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Viasat, Inc. VSAT recently announced that Korean Air has opted to deploy Viasat’s In-Flight connectivity (IFC) solutions for its upcoming fleet of 40 Boeing 787s. Leveraging VSAT's robust satellite network, South Korea’s flag carrier aims to match the growing demand for high-speed, uninterrupted Wi-Fi on board.
In today's digital world, individuals increasingly rely on staying connected to the Internet for both personal and professional reasons. Access to in-flight connectivity enables passengers to stay connected with their work, allowing them to respond to emails, attend virtual meetings, or work on projects while in transit. With Internet access, passengers can stream movies, TV shows and music all from the comfort of their seats. These options are particularly appealing for long-duration flights.
Viasat’s 2023 Passenger Experience Survey also indicates that the likelihood of rebooking a flight increases significantly if the airline has reliable in-flight Wi-Fi. Airlines that invest in this technology gain a competitive advantage by enhancing the convenience, enjoyment and productivity of their passengers' journeys.
Recognizing this emerging trend, Korean Air inked a deal with VSAT to install connectivity in its fleet of 30 Airbus A321Neos in 2023. Following the recent venture, the total number of Korean Air airplanes to be equipped with VSAT IFC kit increases to 70, with all the aircraft set to enter service in 2027.
The South Korean national carrier is one of the world’s top 20 airlines. A successful collaboration will serve as a testament to Viasat's technological prowess. It is expected to have a positive impact on net sales in the Viasat satellite services segment. Moreover, the strategic partnership also will strengthen VSAT’s foothold in the Asian Aviation market and enhance commercial opportunities in the region.
Viasat’s Satellite Services business is progressing well with key metrics, including ARPU (average revenue per user) and revenues, showing impressive growth. ARPU is growing on the back of a solid retail distribution network, which accounts for a rising proportion of high-value and high bandwidth subscriber base.
Furthermore, the growing adoption of in-flight Wi-Fi services in commercial aircraft is proving conducive to business growth. Viasat’s impressive bandwidth productivity sets it apart from conventional and lower-yield satellite providers that run on incumbent business models. Viasat has a competitive advantage in bandwidth economics, global coverage, flexibility and bandwidth allocation, which makes it believe that mobile broadband will act as a profit churner with a significant improvement in IFC revenues.
The stock has lost 46.9% over the past year against the industry's rise of 18.2%.