The Potential Pitfalls of Starlink Aviation
It is undeniable that Elon Musk is a disruptive force in the business world. Throughout his career, Musk’s outside thinking and raw confidence has allowed him to break several industries wide open. He is, perhaps, best known for Tesla; incorporating vertical integration into his business model to change the automotive industry. His direct-to-customer model was so successful that he is utilizing it now with Starlink. Starlink is a Low Earth Orbit (LEO) satellite constellation intended to serve residential, business, RV, maritime, and aviation marketplaces. Similar to Tesla, Musk has seen great success with his manufacturer-to-consumer business template. Despite this, however, there are certain concerns related to how this model may conflict with the rigid nature of the aviation industry.
The reason why the aviation industry is so challenging when it comes to a direct-to-consumer business model is because there is nothing else in aviation that follows that protocol. There is no other item that you can buy for your aircraft that you buy directly from the manufacturer and install yourself. In addition to that lack of precedent, which we can all agree Mr. Musk has been known to avoid in the Automotive Industry, there is the FAA Installation approval process. This is particularly problematic because the complexity of the Starlink system will require STC’s and significant alterations to the aircraft. At $150,000 for the hardware itself and a service fee ranging from $12,500-$25,000 per month, plus the yet to be defined and expensive cost of the installation, the Starlink Aviation product will certainly be as much to install and operate as many more established In-Flight Connectivity systems. While a quarter of a million dollars a year for IFC service isn’t unheard of for large cabin aircraft, the rest of the Business Aviation community is not accustomed to these prices.
The demographic of the aircraft that will find the pricing unobjectionable is used to the highest level of customer service and the virtual self-service model is not likely to be tolerated in this ultra-exclusive community. Typically, they go to a dealer network, or the original aircraft manufacturer and seek solutions from them and once in service they expect the highest level of support. This is particularly important when their equipment fails to function properly. The current service model would immediately provide in-person technical support. Because Starlink Aviation is vertically integrated, without OEM or MRO Dealer support, there is seemingly a vacuum in their service and installation provisions. This could be a potential problem for this customer base, as there has been no precedent for these drastic changes in protocol before.
Of course, Musk is one for tackling the seemingly impossible. His track record is indisputably solid. However, in this industry, consumers have a litany of expectations for their service providers. He himself is a member of this exclusive community that has the utmost in service expectations. This is important to consider because of how limited the consumer pool is for Starlink Aviation. In Starlink’s other factions, customers will come in thousands. For Starlink Aviation, there may only be a few hundred consumers. This is why it is important to understand their expectations. These customers expect to have their needs met, they expect that all of the regulations are being complied with. As aircraft owners, this demographic has no experience doing these things themselves. They have become accustomed to paying mechanics and manufacturers to take care of these things for you. Starlink’s business model, however, is not presently equipped to deal with this problem. These concerns are not meant to be taken in bad faith. Elon Musk has proven himself time and time again to be a business titan. The field of aviation, however, is one that comes with a lot of baggage. Regulations need to be taken into consideration. The limited consumer pool must be accommodated. Vertical integration has proven massively successful for Musk, and he has never failed to approach his problems innovatively. In this particular instance, however, there are certain questions and concerns coming from the aviation industry that are not yet being accurately addressed. In order for Musk to continue his success with Starlink, these concerns are ones that cannot go unnoticed.