to a tight margin industry, particularly on short haul flights. There are many different providers with a range of data speeds. It is possible to provide in-flight Wi- Fi connections using Air to Ground cellular towers and Satellite technologies. The table below summaries the most established connectivity providers in reverse order by peak data speed. 1 Name Supplier Description Peak Data (Mbps) Latency Coverage Swift Broad band Inmarsat Satellite High Global ATG Gogo Cellular Towers 3.1 Low US ATG-4 Gogo Cellular Towers 9.8 Low US Ku Intelsat and SES Satellite 30 High Global Ka Inmarsat Satellite 50 High Global 2Ku Gogo* Satellite 70 High Global *through Intelsat and SES Ku satellites Peak data speeds for satellite technologies currently operate at 30MBps through the likes of Ku-Band and Ka-Band. Gogo, through their project with Intelsat and SES, hope to launch High Transfer Satellites (HTS) to provide a 70MBps service through 2Ku-Band satellites. Air-to ground towers (cellular towers), 1 Source: The Anatomy of inflight connectivity (2016)

7 which are only available over land, have significantly lower peak data speeds but also lower latency. (Note, in November 2015 the average UK broadband speed was 28.9MBps.) Aircraft need to be retrofitted with an antenna which can be done in eight hours at a cost of around $100,000 for an ATG antenna and $500,000 for a satellite option (this excludes the opportunity cost of the plane being grounded 2. The antenna for satellite based communication is a dome shape no larger than a 2m x 1m x 30cm tapered box 3 located on top of an aircraft. In 2016 the complete system weighs below 60kg. The antenna does increase fuel burn due to the increased weight and drag because of the antenna and server Aircraft Health Management Aircraft Health Management is a real-time tool that allows the sharing of real time data about the inflight performance of aircraft. Monitoring the performance parameters of jet engines (pressure intake, flow, blade stresses etc.) is nothing new however, in the last years, Airbus 4 (2012), Boeing 5 (2014), and others have started to implement aircraft management systems that send real-time data to signal ground operation crews of any potential maintenance issues. The data is sent before the aircraft lands, minimizing flight schedule disruptions and maintenance-related delays Automatic Dependent Surveillance Broadcast (ADS-B): ADS-B is a technical implementation in which aircraft broadcast their Global Navigation Satellite System (GNSS) based position to all other listening aircraft and ATC within the transmission volume. This is limited by line of sight and becomes impractical when far from land or limited infrastructure terrain. However, it is automated and provides a guaranteed method to identify aircraft position without having to request it compared to traditional means such as radar. ADS-B broadcast information (position, vector, intent) provides an alternative dataset from which to manage traffic and in the long term, is expected to replace radar as the ATC Officer s (ATCO s) primary tool for separating aircraft. ADS-B is made up of two parts: ADS-B Out: This is a surveillance technology for tracking aircraft. It reports the aircrafts position, altitude and velocity every second. ADS-B In: Allows aircraft to receive transmissions from ADS-B ground stations and other aircraft. Pilots can receive subscription-free weather and traffic data. The use of passive listening satellites rebroadcasting ADS-B messages to controllers on the ground would provide a means for tracking aircraft and allowing controllers to more precisely control aircraft in the future. The implementation could be either through passive listening or through a direct transmission of ADS-B messages on the broadband link. Whilst not directly requiring a broadband link when only transferring single aircraft details, the use of a broadband link also supports the download 2 Source: Hip Pocket Wi-Fi 3 Source: Gogo Inflight 4 Airbus 5 Source:

