Aerkomm Inc. provides in-flight entertainment and connectivity (IFEC) solutions with its initial market in the Asian Pacific region. The company’s business operations are conducted through Aircom Pacific, Inc. (Aircom) and its subsidiaries.
The company intends to provide airline passengers with a broadband in-flight experience that includes a range of service options. Such options include Wi-Fi, cellular, movies, gaming, live TV, and music. The company intends to offer these core services, thro...
Aerkomm Inc. provides in-flight entertainment and connectivity (IFEC) solutions with its initial market in the Asian Pacific region. The company’s business operations are conducted through Aircom Pacific, Inc. (Aircom) and its subsidiaries.
The company intends to provide airline passengers with a broadband in-flight experience that includes a range of service options. Such options include Wi-Fi, cellular, movies, gaming, live TV, and music. The company intends to offer these core services, through both built-in in-flight entertainment systems, such as a seat-back display, as well as on passengers’ personal devices, including laptops, mobile telephones and tablets. The company also intends to provide content management services and e-commerce solutions related to its IFEC solutions.
The company intends to partner with airlines and offer airline passengers free IFEC services. It intends to generate revenue through advertising and in-flight transactions.
To complement and facilitate the company’s planned IFEC service offerings, it intends to build satellite ground stations and related data centers within the geographic regions where the company focuses to be providing IFEC airline services.
Additionally, the company develops and markets two Internet connectivity systems, one for hotels primarily located in remote regions and the other for maritime use. Both systems operate through a Ku/Ku high throughput satellite (HTS). It also intends to develop a remote connectivity system that would be applicable to the highspeed rail industry.
Connectivity Solutions
The company intends to bring connectivity on-board aircraft through communication satellites. The Ku-band offers service outside of the Ka-band coverage over the ocean and in mountainous regions, which focuses to cover hotels and resorts remotely located, as well as the maritime sector. The Ku-band also supports the OneWeb LEO satellite systems.
The company is working with other satellite providers to accommodate global airline routes and fleets.
In March 2017, the company entered into a master service agreement with SKY Perfect JSAT Corporation of Japan for use of its JCSAT-2B/Asia Beam Ku-band satellite telecommunication services, teleport services and housing services.
Aerkomm K++ system
The company’s proprietary IFEC system, which is called the AERKOMM K++ system would contain a low profile radome containing two Ka-band antennas, one for transmitting and the other for receiving, and would comply with ARINC 791 standard of Aeronautical Radio, Incorporated and meets Airbus Design Organisation Approval.
Content Solutions
With the company’s business model and technologies, it transforms in-flight entertainment into a source of revenue for its airline customers. The company will team up with its prospective airline customers to provide them with its Aerkomm K++ hardware system, which would allow it to maintain data traffic control, primarily in terms of blocking or placing advertisements as needed and inserting targeted commercials.
Premium Content Sponsorship
The company intends to exemplify this type of relationship through collaboration with major Internet companies, such as search engine companies. It intends to promote a partner’s brand through its in-flight services by channeling various searches to the partner’s search engine.
Live TV
The company is negotiating with television providers along its prospective airline partners’ flight routes to make live TV available through its IFEC system.
Social Media and Instant Messaging; Content Management
The company would have firewalls in place both on the ground and in the air. These, in combination with its policy enforcement software, will allow it to filter, classify, block, or forward services in accordance with its service and quality policies.
Video/Content on Demand
For programming of various types, the company’s partnered advertising agents will integrate advertisements targeted to the viewer. The company will be able to place similar advertisements before games or radio programs and during online duty-free shopping.
Search Engine
The company intends to manage search engines on a white list basis, which means that the in-flight connectivity system will permit the passage of traffic to and from approved search engines. The company intends to enter into agreements with search engine partners to share the revenue generated from passengers’ searches.
Internet Advertising Replacement
The company would work with Internet advertisers to present advertisements that are relevant to passengers’ interests. This system will enable its partners to place their advertisements accordingly and generate revenue for them and it. Advertisers can offer destination-specific commercials and banners, which can be placed in its in-flight entertainment system and in apps and portals on personal devices. By utilizing commercial agents to sell ad space on its systems, the company intends to cover various marketable areas, expanding sales opportunities and increasing revenue.
With online advertisement utilizing both cost per thousand impressions (CPM) and cost per click models, the company capitalizes on virtually various available ad space and work with any advertising partner.
Online/Streaming Gaming
The company intends to make it possible to stream console-quality games in the airline cabin. Through gaming content partnerships, it offers PlayStation, Xbox, and other console games. Passengers would play major games from their personal devices or in-flight entertainment systems, invite friends to play over the network, and save their gaming data for continued play on the ground.
Telecommunications Text Messaging Services
Through strategic partnerships with telecommunication providers, the company intends to allow passengers to use 4G messaging services while in flight. Its in-flight system is designed to detect whether a passenger is using one of its partner carrier’s network and would deliver or block messages to and from a passenger’s mobile phone accordingly. For those using a non-partner’s network, the system would urge the passenger to request that their service provider join its network. Passengers would also be able to purchase a premium package to enable text message services.
