SpaceX's United Airlines Deal Prompts Talk of Starlink In-Flight Dominance: Analysts

SpaceX landing United Airlines as an in-flight connectivity customer could signal its domination of that sector, analysts and consultants say. In its announcement Friday, United said it will begin testing the Starlink service early in 2025, with the first passenger flights getting service later that year. United said passengers would receive Starlink connectivity for free.

The deal points to Starlink having the highest aviation market share over the next decade, William Blair's Louie DiPalma noted Friday. Viasat is the dominant in-flight connectivity provider, with 3,750 commercial aircraft in service and another 1,460 in backlog. SpaceX hasn't had success netting major airlines as customers, he said. The SpaceX agreement was a surprise given that Viasat in-flight connectivity is "considered the gold standard," he said. "Aviation was the last realm of the satellite connectivity market for which Starlink has not emerged as the industry leader."

DiPalma said Viasat will retain the dominant market share at least for the next five years, "given the slow-moving nature of the industry," and Viasat's aviation revenue will likely grow during the period. But the United win is a "landmark deal" and "will likely lead to other" contracts for Starlink, he said. The United rollout could take three years, between switching costs and required FAA certificates, he predicted.

The United deal "marks a pivotal shift toward higher standards of in-flight connectivity," emailed Analysys Mason's Shagun Sachdeva. She said that trend could make high-speed access on flights ubiquitous. United offering Starlink for free, she said, along with Delta instituting free Wi-Fi and Hawaiian Airlines giving free Starlink access, could pressure other airlines to follow suit.

United is "huge" for Starlink, more than tripling the number of aircraft contracted for Starlink's in-flight connectivity over the next few years, David Whelan of Valour Consultancy said in an email. Most of Starlink's wins thus far have been unconnected aircraft, or airlines unhappy with the service in their region, he said. The United deal "really establishes Starlink as a provider that can win any big [in-flight connectivity] contract now."

Sachdeva said that while Starlink has first-mover advantage, other low earth orbit constellations starting to serve the in-flight connectivity market will further change the competitive landscape. Starlink, Whelan said, will likely win a lot of business in the next few years before Amazon's Kuiper becomes an option. He said OneWeb -- while not directly going after airlines as customers -- will find a role in in-flight connectivity as it partners with geostationary orbit vendors like Intelsat but will face stiff Starlink competition.