8 to aircraft of a complete traffic picture. This is because there are currently many different channels used for communication to and from aircraft each system tends to have its own link. By using broadband to aircraft these links including ADS-B - can be consolidated to a single link (plus contingency as necessary). In addition to satisfying surveillance needs for positive aircraft control, such implementations would enable better coordination of Search and Rescue efforts in the event of loss of aircraft over the ocean or in terrain limited areas. 3. Customer and Value Proposition to the Customer and End-user 3.1. In-flight Wi-Fi: Currently the largest buyer of in-flight Wi-Fi is business jet owners. The service is still expensive to install and use so only those that value it enough are willing to pay that much for it. However, as the technology matures, the price and data speed will make it more feasible for airlines to retrofit it on to their planes. A recent survey by SITA 6 showed that 37% of airlines are already operating aircraft with Wi-Fi and a further 29% are taking delivery of aircraft with in-flight Wi-Fi by the end of For airline usage, the final end-usage will of course be the passengers to allow them to browse the internet, access s and have videoconferences. Airlines understand that in-flight Wi-Fi is starting to play a key role in which flight passengers choose to take. Some airlines provide the service for free and others charge up to 14 for a 1-hour pass 7. Passengers will be able to browse the internet and make video conference calls using their own devices at download and upload speeds comparable to that in UK households at a fraction of a cost today. In the short term, we will see airlines use Wi-Fi as a way of providing a more satisfying customer experience, or in other words as a way of differentiating service between competitors. Other airlines use in-flight Wi-Fi as a revenue generator. In the longer term, it is expected that it will be possible to connect to Wi-Fi on almost all passenger aircraft. This will mean that Wi-Fi will become less of a differentiator between airlines and passengers will see it as a significant negative towards an airline if they cannot connect in-flight, compared to today where a strong connection is considered a luxury Aircraft Health Management: The ultimate consumers of aircraft health management systems are engine and aircraft manufacturers. 6 Source: AIR TRANSPORTS INDUSTRY INSIGHTS: The airline IT Trends Survey (2016) 7 Source:

9 The end user will be airlines. The technology offers significant operational improvements through reduced maintenance delays and reduced flight schedule disruptions. There are two areas that airlines will be able to use aircraft health management for: Real time fault management with the aircraft still en-route, in-flight faults can be communicated to the ground and diagnosed. This allows ground staff to make operational decisions regarding maintenance and deploy the necessary parts, people and equipment to mitigate the issue. Receiving this critical information as early as possible will significantly reduce the delays due to maintenance and repairs. Performance monitoring To support an aircraft s fuel efficiency it is possible to analyse the aircraft s cruise performance data. This includes information regarding fuel efficiency, emission levels and other performance factors. More generally for other AOC applications, such as; electronic flight bag, real-time MET / NOTAM / AIP will enable improvements for airlines in several other areas also through the provision of real-time information. For example, to improve flight safety or to enable airlines to provide a more efficient service to customers and make cost savings, including: Improved delay management and scheduling Better fleet management Increased efficiency and predictability Better service for passengers 3.3. Automatic Dependent Surveillance Broadcast (ADS-B): The main customer purchasing the ADS-B receiver will be airlines or the aircraft owner. The aircraft owner will receive many benefits from having an ADS-B installed, including: Traffic When using an ADS-B In system, a pilot can view traffic information about surrounding aircraft if those aircraft are equipped with ADS-B out. Weather Aircraft equipped with universal access transceiver (UAT) ADS-B In technology will be able to receive weather reports, and weather radar through flight information servicebroadcast (FIS-B). [Currently USA-only] Safety similar to the traffic benefit, pilots will have significant situational awareness reducing the chance of a safety incident. ADS-B will also provide pilots with more flexibility in emergency situations. Additionally, even though Air Navigation Service Providers may not be paying to install the ADS-B device, they will be able to: Offer an improved service ANSPs can provide an improved service (increased safety and reduced separation) through increased positional accuracy. Reduce expenditure - They will also be able to reduce infrastructure expenditure on expensive radar equipment in the future. Offer a remote service - It may become possible to provide air navigation services from anywhere around the world.

