APEX Insight: India was the only nation aside from North Korea to prohibit in-flight connectivity in its airspace, but that’s changing. On May 1, India’s Telecom Commission approved the proposal from the Telecom Regulatory Authority of India (TRAI) to allow international and domestic airlines to offer in-flight Wi-Fi in Indian airspace.
At the start of 2018, if you were to book a flight on a randomly selected airline and route anywhere in the world, your likelihood of having access to in-flight Wi-Fi stood at 43 percent, according to a report by Routehappy. If you boarded a domestic flight within India, the odds fell to zero.
But change is in the air. India’s Telecom Commission recently approved of a recommendation issued by the Telecom Regulatory Authority of India (TRAI) that airlines flying within and through the country be allowed to offer in-flight connectivity, on the condition the services be provided by Indian or other approved satellites.
What’s been the hold up? According to Anand Chari, Gogo’s strategic technology advisor, the country’s hesitance has always been related to national security concerns. “India has always been very cautious about satellite communications, even on the ground. It’s one of the most highly regulated markets anywhere in the world,” he says.
The other delay, Chari says, was bureaucracy. “There’s the Department of Telecommunications, the Ministry of Home Affairs and other government bodies that are all involved in setting the rules and regulations and going through the approval process. Traditionally, satellite communications had a lot of regulations around it.”
Speaking at this year’s APEX Asia event in Shanghai, APEX CEO Joe Leader said he was optimistic that Wi-Fi could appear over Indian airspace soon. “We are definitively convinced that India will open Wi-Fi over its airspace this year,” he said during a presentation. We believe it will happen in Q2 or Q3,” he said during a presentation.
“India has always been very cautious about satellite communications, even on the ground. It’s one of the most highly regulated markets in the world,” – Anand Chari, Gogo
APEX members are among those playing a role in helping to bring this to fruition. Gogo participated in several meetings with Indian government officials and made several technical and policy contributions, Chari says. “We have been very active. The TRAI’s recommendations incorporate some of Gogo’s proposals,” he notes. “We have been participating in this regulatory rule-making process for nearly three years, with people flying to India and being physically present in meetings.”
Dave Shiff, vice-president, North America Enterprise Sales, of broadband satellite systems provider Hughes, says his company’s staff in India has also been actively engaged in the topic. “We think that there’s a light at the end of the tunnel in terms of the regulatory environment. Once the regulatory hurdle is cleared, we will be working with our service provider partners to get the infrastructure in place. From a business and regulatory standpoint, we’re optimistic that the business opportunity could open up possibly before the end of this year, or certainly during the next year.”
For multinationals, including in-flight connectivity providers, India represents a big opportunity: It is home to more than 1.3 billion mainly young people and it has a fast-growing economy. This applies to air travel, too. Buoyed by 20 percent annual growth in passenger numbers, India’s aviation industry is booming. By 2025, it is expected to become the third-largest aviation market in the world, according to the International Air Transport Association.
To meet rising demand, Airbus forecasts the country will need 1,750 new passenger and cargo aircraft over the next two decades. By 2036, it predicts Indians will fly four times more than they do today, with passenger traffic expected to grow by 8.1 percent per year over the next 20 years – almost twice as fast as the world average of 4.4 percent.
By 2025, India is expected to become the third-largest aviation market in the world.
“It’s essentially an untapped market. The number of airlines, and aircraft within each airline, is growing. The economy’s growing, and the percentage of the population that’s flying is growing,” Chari says. “It’s hard to estimate exactly how big it is, but it’s one of the fastest growing markets so we are keenly following developments and are highly encouraged by the recent decision.”
“India is a great market – it’s really fast-growing, and I think in the long term, it has a lot of stability,” – Don Buchman, Viasat
Don Buchman, Viasat’s vice-president and general manager, Commercial Mobility, is also optimistic about the country. “India is a great market – it’s really fast-growing, and I think in the long term, it has a lot of stability,” he says. “You see a lot of really interesting business models, especially with the ultra low-cost and independent carriers like Jet Airways.” With the launch of its Viasat-3 constellation, the Carlsbad, California-based company will become a global Internet service provider and has plans to offer in-flight connectivity in India.
But can the country offer the same commercial opportunities as China, whose middle class has swelled over the past decade? Not quite, Buchman says. “It has a similar population size, but if you look at people who can afford a ticket, it’s not going to be as big a market as China will be, especially in the next 10 years.”
Shiff makes a similar point. While India has a huge population and a large economy, he says the price points are probably not on the same level as in the US and that operating costs won’t necessarily be any lower. Beyond the regulatory environment, he says, satellite and equipment technology won’t be the ultimate determinant. “The real question is: Can you make a business case? Can you have a financially viable offering?”
There’s no consensus on how big India’s middle class is. A recent paper by economists Sandhya Krishnan and Neeraj Hatekar of the University of Mumbai says that the country’s middle class has doubled in size to 600 million from 2004 to 2012. But that doesn’t afford a life with smartphones, credit cards, vacations, or even in-flight Wi-Fi sessions.
According to their definition, living on as little as $2–$4 per person per day qualifies as lower middle class, while joining the ranks of the upper middle class means a daily budget of $6–$10. Officials said in-flight Wi-Fi pricing would likely range from 500 rupees ($7.50) to 1,000 rupees ($15) for a session lasting between 30 minutes and an hour, according to an article published by the Times of India in January. Moreover, 97 percent of Indians have never flown, and only one in 40 adults traveled abroad in 2015, according to SpiceJet, an Indian carrier.
Unlike in the US, where systems are paid for by airlines and the service is funded by passenger subscription fees, Shiff says, in India and China, the focus is currently on advertising and other types of subsidization as the primary funding source. “While this is a more challenging and uncertain business model, the feedback that Hughes gets from different players in the industry that we work with and talk to is they believe that the business model will be viable. That of course remains to be seen, but in the end, in light of the strong demand for in-flight connectivity by both airlines and their passengers, I think it almost has to happen one way or another.”
Gogo’s Chari reckons demand for connectivity in India will match that in other countries. “There are some unique characteristics [to India], but one thing to note is that the demographic of the flying public is more homogenous around the world than the rest of the general population,” he says. “There could be different price points or different business models, but there is no doubt that there is just as much demand in India as any other part of the world.”
Unchartered Airspace was originally published in the 8.3 June/July issue of APEX Experience magazine.