Aviation Week & Space Technology

04/04/2005, page 60

Michael A. Taverna

Neuilly, France

IFE Taking Flight

Following a year-end rush of new inflight entertainment system business, Thales is bullish about prospects for the IFE market, which had been in the doldrums since the Sept. 11, 2001, terrorist attacks.

The company--an IFE leader, along with Matsushita and Rockwell Collins--received more than 100 million euros ($130 million) in IFE orders last year, most of it in the last quarter, and expects to exceed 300 million euros this year.

``We are seeing the airline industry emerge from the crisis of 2001-03, and with traffic recovering in Asia and Europe, carriers are reinvesting in things like IFE,`` says Francois Quentin, senior vice president for aerospace (AW&ST Sept. 27, 2004, p. 38). He cautioned, however, that high fuel costs could brake the trend, which managers hope can help boost civil aerospace revenues. Civil business currently accounts for just 30-35% of the aerospace division`s 2 billion euros in annual sales.

The upsurge has allowed Thales to double its market share, to 25%--largely, in Quentin`s view, at the expense of onetime market leader Rockwell Collins. These inroads are ascribed to the company`s TopSeries IFE line and, in particular, its top-of-the-line i4000/5000 audio-video on-demand models, which he asserts are at least a year ahead of comparable technology at industry front-runner Matsushita.

Quentin thinks that by leveraging Thales` worldwide marketing network, dual technology base and cockpit systems expertise, as well as reinforcing teaming on the user end, market share can be expanded another 10-15 points.

The company recently signed a deal with CalAmp, an Oxnard, Calif.-based provider of wireless and content delivery products, to jointly explore wireless IFE solutions. This followed a November agreement with onboard broadband service provider Tenzing to integrate low-speed proxy and high-speed Internet services--offered through OnAir, a joint venture of Tenzing, SITA and Airbus--into TopSeries equipment.

Thales is working with both Boeing and Airbus to perfect wireless technology, which promises dramatic improvements in flexibility and installation costs, provided certification issues can be worked out. The first application, Quentin says, could be Boeing`s 787 Dreamliner, for which requests for proposals are expected later this year. Boeing previously selected Thales to supply the electric power converter and standby flight display systems for the 787, as part of a new global sourcing strategy.

Sales are expected to benefit from new strategies limiting the number of suppliers qualified to offer IFE systems, which are traditionally buyer-furnished equipment. Only Thales and Matsushita have been picked to provide IFE hardware for the A380, and a similar policy is expected to be adopted by Boeing for the 787.

With orders forecast to triple this year, Thales soon expects IFE business to be generating 10% of its aerospace unit`s revenues.

On Mar. 22, Thales was selected by two more A380 operators--Malaysian Airlines and Air France--after previously being chosen by Etihad. Quentin says the company has 11 TopSeries customers overall for the A380, Boeing 777 and Airbus 340.

Mindful that customer acceptance will be the key to future success, Thales is emphasizing reliability: It is shooting for an availability rate of better than 99.4%, and avoiding teething problems. The first A380 (aircraft No. 2) is expected to fly with a full complement of TopSeries hardware in midyear. The company is already running ground tests on a 555-seat installation in Irvine, Calif., and a 108-seat bench in Hamburg, Germany.

With the market expanding at double-digit rates, Quentin says, IFE is expected to account for more than 10% of the division`s overall sales in coming years--over twice the present figure.

Thales refocused its IFE activity last year by selling its share in LiveTV--an inflight venture owned with Harris Corp.--to its biggest user, JetBlue Airways. Quentin says broadcasting-license issues rendered development of onboard TV, particularly outside the U.S., problematic for the near term.