Lake Forest-based Panasonic Avionics Corp. could be a month away from inking its first deal to install high-speed wireless Internet service via satellites for airline passengers.
A contract for Internet service could cover 100 planes at an undisclosed U.S. airline, according to Panasonic Avionics, part of Japan’s Matsushita Electric Industrial Co.
The move comes about a year after Boeing Co. shuttered its in-flight Internet venture, Irvine’s Connexion by Boeing, because its satellite system was too costly for frugal airlines.
Panasonic contends it’s made the technology more affordable.
“A lot of little things came together to make it work for us,” said David Bruner, Panasonic’s executive director of corporate sales and marketing.
Boeing was leasing use of satellites for 11 different regions, according to Bruner. Panasonic is starting small and expects to gradually increase its use of satellites, he said.
And the company has made its connections two to three more times efficient, according to Bruner.
Those factors, Bruner said, make Panasonic able to compete with cellular service providers such as Verizon Communications Inc., which offer competing in-flight Internet service via their networks.
Panasonic, a maker of in-flight entertainment systems that offer video and audio to passengers in their seats, is working with Bermuda-based satellite operator Intelsat Ltd. on Internet service.
The company plans to charge $5.95 for a half hour of its Internet access, $11.95 for an hour and $21.95 for a day’s use.
Maryland’s Hughes Communications Inc. also is offering satellite-based Internet service with similar technology, Burner said.
Airlines planning to offer Internet service to passengers this year are AMR Corp.’s American Airlines, Virgin America and Jet Blue Airways Corp.
Panasonic is looking to its foothold in in-flight entertainment to win Internet business with airlines. More than 3,000 planes at more than 200 airlines have its systems.
The company also works with Hollywood studios to provide movies to airlines.
Business Growing
Despite setbacks in the airline industry, including high fuel prices and a yearlong delay in Boeing’s 787 Dreamliner, Panasonic’s business has been growing, executives said.
In November, it signed a $500 million deal to install entertainment systems for planes bought by Emirates, the Dubai, United Arab Emirates-based airline.
In the past five years, Panasonic Avionics has nearly doubled its Lake Forest headquarters from 500 people to 950, expanding from two buildings into five. The company expects to do more hiring this year.
Sales have been driven by the refurbishment of old planes as well as outfitting new ones, said Neil James, director of corporate sales and marketing for Panasonic.
Airlines wanting to upgrade their TV and audio systems to be more competitive have provided a steady stream of business, he said.
“Airlines see the value of keeping passengers in their seats,” James said.
A contract with Boeing for the delayed Dreamliner is a small portion of the company’s revenue, according to James.
Boeing expects the first delivery of the twin-engine jet in early next year.
It was initially scheduled to roll out this May.
The first Dreamliners will have Panaonic’s systems on it, James said. Panasonic’s systems will have gigabyte-sized memory chips for computer applications, according to James.
But France’s Thales SA, which has its Thales Avionics unit in Irvine, said it has won 80% of the contracts to put entertainment systems in the new jets.
The Dreamliner initially was engineered with wireless networking in mind. But problems getting government approval to use frequencies have delayed that, James said.
Panasonic also is working with EADS NV’s Airbus on its A350 rival to the Dreamliner.
The company competes with Thales and Cedar Rapids, Iowa-based Rockwell Collins Inc.’s Tustin operation.
The three companies dominate in-flight entertainment, according to James.
In-flight entertainment “grew up” in the county in the 1980s, James said. Most manufacturing of the devices takes place in Asia.
Panasonic Avionics Chief Executive Paul Margis changed the company’s name from Matsushita Avionics Systems Corp. and moved the headquarters to Lake Forest from Bothell, Wash. in 2005 when he took over.
