* Market seen swelling to $2.1 bln by 2023 -Euroconsult
* Good for suppliers like Cobham, Thales - analysts
* Not all airlines agree wireless is best choice
* U.S. players include Gogo, Honeywell, Golden Eagle
By Lionel Laurent
LONDON, July 22 The web-connected aircraft
cabins of the future, powered by technology on show at last
week's Farnborough Airshow, are offering a path to investor
returns through suppliers like Cobham Plc and Thales SA
The market for inflight wireless internet, entertainment and
communications services, driven by a flying public who
increasingly want to chat, tweet, stream movies and check
Facebook uninterrupted, is set to grow to $2.1 billion by
2023 from $440 million in 2013, consultancy Euroconsult says.
While the past is dotted with inflight internet schemes
which failed to take off, such as Boeing Co's Connexion,
there are more reasons to be bullish as installation costs have
come down and the use of social media has skyrocketed.
"It's gone from the days when you were completely cut off in
an aeroplane, to where very shortly every carrier will be
offering real-time television," said Nick Cunningham, an analyst
with Agency Partners.
"You're talking about an installed base of literally tens of
thousands of aircraft, starting with wide-bodies and working
your way down ... It's going to be a must-have."
Analysts say this is good for parts makers such as UK-based
Cobham, which makes compact, lightweight satellite-communication
systems for both small and large planes. Cobham, named after its
aviator founder who pioneered mid-air refueling in the 1930s and
40s, showed off its antenna technology at Farnborough.
Other key players include France's Thales, Europe's largest
defence electronics firm and one of the leading providers of
in-flight entertainment and streaming systems, competing with
the Avionics arm of Japan's Panasonic Corp.
Thales bought LiveTV - a provider of in-flight entertainment
and broadband services - from JetBlue Airways Corp
earlier this year. Florida-based LiveTV has more than 500
employees and expects 2014 revenue of over $150 million.
Such investments underscore the reasons for investors to be
optimistic on take-up of the technology in the still-booming
commercial aviation market: installation costs are falling,
systems are becoming lighter and satellite coverage is becoming
available to most areas where air traffic is dense, according to
The downsides? There is no consensus yet on how to charge
for such services, onboard satellite communications equipment is
still costly and the certification process is relatively long.
Not all airlines agree wireless technology is the right
service to offer passengers. Its main competitor comes from the
in-flight entertainment industry, whose movie and game systems
are hard-wired into aircraft seatbacks.
At a global travel fair in March, Lufthansa
announced plans to wirelessly stream movies on long flights, but
Qatar Airways called the technology untested and said it would
stick to traditional seatback screens.
The stakes are high for airlines because in-flight
entertainment is increasingly seen as a lucrative shopping
platform as well as a place to watch games and films.
Meanwhile, broader aviation trends are strong, with Boeing
and Airbus Group NV betting the world will need some
30,000 to 36,000 new aircraft over the next 20 years.
It is tough to pick out cheap aerospace stocks as a result,
with the STOXX Europe 600 aerospace and defence index
up some 95 percent from 2011 lows, compared with a rise of about
50 percent for the broad Euro STOXX 50 index.
Thales - about 30 percent of whose sales come from civil
aerospace including cockpit systems - trades at a forward
price-to-earnings ratio of 11.98, while Cobham, which gets 19
percent of its revenue from the commercial aeronautics sector,
is trading at 13.87, according to Thomson Reuters data.
Both are lower than the median multiple of 14.07 for a
basket of eight aerospace stocks, including Airbus, Safran SA
and Rolls-Royce Holdings Plc.
Other U.S.-listed stocks in the field include Gogo Inc
, a supplier of broadband services, Honeywell
International Inc, network operator AT&T Inc,
manufacturer General Dynamics Corp and Global Eagle
Giving an indication of the rates of growth on offer,
London-listed satellite operator Inmarsat Plc - market
leader in aviation - said last year its compound annual revenue
growth rate for all aviation services had jumped 22 percent
between 2005 and 2013, more than other divisions.
"Thales are saying it's quite a good fit to provide
interconnection and Cobham are well-positioned because they do
all the antennae and the other hardware that connects," said
Zafar Khan, analyst at Societe Generale.
"I'm not sure how huge a money spinner it will be in the
grand scheme of things, but it is an interesting area."
(Editing by Tim Hepher and David Holmes)