Will 2018 be remembered as the year when passengers finally started expecting in-flight internet to actually be … good? That’s one of the biggest trends Don Buchman, vice president and general manager of Viasat’s commercial aviation business, highlights in the latest episode of the Viasat podcast. “We’ve seen the shift,” Buchman tells Chris Phillips, head of corporate communications and PR at Viasat. “Everyone expects (great) internet everywhere they go, and we’re delivering it to more people. Throughout the past year, Viasat’s exceptional satellite capacity allowed us to create transformational in-flight experiences around the world. From a seamless business class experience on French airline La Compagnie to livestreaming the World Cup to dozens of cheering El Al passengers high above Tel Aviv, we continued to spark creative new possibilities for Wi-Fi at 35,000 feet. “I think now, the expectation is, there’s a new bar,” Buchman says. “We are the bar.” Another of the year’s big trends: added value. Whether it was livestreaming a Willie Nelson concert to fans aboard American Airlines, or the ongoing success of JetBlue’s free Fly-Fi service provided by Viasat, we’ve shown how going beyond a simple data connection can build buzz and inspire customer loyalty. Some other topics discussed in this episode include:
- How Viasat is empowering pilots and crew with Aerodocs and other revolutionary cockpit tools
- How a line fit solution is streamlining the internet installation process for Aeromexico
- Celebrating a major milestone – 1,000 aircraft are now flying with Viasat internet service
- Looking ahead to the content and brand partnerships we’re excited about in 2019
Chris Phillips: Welcome to 2019. I’m Chris Phillips, head of corporate communications and PR at Viasat and I’m here with Don Buchman, vice president and general manager of Viasat’s commercial aviation business. Hey Don. Don Buchman: Chris, welcome. How was your holidays? Chris Phillips: Good thanks. Well we’re here for another installment of our Digital Transformation podcast series focused on how Viasat is helping to transform communications by bringing high-speed, high-quality internet to the hardest to reach places. Clearly aviation is one of those very hard places. It’s hard to bring high-speed internet to an aircraft. Don Buchman: Right. Yep. I mean that’s what we’ve been in business for. That’s what we’ve been talking about for five years now. And you know, it’s just great to see it happening. Chris Phillips: Well Don, 2018 was clearly a busy and prosperous year for Viasat’s commercial aviation business. We made a number of announcements around new customers. We brought new product and service feature sets to market and we close out the year with some new perspectives and some major milestones all relating to the evolution of the passenger and aviation journey. I think our listeners would like to understand why 2018 was an important year in our growth story and what to expect for 2019. But before we delve into those questions: Did you fly anywhere great over the holiday? Don Buchman: Went to Seattle, which was pretty cool. I saw family up in Seattle, very exciting. Chris Phillips: Yeah. Well, I think the last time I was in Seattle was Portland for APEX . That was, what, two years ago, three years now. Wow how time flies! Don Buchman: That was the Netflix Virgin America announcement. Chris Phillips: That’s right. Wow, and we have clearly grown since then. So that sounds like a good time and opportunity for us to dive into trends and highlights from 2018 and then we’ll do a look ahead to 2019 if that sounds good to you. Don Buchman: Perfect. We’ll do it. Chris Phillips: OK, so looking at trends, were there any that stood out to you in 2018? Don Buchman: So the market trends, yeah it’s like you know we’ve been talking about quality internet and that’s what we’ve seen really happen in 2018 as we got to everybody. They’ve actually had bad internet on planes before. No one actually believed it could be possible and what we’ve seen -- and we watch social media -- we’ve seen the shift. Yeah, everyone’s basically saying “I expected the bad, but wow, American, you switched. This is fantastic. Thank you.” That was a kind of a general trend we saw. Everyone expects internet everywhere they go. And we started delivering it to more people. More people got access to the great Viasat product. And I think now the expectation there’s a new bar. We are the bar. Chris Phillips: So when we look at 2019, how will Viasat continue to evolve that bar? Don Buchman: Yeah. So now it’s sort of business models, right? So bringing in more of sort of the internet that’s out there, right? You see streaming video, you see all these other players in our homes and even in coffee shops. But they haven’t really been on planes until they sort of saw what we can do. I see sort of a big uptick there. That’s the things we do. We mentioned Netflix already three years ago. That hasn’t gone away. More people realize what we’re doing more business models are evolving. I think that trend and I think we’re going to see a lot more of that happening. Chris Phillips: Well hold that thought, because when we close this we’re going to talk a little bit more about 2019. But we had a really exciting and busy year in 2018. So as I mentioned before these highlights made for a really big year for commercial