Could Gogo’s sale to Intelsat actually make your inflight Wi-Fi better?
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The novelty of accessing the internet from a metal tube soaring through the sky at 500 miles per hour has long been lost on frequent flyers. Now, the question isn’t whether or not your flight will offer Wi-Fi, but how much it’ll cost and whether or not it’ll actually work.
Recently, a number of top internet providers have worked aggressively to update their offerings — at least partially in response to relative newcomer ViaSat, which continues to roll out new satellites and offers pricing competitive enough for some carriers to offer Wi-Fi service for free.
Gogo has been one of the companies feeling the ViaSat burn. The internet provider launched its commercial inflight product with Delta in 2008, onboard a handful of the airline’s since-retired MD-88s, along with a Boeing 757. On many planes, the technology at play is largely the same today.
At the time, Gogo’s press release advertised compatibility with “personal digital assistants” — while the company’s low-cost air-to-ground (ATG) system might be sufficient for checking email on a Palm PDA, it doesn’t really cut it with a plane full of laptop-wielding road warriors expecting to have a productive day in the air.
That led Gogo to move on from ATG, which utilized special cell towers on the ground, in favor of a much-improved satellite-based alternative, called 2Ku. The system uses a special antenna to connect to Ku-band satellites, offering speedy coverage during 98% of flight routes with a slim top-mounted design that avoids creating extra drag, resulting in fuel savings for the airline.
2Ku is a promising solution, and could have provided Gogo with the lifeline it needed to succeed. And then the pandemic hit.
Investing in new technology to appease business travelers is no longer a priority — there aren’t any business travelers at the moment, and, in the meantime, the satellite industry continues to advance, leaving a major player to look elsewhere in an attempt to survive.
Fortunately, it seems Gogo has found a new home. Satellite company Intelsat has agreed to acquire Gogo’s commercial aviation business for $400 million in cash, in a deal that should close in the first quarter of next year. Intelsat is on shaky ground itself, though, having filed for Chapter 11 bankruptcy protection in May.
Following the deal, Gogo will remain an independent, publicly traded company, shifting its focus to business aviation, and the latest version of its air-to-ground network, Gogo 5G. It’s just GoGo’s commercial inflight Wi-Fi business that will shift to Intelsat.
$400 million may seem like a small price to pay for a satellite internet company — a single satellite can easily cost that much, once you factor in launch expenses, and Gogo would need a whole network of them to provide global coverage. Gogo, however, doesn’t have valuable assets — the company doesn’t own any satellites, opting instead to rent bandwidth from partners.
What Gogo does have, however, is a competitive product, and contracts with major airlines around the world, including Delta and Air Canada. A number of TPG staffers have had great experiences using 2Ku, as I did on a 2016 demo flight — it’s a huge step up from the dated ATG product that earned the company a less-than-stellar reputation.
While Gogo was already on the way to improving its product and reputation, thanks to 2Ku, having a large satellite provider’s backing could add some financial stability, assuming Intelsat emerges from Chapter 11 relatively unscathed.
One of Gogo’s biggest challenges at this point appears to be its backlog — some 1,400 aircraft are slated to get 2Ku connectivity, but don’t yet have it installed.
Once those planes are online, Gogo promises “peak” speeds of 70+ Mbps, which theoretically makes it possible to stream HD content during a flight, and perhaps even participate in Zoom video calls, if an airline permits.
Most exciting, however, is Intelsat’s existing infrastructure — namely, a large network of satellites offering coverage of much of the globe, including a number of Galaxy-branded Ku-band satellites covering North America.
According to Intelsat, “Passengers will benefit from an enhanced in-flight connectivity experience that delivers fast and reliable video streaming, browsing and cloud-based applications from gate to gate. Airlines can expect a fully integrated platform offering high reliability, flexibility and passenger satisfaction.”
With Gogo and its satellite provider now working hand in hand, the service will no longer be vulnerable to limited-time agreements, or conflicting interests with satellite companies looking to enter the commercial aviation space. Intelsat will be invested in Gogo’s success, which should enable the duo to provide a speedy, reliable, affordable product to airlines and their customers for years to come.
Featured photo by Zach Honig/The Points Guy.
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