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Gogo eyes international expansion, calls global in-flight broadband 'untapped market'

The in-flight connectivity firm's chief executive calls the international airborne broadband market "relatively untapped," but Gogo's growth remains at the mercy of airlines.
Written by Zack Whittaker, Contributor
Image: Zack Whittaker/CBS Interactive

Gogo's pitch to the international airline market is coming along, albeit slowly-slowly. 

The in-flight technology company already has its feet firmly in the North American market, with American Airlines, Delta, United, and Virgin America on its roster. But internationally, the airborne connectivity market is "relatively untapped," according to Gogo chief executive Michael Small.

Up until the company's fiscal third quarter, ending September, Gogo has played the home game: offer service to North American airline partners, tap into the business aviation market, and build momentum over time.

Gogo's business aviation unit is its bread and butter, offering in-flight connectivity to more than 6,500 private and charter jets. This could be far higher, Small said on the company's fiscal third quarter earnings call on Monday, citing more than 20,000 business jets in the North American market alone.

Meanwhile on the commercial side — regular airlines to the likes of mere mortals — is where the company reaps much of its brand recognition and long-term revenue, with more than 2,000 commercial aircraft running its broadband technology.

But according to Small, the in-flight technology firm is on the most part at the behest of the airlines themselves.

"Given the importance airlines now attach to broadband, we think most major airlines will make connectivity decisions over the next few years," Small said on the call.

He said around 200 aircraft have in-flight broadband connectivity, and only "several hundred more firmly committed" out of roughly 13,000 non-U.S. commercial aircraft.

Gogo in October signed a lucrative deal with Japan Airlines to provide its in-flight Internet service to its domestic mainline fleet of 77 aircraft. Small described it as a "significant growth opportunity" for the firm. The service is expected to go live in the third-quarter of 2014. 

For Gogo, international growth is crucial for the company's long-term prospects. It still has a great deal of work to do — though, already ticking along well — in the U.S. and Canada markets, but the company is reliant on the airlines to offer in-flight services to their customers.

Small noted its "simple" growth strategy. Be the best at what the company does, and hope the other airlines, which might be lagging in in-flight services, come running. 

For now, while Gogo has its global plan mapped out, its focus is to bolster its position at home before it starts playing with the international players abroad. 

Gogo reported revenue of $85.4 million, up close to 50 percent, on the year-ago quarter. For 2013, the company is looking at a high-end outlook of $325 million, up from $315 million on earlier guidance.

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