aviation and the highlights were global. So I think it’ll be fun to do a quick round robin across the continents where we’ve been active in 2018. Does that sound good to you? Don Buchman: Let’s do it. It sounds like my frequent flyer miles. Don Buchman: Let’s start in Europe. We expanded our presence in Europe. We expanded our Dublin office, focusing more on software excellence. No surprises there, right? Ireland is well known for software expertise. Can you tell us what this team is specifically working on as it relates to commercial aviation? Don Buchman: Yeah. Yes, so the Dublin office ... first full year, second full year with Viasat. Some of the products we brought to market were the Aerodocs, is what their core product was, and that’s a document management system for flight deck and operational sides of airlines. That product continues to evolve and it’s deployed on several airlines. But specifically what we did here was ... the entertainment aspect of what Viasat brings. So you know, you fly around a lot of our flights like American. They have wireless IFE, so wireless in-flight entertainment, is an adjunct product. And the Ireland team developed that in-flight entertainment product for us and that’s the excellence that they brought into our product. It looks seamless. Chris Phillips: So looking beyond wireless IFE and really into more of the connected space and kind of this blend and convergence of entertainment and connectivity ... where does software fit into that long term vision for you for your business? Don Buchman: Yeah. You think about the software, but really what we’re talking about is experience, right? So sort of what is that experience ... like whether it’s an app on your phone or the portal, the first thing you see on the plane. How does it follow you around. And so the software is really an invitation into the experience of passengers to have. So it’ll be a blended world. You’re going to sort of see the world kind of come in and this is where third party sponsors can come in. Local entertainment, the internet; you basically have something for everybody. We know the business traveler is the one that generally pays your 8-10 percent take rates. But most people want to get online, and so where software comes in, it’s basically bringing in more into the ecosystem in a very natural way. Chris Phillips: Sounds like another trend for 2019. Don Buchman: It does sound like a trend for 2019. Chris Phillips: Well in addition to the office expansion, there was just a lot of overall activity in Europe last year, from announcements with SAS, Finnair and El Al -- Israel Airlines -- all on the connectivity side. But also Aer Lingus’s on Viasat’s electronic flight bag technology. Why do you think that Europe was such a hotbed market for us? Don Buchman: Well, I think they were lagging a little bit of the US, right? The Wi-Fi sort of in-flight connectivity sort of started in the US and sort of had the most traction. Europe has been… you know, areas around the world have been coming, but Europe had mostly stayed out, so few airlines dabbled in early. But I think last year was what we saw was most of them sort of made the decision they’ve been on the sidelines, so OK, now we’re ready to go and it just sort of happened that Viasat was ready to deliver it at the time. So all of our early success here in the US worked really well for us and translated over to Europe, because we’re sort of bringing that same high-quality product and it was available. Chris Phillips: When we’ve been in Europe we’ve seen a variety of aircraft types, definitely flight routes and packages that have been offered to passengers. Can you speak to how our team effectively supports the range of different customers and packages? Don Buchman: Yeah, so again, there’s different business models that are evolving and I think all of us in the industry, and the airlines included, are trying to find what business model and what packaging of the product works for them and their passengers. So we have everything; Like SAS is delivering free (Wi-Fi) to their premium customers. So business class or a Euro bonus gold member or higher they’re bringing it free and then if you’re just a leisure passenger that only flies SAS once a while without status, you have an option to pay. So that’s a really interesting model, where you’re sort of giving a nice nugget to your premium customers but still giving an amenity and pay for service to your less frequent passengers. Chris Phillips: So we have a nice set of customers in Europe, but there’s still a lot of airlines that still have no connectivity. So will we be seeing more European airlines have an interest in connectivity? Don Buchman: We’re seeing that trend continue. So I think you’re seeing it out there ... You had the first wave, a second wave and now I think you’re going to have sort of mass adoption like we saw here in the US and that’s something that I think we’re really confident, very bullish of, not only the quality of internet but sort of what it ... That’s sort of a means but the end is really how does airline use it. How do their passengers get value out of it? And I think we’ve got packages that allow sort of any spectrum, whether it be a full-service carrier or a low cost carrier to basically present the product. It still shines no matter what the model. Chris Phillips: One announcement that we made