10 4. Market Competitiveness 4.1. Overview: Currently ATC and AOC applications are provided over Aircraft Communication Addressing and Reporting System (ACARS) Very High Frequency (VHF) and in Europe VHF Data Link Mode 2 (VDL2). The increase in AOC traffic is leading to a global roll-out of VDL2 in advance of any additional mandate for ATC applications. Issues with VDL2 performance for ATC in Europe are leading to possible opportunities for SATCOM. In particular, airlines may decide to offload AOC data to SATCOM. In the longer term, SESAR are developing a next generation terrestrial datalink, provisionally referred to as L-band Digital Aeronautical Communication System (LDACS), that would support advanced ATC applications. LDACS is unlikely to be available before 2022 and could be used alongside SB Safety in the SESAR Multilink concept to support Full 4D applications. This however, still leaves provision of broadband services in remote areas to be provided via SATCOM In-flight Wi-Fi: There are currently no alternatives. Use of terrestrial solutions are not currently possible at altitude due to interference issues and limitations on the antenna reception angles on the ground Aircraft Health Management: As mentioned previously, aircraft can currently record sensing data to monitor the health of jet engines and other aircraft systems. The data is either transferred to ground technicians and other operational decision making parties by: ACARS, which is a digital datalink system for transmission of short messages between aircraft and ground stations via air band radio or satellite. Waiting until the aircraft lands and an update will be sent to the technicians at the airport. For Aircraft Health Management to work effectively a higher data upload rate will be required than ACARS can provide. Also the data needs to be sent in real-time to see the full benefits which makes using transmission once landed not an option. Automatic Dependent Surveillance Broadcast (ADS-B): There are currently no alternatives without requiring the installation of a ground based network of ADS-B receivers. Reception in oceanic or remote areas is impossible without the involvement of space assets. 5. Role of UK ccompanies 5.1. In-flight Wi-Fi: Inmarsat for the provision of satellite broadband services (e.g. Swift Broadband and Global Xpress services). Inmarsat, through Global Xpress Aviation (GX), has four Ka-band High Throughput Satellites (HTS) in orbit positioned to provide worldwide coverage. Each satellite carries 89 spot beams with up to 50 Mbps per beam. 8 8 Source:

11 Recently Honeywell and Boeing have teamed up on GX to help provide the fourth satellite. Inmarsat, long a provider of satellite communications to the maritime industry, has spent five years building its Global Express network for aviation Aircraft Health Management: For engine manufacturing, Rolls-Royce already do remote monitoring of aircraft engines to be able to diagnose faults whilst the aircraft may already be in flight. Increased bandwidth may provide additional opportunities for more data to support earlier diagnosis and avoidance of costly unscheduled stops Automatic Dependent Surveillance Broadcast (ADS-B): As a primarily surveillance application, this would allow companies such as NATS UK to tender for the provision of air traffic services in different parts of the world, or to support specific operations of British aircraft operating overseas. New air traffic control applications such as the Unmanned Traffic Management (UTM) system and U-Space within Europe will compound the need for a service able to detect via datalink (broadband) aircraft that could not be detected through traditional radar. 6. Revenue projections Current levels Scale of Scale of Scale growth*/decline growth/decline growth/decline In-flight Wi-Fi $2,796M $3,216M (15.0%) $4,891M (15.0%) $13,228M (6.0%) Aircraft Health $3,438M $3,661M (6.5%) $4,423M (6.5%) $6,699M (2.0%) Management ADS-B $428M $516M (20.61%) $905M (20.61%) $3,631M (4.61%) *Compound Annual Growth Rates (CAGR) figures are shown in brackets. Calculation of these figures: Below explains where the how these figures were calculated and the source of the data. In-flight Wi-Fi: The revenue for in-flight Wi-Fi has been calculated by taking a revenue estimate from Persistence Market Research 10. They predicted that; The global in-flight Wi-Fi market was valued at US$ 2,114.3 million in 2014 and is expected to witness a healthy Compound Annual Growth Rate (CAGR) of 14.9% from 2015 to It was assumed that after 2021 the CAGR would fall by 1% each year from 15%. The graph below shows that by 2020 the in-flight Wi-Fi market is expected to have a total revenue of $4,891M and by 2030 $13,228M. of 9 Source: 10 Source:

