Global mobile satellite communications provider Inmarsat reported $1.4 billion in total group revenue for 2017, up 5.4% from 2016, largely on the strength of 36.7% growth in Inmarsat’s aviation sector, which includes in-flight connectivity (IFC), business/general aviation (BGA) and safety/operational services (SOS) revenue. The aviation sector reported $195 million in total revenue for the year.

Inmarsat said 194 aircraft are now installed with Global Xpress (GX) terminals, compared to 20 in 2016.

“Our investment in GX, our high bandwidth global mobile satellite network, is starting to show material returns, generating over $140 million of revenue in the year,” Inmarsat CEO Rupert Pearce said. “We are well placed to access the substantial opportunity in IFC in aviation.”

IFC revenues more than doubled year-over-year in 2017 to $62.5 million. New customers contracted for GX installation in 2017 included Air Astana, Avianca, Philippine Airlines and Qatar Airways, bringing to 1,300 the number of expected aircraft under contract for IFC services, compared to 950 in 2016. Lufthansa-associated aircraft made up the new GX installations recorded in 2017.

Inmarsat’s board said it expects aviation will be the company’s largest growth driver in coming years, in both its core aviation business (BGA and SOS) and through IFC provision to the commercial aviation segment.

“Connectivity is expected to transform commercial aviation markets in the medium term, with related ancillary revenues from activities—targeted advertising, e-commerce and the delivery of premium content and entertainment—becoming increasingly important to airline profitability,” Inmarsat said, referring to a study the company conducted in 2017 with the London School of Economics.

“Airlines will become gatekeepers to a $130 billion incremental revenue opportunity for all related parties by 2035, empowered by IFC services, with the airlines themselves capturing about 25% of this value.”

Satellite communications and air-to-ground networks will drive increased digitalization across the industry, as passenger demand for improved connectivity and new technologies inevitably rises.

“Consequently, the retail value for satellite operators and services providers delivering IFC connectivity services to the industry is predicted to grow from around $1 billion in 2017 to 5.4 billion by 2026,” Inmarsat said.

The company said the number of connected aircraft in operation will grow from about 6,000 at present to over 20,000 by 2025, with over 70% of the newly connected aircraft located in Europe, Asia-Pacific, the Middle East and Latin America. Hence, the company is looking to these regions as key targets for future revenue.

Inmarsat said it has an estimated segment share in IFC of over 30% (excluding North America). “Although we [are now in] the market capture and infrastructure investment phase regarding the global IFC opportunity, we remain confident over the medium term our IFC business will become highly profitable and cash generative on a long term, sustained basis.”

Mark Nensel