that had a lot of buzz especially at one of the events that we went to, APEX, was our announcement regarding a new European-based all-business class airline, La Compagnie. They’ll be offering unlimited high-speed Wi-Fi to all passengers on their aircraft. And do you anticipate that this customer set, being all business class passengers, will have a different in-flight internet behavior. Don Buchman: I think so. Right. So, there’ll be a lot of business travelers. Chris Phillips: So what does the business traveler do? Don Buchman: They want to be connected. It’s “bleisure” -- business-leisure sort of. Where you sort of see, the first thing, I can check email. I’m going to download the document, I’m going to send the PowerPoint file. I’m gonna interface, I’m gonna do this. And then it’s like, ‘Oh I’m going to kick back, I’m going to download a book, or I’ll listen to a podcast, like this one.’ Anyone listening, please download and listen. And listen to their favorite music, Spotify or Apple Music, whatever, maybe catch a movie, you know, Netflix. So I think that’s going to be behaving like they normally behave when they’re in transit, right? If it’s a train, they probably do very similar things; if they’re going to a coffee shop. We used an analogy last time we spoke. And so I think you’re going to see that behavior, but it’s going to be directed towards the business, you know kind of what their applications are. Chris Phillips: I definitely feel that I’m part of the bleisure crowd. One last highlight from Europe: I was lucky enough to be part of the official launch of in-flight connectivity on a passenger flight on El Al Israel Airlines during the World Cup. Don Buchman: That was cool. Chris Phillips: I know that was a highlight for you too because we still talk about it months later. This flight clearly showed the power of our capacity reach IFC system. Can you tell me your favorite highlight from that flight? Don Buchman: Oh boy, there’s some highlights, but it was France-Belgium semifinal going from Tel Aviv to Paris ... game comes on with an hour and a half left and you can hear the roar of the crowd. When something happened, you’d hear the wave of like a goal was scored and you hear the wave of people shouting throughout the aircraft when it happened. The worst thing is, we landed the game wasn’t over yet and no one wanted to get off the plane. They want to continue watching the game. That was really cool. Then you get into the streets of Paris with the horns and everything else going as they advance to the final. Chris Phillips: Everywhere. One media (guy) was filming himself. Can you talk about that? Don Buchman: I’m sitting there and one of the media is basically -- you’ve got a couple devices, I’m trying to figure out what he’s doing, because he’s got devices pointed at each other. So what he was doing it turned out, was he had one device streaming the World Cup live. The second device was pointed at the first device and it was uploading the live stream and rebroadcasting it to the world. Then a third device was actually watching his own rebroadcast of what he was already downloading there. So it was essentially three streams going on with one person. Chris Phillips: Well if that doesn’t sell a capacity rich system I’m not sure what would. That was my favorite moment too. OK Don, let’s travel over the pond and take a look at the Americas. A lot has happened in the Americas. We had a new announcement with longtime customer United Airlines adding Viasat in-flight connectivity to over 70 aircraft, but they also went direct with us. Why was the timing right in 2018 to make this switch from indirect to direct? Don Buchman: The trend in Viasat in 2018 as we kind of made that transformation from maybe a behind the scenes player to a prime. So we’re a full service provider and so we’ve been working on that and what we really worked on in 2018 was stepping up to that prime position as airlines looked at us they saw the value as the internet right. Capacity. And they were kind of asking us to kind of put it together. And so we put together a full package for them and I think United even though they’re a long term customer they earned trust in our ability to do the satellite piece of it. The hardware piece of it. You know maybe that we hadn’t done the other piece and they saw that happen and say hey you know we see the value that we trust it. So I think we want to go forward these guys these guys. Do the prime interface and then we will go right to the source of it and Viasat stepped up, they asked us do it. And I think right now I would say I’m hoping they would say they yep we’re delivering on the promise. Chris Phillips: That’s great. We also expanded our relationship with American Airlines by highlighting some value-added content services direct to passengers. Most recently we showcased Willie Nelson live at 35,000 feet which was a major accomplishment through that partnership with Austin City Limits and American Airlines. So three questions for you on this topic. First: What’s your favorite Willie Nelson song? Feel free to sing if you’d like. Don Buchman: (singing) On the road again ... I’m actually banned in multiple karaoke bars across the three continents. Chris Phillips: Ok I will let you off easy then. Going back to being real here. So are these value-added services setting a new standard in the industry? Don