Elon Musk's Starlink has arrived in the business aviation market with a sonic boom, promising blazing-fast internet speeds and capturing headlines with its association with the visionary entrepreneur. However, beneath the surface of this flashy entrance, a quiet, strategic game is being played by an established player, Gogo Inc., whose under-the-radar moves might just hold the key to challenging Starlink's ambitions.

Gogo, a veteran in the aviation connectivity space, understands the unique demands of this niche market. Their strategy hinges on a seemingly innocuous product, the "C1," which they playfully dub the "Time Machine." This unassuming device, housing both EVDO and LTE air cards, replicates their older "Classic" product without offering any performance enhancements. But here's the catch – it's a strategic masterstroke.

The C1, with its low cost and minimal installation time, acts as a bridge for customers hesitant to immediately upgrade to the more advanced AVANCE platform. It buys them time, allowing them to defer the decision until after Gogo's planned network cutover. This seemingly minor tactical play unlocks a powerful strategic advantage for Gogo.

Consider this: Gogo has 3,200 aircraft still using the "Classic" product. While a majority are leaning towards an AVANCE upgrade, some remain on the fence. The C1 allows Gogo to capture these hesitant customers, ensuring their continued loyalty within the Gogo ecosystem. It's a clever way to sidestep the potential disruption from Starlink's aggressive entry.

Here's why this matters. Gogo's long-term success hinges on the successful launch of its LEO satellite product, Galileo. And the C1 plays a crucial role in maximizing Galileo's potential. By migrating the "Classic" customer base to the AVANCE platform, Gogo ensures an easier and far more cost-effective upgrade path to Galileo.

Think about it: a customer with a C1 installed only needs to swap out an external antenna to transition to Galileo, a far simpler process than ripping out and replacing an entire system. This advantage translates to lower costs for customers and smoother integration for OEMs and dealers, creating a compelling proposition that directly challenges Starlink's one-size-fits-all approach.

The numbers tell the story. Gogo projects a compound annual growth rate of 15% to 17% from 2023 through 2028, with Galileo becoming a significant revenue driver in 2025. This projection assumes Starlink achieves its ambitious goals and introduces a smaller antenna. Even under this scenario, Gogo anticipates capturing 20% of the heavy jet market outside North America, a significant achievement considering their current 0% share.

The C1 is not just a product; it's a Trojan horse. It subtly ensures customer retention while building the foundation for a future dominated by Galileo. This strategy, executed under the radar, allows Gogo to capitalize on the industry's transition to LEO while mitigating the risks posed by Starlink.

While Starlink might be the flashy newcomer, Gogo, with its veteran experience and subtle strategic maneuvers, might just have the "Time Machine" to rewrite the script of the aviation connectivity market.

Hypotheses

The C1 "Time Machine" will significantly boost Gogo's customer retention rate, particularly among those hesitant to upgrade from the "Classic" product.

This increased retention will translate into a larger customer base readily poised for an easy upgrade to Galileo, potentially exceeding Gogo's projected 20% market share in heavy jets outside North America.

Key Numbers

Gogo currently has 3,200 aircraft using the "Classic" product, representing a significant pool of potential Galileo customers.

By offering the C1 as a bridge, Gogo can potentially convert a larger portion of this base to AVANCE, setting the stage for Galileo's success.

If Gogo manages to retain a higher percentage of its "Classic" base than anticipated, its projected 20% market share in heavy jets outside North America might prove to be conservative.

Financial Performance

Projected Revenue Growth

Gogo projects a compound annual growth rate (CAGR) of 15% to 17% from 2023 through 2028, driven by the launch of its Galileo LEO satellite product. This chart illustrates the projected revenue growth.

Fun Facts

"Gogo's history dates back to 1991, predating the widespread adoption of the internet. They were pioneers in bringing connectivity to the skies, starting with analog dial-up technology."

"Gogo's technology has been used to connect passengers on over 11 million flights, highlighting their long-standing expertise in the aviation connectivity sector."