12 Expected market Value ($M) 3,438 3,661 4,423 CAGR 6,699 Expected market Value ($M) Calculated market value 2,796 3,216 4,891 CAGR 13,228 In-Flight Wi-Fi Expected growth 14,000 22% 12,000 10,000 8,000 17% 12% 6,000 4,000 2,000 7% 2% - -3% Expected Market Value ($M) Compound Annual Growth Rate (CAGR) Aircraft Health Management: The revenue for Aircraft Health Management has been calculated by taking a revenue estimate from MARKETS AND MARKETS 11. They predicted that; The global Aircraft Health Monitoring Systems Market is projected to reach USD 4.71 Billion by 2021, at a CAGR of 6.53% from 2016 to *Note this includes avionics It was assumed that after 2021 the CAGR would fall by 0.5% each year from 6.5% in The graph below shows that by 2020 the aircraft health management market is expected to have a total revenue of $4,423M and by 2030 $6,699M. Aircraft Health Monitoring Systems Expected growth % % 12% % 2% 0-3% Expected Market Value ($M) Compound Annual Growth Rate (CAGR) 11 Source:

13 Expected Market Value ($M) CAGR Automatic Dependent Surveillance Broadcast (ADS-B): The revenue for Automatic Dependent Surveillance Broadcast has been calculated by taking a revenue estimate from MARKETS AND MARKETS 12. They predicted that; The Automatic Dependent Surveillance-Broadcast (ADS-B) market is projected to grow from USD Million in 2016 to USD 1,316.9 Million by 2022, at a CAGR of 20.61% during the forecast period. It was assumed that after 2021 the CAGR would fall by 2% each year from 20.61% in The graph below shows that by 2020 the ADS-B market is expected to have a total revenue of $905M and by 2030 $3,631M Automatic Dependt Surveillance - Broadcast (ADS-B) 25% % 15% % % 0 0% Expcted Market Value ($M) Further discussion on the ADS-B market: Compund Annual Growth Rate (CAGR) Costs associated with ADS-B and the market size are dependent upon who the eventual customer is. There are opportunity costs for the ANSPs to reduce the overall ground surveillance infrastructure by substituting for radar surveillance with ADS-B via satellite. Initial estimates based on a single average flight in Europe would show approximately 12.6kB of data transmitted via ADS-B. If this is transmitted to the ground via satellite monitoring all flights in the globe, then approximately 500 GB of data would be transmitted annually purely for ADS-B purposes. Not all of this will however be transmitted via satellite except for data monitored passively such as the services provided by Aireon. The move to ADS-B over satellite would provide a different route for transmitting longer messages that are not subject to frequency congestion as in busy continental airspace. Several parameters are available via ADS-B which could also be useful EO purposes such as being able to derive wind speeds and directions as different altitudes based on aircraft heading and ground track. These messages are however not routinely used due to the restrictions in the transmission slots. The use of a broadband service that could interrogate more of the ADS-B message set would lead to better knowledge of the aircraft s position and intentions and facilitate further innovation around other uses of such data. This is open to others beyond just the ANSP market as anyone with access to the data could develop new applications or algorithms to deliver operational benefits.

14 7. Swot Analysis 7.1. In-Flight Wi-Fi Strengths Weaknesses Opportunities Threats Inmarsat has a strong position in global market. It has its own high transmission satellite service and has one of the highest peak data speeds. It also provides global coverage. Potentially of most interest to consumers on longer flights. Average flights within Europe are 1.5 hrs in duration. So could be weak demand on internal and overland flights. Increasing demand for data driven services. Competition between airlines and willingness to attract premium paying passengers. New emerging ground based communication links are potentially providing individual spot beams per airframe that will result in data transfer rates typical of 4G environments. This is delivered per aircraft rather than over a shared connection between multiple aircraft as in the case of a satellite and is more akin to the terrestrial mobile phone communications link where each mobile phone has its own link. Examples of these developments are illustrated by the solutions being developed by SmartSky Networks ( Aircraft Health Management: Strengths Weaknesses Opportunities Threats Provides universal and global coverage for services which do not require low latency and have relatively low bandwidth requirements. Data may not be deemed critical enough to warrant investment from either the airlines or the engine manufacturers. Proprietary nature of data and sensitivity would be an obstacle for new data analysts market entry. Increased awareness of costs associated with The anticipated demand from AOCs and Engine manufacturers does not materialise and most data remains collected and stored on the aircraft till landing. Data upload then utilises ground based networks and does not rely on SATCOM. 12 Source: html