Buchman: We think we are. It really is. I mean when you kind of do those sort of things that sort of opens up the imagination. We talked about that before what’s the art of the possible. In the past he had sponsors other things they came in they had very limited engagements because the quality wasn’t there. And so we really tried to do a sort of take off the blinders on poor quality and we have good quality. Now what would you do if you knew you had this kind of quality and I would think something like the partnership that American already had with Austin City Limits and then bring that live to their customers in-flight and having it available for the next 24 hours. It’s a nice perk right. To get on there and so those are the kind of things that are super interesting you’re bringing parties that never would have really been involved in the airline industry or passengers and you’re getting their product in front of them. So it’s good for American and it’s good for Austin City Limits. And I think you know for Viasat we think it’s good because it kind of highlights the open imagination, art of the possible. Chris Phillips: So for maybe a first time listener that is just getting familiar with in-flight connectivity. Can you tell us how are we able to deliver these unique experiences in the sky just from a big picture view? Don Buchman: Ok. This is great because ...10 minutes into our podcast I haven’t even mentioned the satellites yet. So yeah. Chris Phillips: So let me bring you back. Don Buchman: ... again kind of going back you know as Viasat, the core strength is what we’re doing is we’re bringing the real internet right. So we launched a series of satellites and continue to launch and invest in satellites and they haven’t just been you know better than last year’s satellites, these are transformational satellites. You know 10x and 100x improvements over the state of the art when we launched them. And so what does that mean. OK. What’s fine Don what does that mean for me the passenger. Well it means I go from text messaging you know is the best thing I can do on a plane to streaming anything right. Willie Nelson concerts, Netflix, Hulu you name it. World Cup live on El Al. So that’s the thing and what it is it all goes back to our satellites and it’s the capacity and the economics so we put into them same invested capital they’re more productive. What that means is sort of a better quality product for the for the airline and the passenger. What that means they can do more. Chris Phillips: And more means more bleisure time. Let me switch to JetBlue for a moment. We jointly participated in two incredible conversations at some trade events last year. APEX and AIX where we discuss how Viasat has enabled JetBlue to provide a unique experience in the sky. Free for All which has in turn boosted customer loyalty. What would you say to other airlines who are on the fence about offering a free service to passengers? Don Buchman: Yeah I think there’s a lot of buzz. JetBlue had buzz when we first launched. They’ve continued to have buzz and it’s kind of amazing. It’s what, five years since they’ve launched with the free product and they’re still getting buzz. I mean they’re still getting thanks on social media. You see articles written basically pointing out JetBlue is the one, now Qantas has jumped into the fray of offering up ... really the only two that are offering the full internet high quality for free. And I’ll say when they kind of look at it everyone sort of views it as a cost. OK. This is a cost I’m not going to get any value for this cost. Why would I do it? I think there’s the loyalty as you mentioned is there. You’re just sort of seeing the brand pickup as other amenities like giving coffee away for free or say movies in the past on the seat backs it’s the same cost for an amenity you’ll get paid for it but you get there and so I would say when you go to free it’s sort of it’s not if it’s when, like we saw the trend in hotels we talked about that the last time, coffee shops. So the airlines will be there. So what you really want to do is ... I want to have a product that actually works and it’s affordable and that’s what we supply. Chris Phillips: Awesome. One last highlight in the Americas. We proudly announced Aeromexico’s commitment to bring Viasat onto their fleet bringing our service to 18 new 737 MAX aircraft with the option to extend to more in the future. They have a line fit solution. Can you tell us about the line fit process and how that has helped us gain the trust of new airlines? Don Buchman: Yeah I think what it is it’s really kind of taken that initial ... there’s a lot of friction right when you put equipment on your particular airplane. So if you don’t get it on the line you have to take it an airplane out of service. You have a three or four day maintenance cycle that you have to go to do certifications. And so with the factory, what it does it removes all of that. So I get my plane and I order with the options right. So it’s like buying a new car I get it with the radio instead of having to get it later. So they basically get it and it’s certified by Boeing and you know we work with Boeing to make sure all that happens. Boeing stands behind the installation and it gets delivered to the customer working on day one. And so for them it really kind of removes that friction point they build it into