Late last year, Panasonic Avionics Corp. formalized a reality as the maker of in-flight entertainment systems officially moved its headquarters from Bothell, Wash., to Lake Forest.
Part of Japan’s Matsushita Electric Industrial Co., Panasonic Avionics saw its “center of gravity” shift here in 2005, when Paul Margis was named president.
Margis lives in Irvine.
The Lake Forest facility is an engineering hub for Panasonic Avionics. The Bothell facility near Boeing Co.’s jet production plant in Seattle, houses a repair shop and sales offices.
Orange County is a center for in-flight entertainment companies, including Thales Avionics Inc. in Irvine, part of France’s Thales SA, Cedar Rapids, Iowa-based Rockwell Collins Inc.’s Tustin unit, and up until August, Boeing, which shuttered its Connexion unit in Irvine.
Panasonic Avionics shares a big name, thanks to Matsushita’s consumer electronics arm. But it keeps a low profile in in-flight entertainment, according to Margis.
“Our real goal is that our customers have the most advanced systems,” he said. “We are like the guys who build Bentleys. We don’t make a big splash. But the premium airlines know who we are and know where to get the latest stuff.”
More than 3,000 planes are outfitted with Panasonic Avionics’ in-flight entertainment systems for watching movies, TV shows, shopping, playing games or making calls. Customers include EgyptAir, Qantas Airways and Japan Airlines.
U.S. customers include United Airlines, Delta Air Lines, Continental and Virgin America, the U.S. startup of the British airline.
Carriers such as Singapore Airlines and Emirates use in-flight systems for luxury appeal and to win customer loyalty.
They often compete with each other for the most high-end gear.
“There’s a bit of an arms race, and that’s good for us,” Margis said.
Panasonic Avionics has seen rapid growth as airlines roll out new jets and seek to fill first-class seats with repeat customers.
“It’s a great time in our business,” Margis said. “If we can keep a little bit of peace in the world, a little bit of stability, it will really fuel the growth.”
Big Backlog
Matsushita, which counts yearly sales of $72 billion, doesn’t break out sales for Panasonic Avionics. The unit’s backlog, or orders placed but not yet filled, was $2.3 billion in January.
Sales rose 22% last year, according to spokeswoman Brenda Kuhns.
The unit is one of the largest in-flight entertainment suppliers.
Unlike closest rival Rockwell Collins, Panasonic Avionics doesn’t develop programming or on-screen menus for its systems. It taps others for that.
Rockwell has its own media unit in Tustin that packages music, movies and TV programming for airlines.
Where the rivals go head-to-head is in being first with technology.
“Today, it’s easier for our competition to come up close,” Margis said. “We like to keep them surprised.”
Panasonic Avionics benefits from being part of Matsushita, Margis said.
The parent company “spends about $6 billion a year in R & D;,more than the revenue of some of the other avionics suppliers,” he said.
Panasonic Avionics gets a portion of that spending. The company turns out a line of in-flight entertainment systems every three years, according to Margis.
“We continuously push the envelope to innovate,” he said. “Our customers demand the next level up every single time.”
About 90% of Panasonic’s manufacturing is done at Matsushita’s facility in Osaka.
Panasonic Avionics’ newest in-flight entertainment system, eX2, is set to be installed on the fleets of 11 airlines, including Japan’s All Nippon Airways and Continental.
It’s the most advanced yet, with satellite links for live TV, wireless connections, on-demand video, high-speed data and digital phone service.
Seatback monitors have a wide screen and range in size from 9 inches in economy class to up to 23 inches in first class.
Its remote control does triple duty as a small keyboard, a phone and a game controller.
Upscale global airlines have smaller fleets, so they can upgrade their in-flight entertainment systems every few years, Margis said.
“Traditionally, they are leaders for in-flight entertainment,” he said.
U.S. airlines, on the other hand, come to Panasonic Avionics looking to fill the most profitable seats in the business and first-class cabins.
“Domestic aircraft have put a huge investment into this over the last couple years and actually have been able to measure the results of that in yield,with the passengers they want to attract, not just the discount fares,” said David Bruner, marketing director for Panasonic Avionics. “That’s really changed the business.”
Delta Song, a low-cost carrier that’s part of Delta Air Lines, has embraced the idea.
“They are totally sold on the fact that this is bringing them premium passengers,” Bruner said. “They are revamping their entire business around in-flight entertainment.”
Still, U.S. carriers lag behind international counterparts when it comes to having the latest bells and whistles.
“It’s just been slower,” Bruner said. “They tend to have a lot more airplanes, so it’s a lot bigger investment. Their return cycle is much longer.”
Panasonic Avionics expects more airlines to adopt high-end entertainment systems with Boeing’s new 787 Dreamliner.
“It’s going to be a very, very important aircraft for us,” he said.
History
Matsushita got into avionics when it was asked to develop a light, thin radio that could be mounted on any surface.
The company started out supplying passenger control units, such as the flight attendant call signal buttons and overhead light switches found on the armrests.
It was the first avionics company to market video equipment to airlines in the late 1970s, which launched it into the in-flight entertainment business.
In 1980, Matsushita won a contract from Boeing to provide flight attendants’ cabin controls and in-flight entertainment systems for the 767 planes.
That same year, the company set up a small operation at Panasonic North America’s headquarters in Secaucus, N.J., and introduced a string of plane technologies.
In 1986, the company moved its headquarters to Bothell.
The company set foot in OC in 1990, when Margis and seven other engineers set up a research and development office in Irvine.
Matsushita Avionics Systems Corp. was integrated as a subsidiary five years later.
In 2005, the company changed its name to Panasonic Avionics Corp.,reflecting Matsushita’s best-known brand,and moved to an industrial park off of Bake Parkway.
It’s grown into three separate buildings at the site and is about to move into a fourth.
The company employs more than 900 local workers and has about 296,000 square feet of space.
The next big push: “connectivity”,linking a plane to the ground, passengers to interactive content, and different systems on the plane to each other.
“The airlines have very, very high expectations,” Margis said. “We see connectivity as the next step to raise the level of support and maintenance.”