15 7.3. ADS-B: Strengths Weaknesses Opportunities Threats Provides universal and global coverage without the need for complex and expensive ground infrastructure networks. Enables ATC direct control in areas which would previously only been able to exercise procedural control. Comparatively 10 times as expensive under today s operations as an existing surveillance system due to the cost per message set that has to be transmitted via the satellite. Global pressure for flight tracking following the loss of MH370. Regulatory developments. Increased requirements to place ADS-B on RPAS and drones leading to spectrum overload in specific airspace. Divergence on frequencies used for ADS-B transmissions to negate frequency congestion. 8. Opportunity Blockers and Enablers 8.1. Overview: Cost, or even perceived cost, could be a deciding factor in driving airline adoption of AOC applications. SATCOM has historically been seen as an expensive form of datalink communication and airlines therefore frequently use a store-and-forward process to send non-time critical AOC and Airline Administrative Communications (AAC) messages (e.g. engine performance reports) when a cheaper datalink is available, rather than transmit messages over ACARS. The cost point will need to be competitive with terrestrial data services such as VHF, airport Wi-Fi (WiMAX/AeroMACS) and other gate communications, to encourage SATCOM Inflight Wi-Fi: What has been holding in-flight Wi-Fi back? Regulation - The differing regulations across Europe governing Air to Ground (ATG) networks has hindered the creation of any substantial ATG networks, while satellite-based systems have until now been too expensive for short-haul routes. Technology - Until recently the satellite technology was not ready to support in-flight Wi-Fi. However, satellite technology can now provide global coverage, including over oceans, which ATG is unable to do. It may also be possible to overlay additional satellite beams to provide a higher capacity for areas with greater traffic. What can be done to help realise the growth? Inmarsat is the only serious UK supplier of in-flight Wi-Fi. It is worth focusing efforts on ensuring that they succeed. The market is already very competitive, with many suppliers and there is expected to be only room for between three or four suppliers according to David Bruner, vice president of global communications services at Panasonic Avionics Source:

16 8.3. Aircraft Health Management: What has been holding Aircraft Health Management back? Technology - Cost and data throughput volume are the main inhibitors to a constant stream of all the data from the aircraft while in flight. On average 500GB of data will be generated per flight. 14 It is possible to ping the flight and ask the aircraft to send back specific data using ACARS but this would prove very expensive and will not provide the required capacity. Data security there are concerns that broadcasting flight data will increase the opportunity for hacking threats to disrupt aircraft software and controls. However, this is unlikely to pose a significant obstacle in the development of this opportunity as there are rigorous regulations in place to ensure aircraft security is not hacked. What can be done to help realise the growth? Establishing the necessary levels of connectivity. Enabling everyone involved in a flight airline, airport, Engineering team, crew, pilots to have access the data they need ADS-B: What has been holding ADS-B uptake back? Buy-in - Not all aircraft are ADS-B capable. For the aviation industry to make full use of ADS-B technology it requires all aircraft will be required to be ADS-B capable. Cost - General Aviation aircraft are more reluctant to install ADS-B Out than commercial aircraft because they struggle to see the benefits given its relative expense. 15 Regulation - The continued uptake of ADS-B will be dependent on whether it becomes mandatory or not. Note: In the US, the FAA have made it mandatory by What can be done to help realise the growth? Regulation - By pushing national regulators to make ADS-B mandatory the up-take of the technology will significantly increase. Uptake in new aircraft- Any new aircraft will be fitted with ADS-B which means that by 2020 all planes including small aircraft should be fitted with ADS-B. 14 Source: SITA OEM Data 15 Source: Avionics: Pay to Play: The Cost of ADS-B and Where to Find Financial Assistance (2017)

