John Wade, Executive Vice President and General Manager of Gogo Business Aviation, discusses record revenues and new products
While 2015 was not a great year for many companies in the business aviation sector, IFE (in-flight entertainment) and connectivity specialist Gogo Business Aviation has turned in another really solid performance. The company saw record fourth-quarter revenues of US$137.8 million, up 26% year-over-year, while service revenues for the last three months of 2015 grew at 29%.
As John Wade, Executive Vice President and General Manager at Gogo Business Aviation points out, the company reached a new milestone as far as revenues for the whole of 2015 were concerned, reaching half a billion dollars for the first time. Gogo’s President and CEO, Michael Small, said that in addition to becoming a half billion dollar revenue company, Gogo also installed nearly 1,900 broadband and wireless entertainment systems through 2015. Gogo’s activities and product sets cover both business aviation and commercial airlines, and include both IFE and in-flight connectivity (IFC) solutions.
Q: You seem to have done very well through 2015 both on the commercial aviation front and with business aviation. Are you pleased with the results?
A: We are doing really well on both fronts. We have won a number of new airline customers and now have 12 airlines taking onboard IFE and IFC solutions. We are working on products and deals with satellite companies that are going to enable us to deliver hundreds of megabytes of data per second to commercial airline sized aircraft, and we now have over 6,500 business aviation aircraft using our products.
Q: You are now combining satellite and air-to-ground services. How much drag is created by putting an externally mounted satellite receiver on the fuselage?
A: There are three flavours when it comes to satellite receivers, known as high, medium and low-gain receivers. The low-gain receiver is about the size of a hockey puck and
really does not create much drag. The high-gain receivers are substantially bigger and can be six feet long, a foot or so wide and a few inches in height. So they will add some drag to the aircraft. However, when you set this against the advantages of having high-speed connectivity services delivered to the aircraft, there is no comparison. Today, we frequently see even aircraft that are just about to be sold having our connectivity products installed since it has a tremendously positive effect on the resale value – and not having connectivity in the cabin really hurts the residual price.
Q: What kind of speed are you delivering now to the cabin?
A: The download speed varies considerably. The benchmark, of course, that is set by most people is whatever speed they can get at home. Today in the USA, 15Mbps is basically table stakes on the ground. You can’t play as a broadband provider if you can’t deliver at least that. However, a lot of services are up to 100Mbps to the home, mostly via cable. We can’t match a home-based 100Mbps service in the air yet, but we can generally deliver 3Mbps and if you only have five or six devices on the aircraft, or less, as is commonly the case in business aviation, then each of those devices is going to be getting plenty of bandwidth; 3Mbps delivered to a modest number of handsets is a significant step up on anything business jet passengers have had in their hands before now.
Q: What are clients – i.e. the passengers – actually looking for from wireless capability in an aircraft?
A: The big thing with this increased bandwidth is whether or not you can do streaming. That is the Holy Grail at the moment and truthfully, it is the major reason today why we need more and more bandwidth to the cabin. Web browsing and email take up much less than 5Mbps.
Yet even if you could get movie streaming, when you factor in the cost of a service plan that would include movie streaming, as with Netflix, for example, the bill would be absolutely prohibitive on today’s data plans for aviation. A high-definition movie is going to be around 5Gb, which could easily work out to several thousand dollars. By way of contrast, with our in-flight entertainment service – Gogo Vision – we charge approximately $10 per film, which is stored in solid-state storage in the aircraft. We get these films on the same day they are released to DVD and we update the movie store in the aircraft wirelessly whenever it is on the ground in one of the FBOs that we have a contract with, or when it is back in a hangar set up to deliver the service. It is a tremendously cheap and easy way to keep the in flight entertainment as up to date as possible, without someone having to come to the aircraft with some kind of portable storage device to update the movie database.
Q: Can you run through your latest offerings with us?
A: Our big news was the launch of Gogo Biz 4G for North America. This is an evolution of our air-to-ground (AtG) product. The previous peak connectivity we offered on our AtG service was 3MB per second. We now offer 10 Mbps. To achieve this, we upgraded our ground network and we combine two data channels to the aircraft. This gives us a much more stable performance. It means we can balance the load between the two channels dynamically, and that provides an improved user experience.
We also have a very nice service, called Gogo Text and Talk, that uses Wi-Fi in the cabin along with an app we provide to use the service. So instead of using the cellular network, you make use of the aircraft’s onboard Wi-Fi. Moreover passengers use their own mobile phones and their own numbers, not some unique aircraft identifier number, so it’s seamless. Anyone calling you does not have to know where you are. They don’t even know that you are in an aircraft. You launch the app and people dial and call you just as they do on the ground.
Q: How do you price this service?
A: The app is free, of course. The hardware in the aircraft starts at around $35,000 and our top-of-the-range server is $120,000. The service pricing ranges from pay-as-you-go to a monthly fee, but we cap that fee at $4,000. The average user will probably pay around $2,500 a month for the service. We think that is a very reasonable cost. Wi-Fi today is as essential to a business aircraft as pilots and propulsion. For anyone who flies a business aircraft for reasons of productivity, having Wi-Fi is absolutely essential.