Correction: Airbus exits inflight connectivity business with sale of OnAir stake to SITA

February 11, 2013

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OnAir photo 150x150 Correction: Airbus exits inflight connectivity business with sale of OnAir stake to SITA

(Corrects statement that Airbus gradually reduced its shareholding of OnAir over time. A SITA spokesman says the airframer maintained the same shareholding of 33% for the duration of the agreement before selling it on 1 February.)

European airframer Airbus has officially exited the inflight connectivity service business, after selling its stake in OnAir to SITA, the APEX editor’s blog can confirm.

Airbus and SITA operated OnAir as a joint venture for eight years, and Airbus sold its 33% stake to SITA on 1 February. SITA will now operate OnAir as a wholly owned subsidiary. OnAir CEO Ian Dawkins will continue in his role, and no other changes to management are currently planned.

The deal comes at a time when OnAir has faced some disappointments in the market. Qantas recently stopped offering OnAir’s inflight Wi-Fi service to passengers, and last week Emirates confirmed it has tapped Panasonic Avionics to provide Ku-band satellite-supported inflight Internet – and live TV – on its widebodies, even though Emirates’ A380s currently offer the OnAir Wi-Fi product.

Yet the move might also be fortuitous for OnAir. SITA is a true service company, and is focused on improving the passenger experience. And SITA is “100% behind what we’re doing and how we’re progressing going forward”, says Dawkins in reference to OnAir’s decision to offer Inmarsat SwiftBroadband-supported Wi-Fi and mobile solutions to airlines today, and graduate to Inmarsat Global Xpress (Ka-band) service when it becomes available (around early 2015).

Dawkins says the main driver behind the deal is that SITA was “really looking at their portfolio and how the passenger is connected from the time he or she leaves home right through to the airport and on board aircraft. And, at the same time, Airbus was looking at its JVs and deciding what to do; it decided that it had helped OnAir become established in the industry and now it was time to move on.”

He adds: “[This arrangement] also makes us a more neutral company, which make us stronger. That’s the rationale for Airbus – offering our services on different platforms, and that’s really how it came together.”

Some industry players believe OnAir has long enjoyed an unfair advantage in the market due to its close ties with Airbus; OnAir’s inflight connectivity systems are line-fit offerable across the airframer’s portfolio. Its rival Panasonic, for instance, has not yet seen its Ku-band-supported Global Communications Suite (GCS) fitted at the factory to Airbus aircraft, though the airframer has agreed to make GCS line-fit offerable on the Airbus A380 and the A350. Emirates told the APEX editor’s blog last week that it expects to take delivery of A380s with GCS from the second quarter of 2014.

Interestingly, OnAir will remain ISP for Emirates. Dawkins says the Emirates contract underscores how OnAir is focused on being technology agnostic. “What Emirates wants to do is provide a consistent service to all of its customers. It wants a standard interface. This is what we have constructed with Emirates so the passenger won’t even know who’s behind it.”

Dawkins stresses that, despite Airbus’ decision to exit inflight connectivity service provision, OnAir will continue to hold a strong “strategy relationship” with the airframer going forward. “Airbus is still an equipment supplier and OnAir is the service provider for that equipment. Airbus has been strategically important to use, and will be going forward. So, just because the shareholding has changed doesn’t mean anything [else] has changed. It’s business as usual.”

Airbus’ decision comes nine years after its rival, Boeing, also exited the inflight connectivity service world. Boeing’s Ku-band service, Connexion by Boeing, was shuttered at the end of 2006 due to a failed business case and heavy losses.

(Check out SITA’s new infographic about what the passenger experience will be like in 2015.)

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About Mary Kirby

Editor in Chief - APEX Media Platform | Previously Senior Editor at Flight International where she led the magazine's coverage of in-flight entertainment and connectivity (IFEC) and aircraft interiors | Former proprietor of the highly-regarded Runway Girl blog, which focused on the passenger experience | Regularly speaks at industry conferences about airborne communications, ancillary revenue opportunities for airlines and social media | You can connect with Mary on Twitter, LinkedIn

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4 Responses to “Correction: Airbus exits inflight connectivity business with sale of OnAir stake to SITA”

  1. Lawley Says:

    Looks like one of the IFEC players will buy an OnAir stake from SITA…….

    Reply

  2. Shashank Nigam Says:

    Does this mean Airbus did not see in-flight connectivity as a money-making business for them? Or does it mean that the field was progressing too fast for Airbus’ pace? I’m sure there’s more than what meets the eye..

    Reply

    • Christian Says:

      In the early days the challenges of inflight connectivity was regulatory approval, supplemental type certification and system integration into the cabin, where Airbus has had obvious advantages. Today’s major challenges, however, are the rapidly growing demand for bandwidth (for Internet access and live TV streaming) and the convergence of inflight entertainment and communication systems, which is outside of Airbus’ core competency. By constrast Panasonic is a major supplier for IFE systems as well as airborne VSAT equipment, has secured loads of capacity on Intelsat’s EpicNG satellite constellation and they own AeroMobile, the other major GSMoB provider. In addition Panasonic has a significant global workforce of own technicians who perform installation and maintenance works, which OnAir lacks.
      There’s certainly money to make in the field of IFC, but obviously Panasonic is much better positioned as it covers the whole value chain, while OnAir simply combines products and services from multiple parties. These strategic disadvantages will be fatal for OnAir over the time, which is probably the reason for Airbus’ exit.

      Reply

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