17 9. Market Dynamics Who are the key stakeholders and players in the main market sectors of interest to UK Space Community and what is their relationship to each other in the supply chain? 9.1. Aviation procurement in general: Market entry to manned and commercial aviation tends to be difficult for new entrants without the support of existing players. This does however, depends somewhat on the target customer as low end aviation can use advanced equipment without the certification and regulation hurdles that dominated in larger aircraft. From a broadband perspective, the market would then be dominated by equipment manufacturers in the main selected by the aircraft manufacturer as part of their certification and airworthiness programmes. Service delivery on behalf of an airline utilising a broadband link is open to competition, either through niche product entry or partnership with one of the dominant service companies such as ARINC, Jeppesen, Lido or Navtech. In particular, equipment that does not interact with aircraft systems needed to comply with airworthiness requirements may be selected by the airline In-flight Wi-Fi: As the market starts to move away from ATG provision to satellite based communications the market is moving from regional monopolies towards a highly competitive global market. This is visible through the numerous companies that are promising high capacity and speed globally. The main players are Inmarsat Plc, ViaSat Inc, Gogo Inc, Panasonic and Global Eagle Entertainment Inc. ViaSat, Panasonic and Inmarsat each have their own high-throughput satellite (HTS) service. 16 Gogo, who have a monopoly in the US, currently uses ATG but is developing its own satellite-based service, with the help of SES and Intelsat known as 2Ku Aircraft Health Management: The main players within aircraft health monitoring systems market are Airbus Group, Boeing Company, United Technologies Corporation, Honeywell and General Electric Company. The other prominent vendors are Rolls-Royce Holdings, RSL Electronics, Accellent Technologies and Ultra Electrics Holdings Automatic Dependent Surveillance Broadcast (ADS-B): ADS-B from a satellite perspective is being dominated by Aireon, Inmarsat and Thales. 16 Source: Aircraft Interiors International

18 10. Market Trends Is this a growing market, what are the main drivers, is the market sustainable or is there a limited window of opportunity? In-flight Wi-Fi: Where will we expect to see the highest levels of growth around the world? The US currently represents the largest market, conquering 80% of the market as of 2016 (by number of aircraft with in-flight Wi-Fi). Asia-Pacific region is expected to have the fastest growing market with an approximate CAGR of 33%. This is due to increased air traffic and currently low penetration of in-flight connectivity. Europe is expected to also see significant growth with an approximate CAGR of 28%. 17 What are the main drivers for increased in-flight Wi-Fi? Airlines can use in-flight Wi-Fi as a differentiating service and can also use in-flight Wi-Fi to increase revenues from selling it on flights. The rise in smartphone use and social networking on the move is set to increase market expansion. In-flight Wi-Fi will be increasingly used for people using their personal devices for on-demand entertainment. Will Air-to-Ground (ATG) or Satellite technology be dominant in the future? The air-to-ground technology was the dominant segment in However, due to the low speeds capable and inability to provide a service in remote locations (e.g. oceans) is set to see a decline in market share. Satellite technology is anticipated to emerge as the dominant segment by 2021, due to growing adoption of satellite technologies such as Ku-band and Ka-band by airlines across the globe Aircraft Health Management: The aircraft health monitoring system market in the Europe region is expected to grow at the highest CAGR between 2016 and Factors such as passenger traffic growth and increasing aircraft deliveries are fuelling the aircraft health monitoring systems market growth in this region ADS-B: Where will we expect to see the highest levels of growth around the world? The US has the most aircraft equipped and accounts for around one-third of the global fleet. (Europe accounts for 20%.) 17 Source: Smart Plane Summit 18 Source: Persistence Market Research

19 Western Europe is expected to be one of the fastest growing regions in the global ADS-B market because of its increasing number of aviation production and assembly sites in the region. 19 Aircraft manufactures have started to shift their focus towards the Asia Pacific region. This is expected to be a key area of growth in the coming years. What are the drivers for increased uptake of ADS-B? As previously mentioned, regulations will play a key role in driving the uptake in ADS-B. Increased situational awareness pilots will receive signal from local aircraft and will have a better understanding of their surrounding area. Improved surveillance in remote areas. Disastrous events such as MH370 going missing would not have happened if the aircraft had been fitted with ADS-B. 19 Source: Future market insights