In-flight WiFi demand shows no sign of abating. Gogo‘s latest statistics show record usage levels on its air-to-ground network, along with a rising number of aircraft installed and hardware shipping to new customers.
Demand for connectivity in business aviation, combined with the excellent performance of our AVANCE platform, are driving record sales of equipment and high-margin service plans for Gogo.
– Oakleigh Thorne, Chairman and CEO of Gogo
Big numbers, and more to come
In Q4 2021 the company reported a 78% increase in bandwidth consumed per day, compared to 2019 numbers. Megabytes per flight increased 38% relative to pre-pandemic numbers. And the service operated on more that 416,000 flights (+29%) across 6,400 installed aircraft.
Read More: PlaneSense goes full fleet with Gogo AVANCE L3 connectivity
Those users are also paying more on average to consume data in the sky. The monthly average revenue per aircraft (ARPU) hit $3,301 in Q4 21, up from $3,113 in 2019. And the shift of aircraft online towards the company’s newer AVANCE platform – now 39% of the install base – should help further drive ARPU growth. AVANCE plans generally deliver higher margins to the company, thanks to value-add subscription services that can be added by customers.
Read More: Gogo 5G hits certification milestone
Beyond the AVANCE platform, launching the Gogo 5G network is expected to improve the revenue numbers significantly. Gogo has not been shy about its plans to increase subscription rates as the increased bandwidth comes online. Revenue from Intelsat, owing to its management of the commercial airline regional jets, will rise dramatically with the transition to the Gogo 5G network. That was detailed in the sale contract.
Other Gogo ATG customers are also expected to pay more on the new platform. That will come about both as a result of the faster speeds available and expectations that customers will consume more bandwidth, and many of the company’s plans charge based on that consumption rate. Or customers will just shift to the unlimited plans that increase ARPU.
Putting up a fight
Not all the news this week is good news for Gogo, however. The company also faces a lawsuit from upstart competitor SmartSky. The suit alleges the Gogo 5G network upgrade, slated to launch in the back half of this year, violates at least four SmartSky patents. Should SmartSky secure a preliminary injunction that launch would likely be delayed. Should SmartSky eventually prevail in the suit – a decision is not expected for years – the financial impact on Gogo could be significant. CEO Oakleigh Thorne’s position on the lawsuit is both clear and optimistic, “We know these four patents very well. I can assure you we do not infringe on these patents. We will fight with vigor.”
Read More: SmartSky hits Gogo with patent lawsuit
When asked directly about the competition posed by SmartSky Thorne was equally dismissive, “We do factor in competition. We do factor in positive trends for GEO competitors. For SmartSky, we have included them in our projections. We don’t project them getting tremendous success, but we assume they launch as some point and win some share of aircraft… We think the odds of success there are very low, to be honest.”
Thorne also notes that the company expected the lawsuit, though “frankly, closer to our actual launch time.” He says Gogo has set aside money for the legal battle (though not necessarily for associated damages, should Gogo lose the suit), and that it is ready to pursue its defense.
Beyond the lawsuit bits, Thorne also once again took the opportunity to point out SmartSky’s late delivery of its network. He also points out that the SmartSky network is not yet delivering full CONUS coverage, saying the company is “still working towards a launch of a 4G solution.” SmartSky’s position is that the offering is live and being installed for customers. And bickering over whether it is a 4G or 5G solution is a distraction, not relevant to the utility of the network for customers.
A favor to ask while you're here...
Did you enjoy the content? Or learn something useful? Or generally just think this is the type of story you'd like to see more of? Consider supporting the site through a donation (any amount helps). It helps keep me independent and avoiding the credit card schlock.
caudalieG says
Thanks for your quick take on this right after the earnings call. Wonder if you would you be able to share more on what is being contended in the Smartsky law suit, and what’s the probability of them securing a preliminary injunction? Cheers!
Seth Miller says
Here’s a bit about the lawsuit that I wrote earlier in the week.
As for what a judge will decide, that’s a far more interesting and challenging question to consider. I’d be happy to chat more about it in a consultative capacity if you’d like.