the model of the airplane itself. It’s part of the airplane, it’s part of the service and part of the sort of what the value they bring to their passengers. Chris Phillips: Let’s go further west. Right. We start in Europe. We hit the America. And so let’s talk about Australia, Qantas. Quantas is really known for pushing the needle on how to offer great customer service but they’re also looking at operational use cases for having high-speed internet onboard. Can you share some early learnings from their operational side? Don Buchman: They’ve been really pushing the limits. I love working with all these airlines because each one of them is unique and they ... move the bar forward, right? When they pick us I think that’s part of their selection criteria, is if they want to move the bar forward, they go with us. With Qantas, I know the flight crew has been really enamored with it because it’s sort of putting a lot of power into their hands of sort of you know passenger interfaces and in-house they’ve developed a lot of really cool things through that. But on the flight deck, yeah we’ve heard really positive, you know it’s come from say passenger comfort -turbulence avoidance - you know those are things that they’ve had really good success with using our system, being able to do that, getting real time data and in addition they’ve saved a lot of money as well. They’ve sort of taken things that they’ve to use more secure channels that cost a lot of money and they’ve been able to sort of offload a lot of it onto the satellite internet connection and they’ve got a lot of value out of that. And so we’ve just seen them continue to sort of you know kind of push it for their their internal use and they’ve been really happy with that. And you know it’s good feedback. Chris Phillips: Well I agree. I think Big Data and analytics are definitely two components to a bigger trend that we’ll continue to hear about in 2019. Before we close out. Don, I must congratulate you and the whole commercial aviation team for closing the year with a major milestone. You guys hit over a thousand commercial aircraft flying with our high-speed internet equipment and service -- a well-deserved congratulations. Don Buchman: For the whole team. I mean it is pretty amazing. Chris Phillips: So here’s a hard question: When you when you reach a milestone like that, what do you tell the team, like how do you thank them? Don Buchman: You know it’s just it’s more of just congratulations on your dedication right. It’s just basically you’re smart. We thought about this and we weren’t just we didn’t get into this haphazardly. We knew what we were doing, we had intent, and you know that’s really the team we just sit back and enjoy the moment because this is what you’ve ... three years ago when you’re kind of drawing things up and you’re working and you’re trying to figure out what should we do. You are really thoughtful because we couldn’t hit this milestone had we not been that thoughtful two to three years ago. So I tell him to just sit back enjoy the moment and really congratulate yourself because you guys are good and you’re smart and that’s what Viasat’s all about. Chris Phillips: Well you can enjoy the moment for a moment but 2019 is knocking on the door and you’ve got to start to set goals and align those to some of the trends that we’re seeing. So throughout our conversation we’ve talked about some key trends, we’ve talked about software and how that affects the passenger and the crew journey. We’ve talked about free as being a clear trend. So when we think about 2019 and how significant it could be as we evolve new business models and we bring new revenue sources such as live events and sponsorships to our airline partners and we bring value-added content services to market ... with all of that said can you just tease our listeners a little bit with what to expect in 2019? I’m sure we will do a number of podcasts on these topics so just maybe a little bit about what’s ahead. Don Buchman: Ok. I can’t give up too many secrets but it’s going be pretty fun year. So a lot of, we’ve talked about this stuff right. We’ve had a few things like Austin City Limits and Netflix which we’ve mentioned before, but I think what you’re gonna see next year is a pretty big acceleration of that trend that’s happening and I think one of things that a lot of the brands out there are pretty excited about with Viasat, is we’re going to get access to a lot of passengers. And so one of the trends we see is just more of the business models kind of going, you know there’s this trend towards that bringing the producers in that you basically want to get in front of passengers also enabling it. Going from talk to action. This is the sort of the thing I think you can see in 2019. Chris Phillips: Well, I feel like action is your middle name. Don as always thanks so much for your time today. You and the whole commercial aviation team have a lot to celebrate and also to look forward to in 2019. So lots of good stuff. On the next episode will likely cover off some new excitement and operational trends taking a different slant from just focusing on the connectivity so it should be a good conversation. I know I can’t wait to hear what we’re going to talk about and I know the industry will continue to push forward. So until next time, thanks. Don Buchman: All right. Thanks Chris. Thanks guys.