Destination-Based Services
With flight route and passenger information, the company’s partners would offer destination-specific merchandise and services, including hotel and rental car bookings, transportation arrangements, restaurant reservations, local tours, ticket purchases and travel insurance. By partnering with service partners in the region, the company intends to share the transaction-based revenue on a fixed dollar amount or percentage of transaction basis.
In-flight Trading and e-Commerce
The company has found that in-flight connectivity through its AERKOMM K++ system would allow travelers to make use of their travel time. It intends to partner with trading partners who are registered with the various regulatory authorities to offer financial product trading services and it intends to charge a processing fee when a passenger conducts a trade in-flight. Additionally, an e-commerce platform made available through the AERKOMM K++ system would enable travelers to engage in unlimited on-line shopping, to make travel arrangements, including holiday destinations, hotel bookings and car rentals and to complete duty-free purchases, among other options.
Black Box Live
With Black Box Live, the company intends to provide a system of real-time flight information back-up, which focuses on advancing flight safety. Under security measures, this product is being designed and engineered to stream flight data and crewmembers’ cockpit voice records to its cloud-based storage solution for airlines and authorized individuals to access and monitor. Black Box Live is in the early stages of development.
Other Markets (Remote Locations and Maritime)
In addition to its focus on IFEC systems for aircraft, the company has begun to develop related Internet connectivity systems for other markets and applications. In this regard, the company has developed two connectivity systems, one for hotels, primarily for remote locations, and one for maritime use. Both systems operate through the Ku/Ku HTS.
The Ku-band offers service outside of the Ka-band coverage over the ocean and in mountainous regions and focuses to cover remotely located hotels and resorts, as well as the maritime sector. The Ku-band also supports the OneWeb and other LEO satellite systems.
The company is in the customer demonstration stage in the East Asia market with its maritime satellite communications equipment and services.
Satellite Ground Stations and Data Centers
The company intends to build a satellite ground station and a data center in Asia region to support its operations in that region. As the company expands its operation, it intends to have multiple dish antennas connecting to various satellites.
In July 2018, the company entered into a real estate sales contract with Tsai Ming-Yin, as seller, and Sunty Development Co., Ltd., as trustee, pursuant to which the parties agreed to definitive terms and conditions relating to the acquisition by Aerkomm Taiwan of a parcel of land located at the Taishui Grottoes in the Xinyi District of Keelung City, Taiwan. The parcel consists of approximately 6.36 acres of undeveloped land and is intended to be used by it to build its first satellite ground station and data center.
Contracts with Airline Partners
Airbus SAS
In November 2018, in furtherance of a memorandum of understanding signed in March 2018, Aircom entered into an agreement with Airbus SAS (Airbus) pursuant to which Airbus would develop and certify a complete solution allowing the installation of its ‘AERKOMM K++’ system on Airbus’ single aisle aircraft family, including the Airbus A319/320/321, for both Current Engine Option (CEO) and New Engine Option models. Airbus will also apply for and obtain on its behalf a Supplemental Type Certificate from the European Aviation Safety Agency (EASA), as well as from the U.S. Federal Aviation Administration (FAA) for the retrofit AERKOMM K++ system.
In June 2016, the company entered into a master agreement with Hong Kong Airlines Limited (Hong Kong Airlines) to install IFEC systems on-board their aircraft. Also party to this agreement is Klingon Aerospace, Inc. (Klingon), its product development partner and value-added reseller in the region where Hong Kong Airlines operates.
Growth Strategy
The key elements of the company's strategy are to launch and increase number of connected aircraft; increase passenger use of connectivity; expand satellite network coverage; and expand satellite-based services to other markets.
Regulation
The company’s business depends on its continuing access to, or use of, these FAA certifications, authorizations and other approvals, and its employment of, or access to, FAA-certified individual engineering and other professionals.
Under the Communications Act of 1934, as amended, or the Communications Act, the FCC licenses the spectrum that it uses and regulates the construction, operation, acquisition and sale of the company’s wireless operations. The Communications Act and FCC rules also require the FCC’s prior approval of the assignment or transfer of control of an FCC license, or the acquisition, directly or indirectly, of more than 25% of the equity or voting control of its company by non-U.S. individuals or entities.
The company’s services are also subject to CPNI rules that require carriers to comply with a range of marketing and privacy safeguards. Some of the company’s services are subject to the Federal Trade Commission’s (FTC’s) jurisdiction.
Competition
The company’s major competitors include Gogo Inc. and Panasonic Avionics Corp. Other competitors include Global Eagle Entertainment, Inc.; SITAONAIR; Panasonic; Zodiac Aerospace; and Honeywell.
The Analyst Price Target shows the analysts’ low, high, and average target at a glance.
