Closing Bell - Manifest Space: Hawaiian Airlines Strikes SpaceX Partnership (Part 2) with Starlink VP of Business Operations Chad Gibbs 2/8/24

Episode Date: February 8, 2024

For the first time ever, Hawaiian Airlines is rolling out WiFi services to passengers. Partnering with SpaceX, the airline will equip its first Airbus A-321 with free Starlink Internet service for passengers to use. In a rare interview, Starlink VP of Business Operations Chad Gibbs joins Morgan Brennan to discuss the rollout of Hawaiian Airline’s offering, a milestone for Elon Musk’s space startup and the broader market opportunity for the fast-growing satellite service.

Hawaiian Airlines is officially rolling out Wi-Fi to passengers in a company first. It's doing so with SpaceX. It marks the first time a major U.S. commercial airline has deployed the Starlink service, and the milestone is almost two years in the making. For Hawaiian Airlines CEO and President Peter Ingram, it's an opportunity to leapfrog the connectivity options that, until now, have existed. You know, it's another challenge that guests have faced when they want to use connectivity on airplanes

is traditionally it has been priced very high. Part of that is because of the costs of providing it, but part of that, candidly, is because with those less capable systems, people really don't want you using it all that much because if too many people are logged on and using it, it's not going to perform very well. And SpaceX has really cracked the code, literally, in terms of the technology to be able to deliver a wide bandwidth of very high quality connectivity to an airplane with a global reach. The first commercial flight of the first Starlink-equipped aircraft is happening today, but more jets will come online in the coming months. For SpaceX,

it's another opportunity to reach more customers, including more enterprises, which is what Chad Gibbs, SpaceX's VP of Starlink Business Operations, is focused on. It really feels like an experience that should not be possible when you get on a commercial airline flight and you're able to connect to the internet and experience it in a way that's similar, if not better, than what you can experience in your own home. With more than 5,200 satellites in low-Earth orbit and millions of residential users, Starlink service is rapidly expanding. And businesses are striking deals as well, from telecom companies to cruise ship operators and machinery makers like Deere, which just recently was on Manifest Space.

It all speaks to Starlink's role in propelling investor appetite for the most valuable startup in the U.S. On this episode, a rare SpaceX interview about the rollout of Hawaiian Airlines offering, why it's a milestone for Elon Musk's space upstart, and what the broader market opportunity could be for applications of the fast-growing satellite service. I'm Morgan Brennan, and this is Manifest Space. Chad Gibbs of Starlink, of SpaceX, overseeing the Starlink business. It's so great to have you on. Thanks for joining me. I'm going to just jump right in.

So Hawaiian is getting ready to do its first flight with connected Starlink service. How is this a milestone? Why is it a milestone for SpaceX? Yeah, this is super exciting for us. Hawaiian is the first major commercial American airline to use Starlink for in-flight connectivity. And it's a very exciting milestone to move from all the testing and development work that the teams have been doing over the past year and into actually serving customers.

And so for us, this is sort of where you go from the sort of internal Hawaiian teams testing and giving great feedback on the experience to the thousands and millions of passengers that will fly on Hawaiian getting to use the experience and experience, use the service and experience how great Starlink is. Yeah. In terms of internet speeds, in terms of connectivity and the capabilities that this is going to enable for passengers on airlines of Hawaiian and potentially other airlines that you might be talking to as well, I guess just walk me through what that looks like versus what we've seen traditionally when it comes to in-flight Wi-Fi. most excited about for more people to experience. It really feels like an experience that should not be possible when you get on a commercial airline flight and you're able to connect to the internet and experience it in a way that's similar, if not better, than what you can experience in your own

home. During some of the early testing flights I was on, we were with some of the Hawaiian team and somebody brought along their Nintendo Switch. We were actually able to connect the Switch to the Starlink internet and play Mario Kart online. And just this moment of not being constrained by sort of your normal experience with connectivity in the sky and instead just being able to treat it like, have the similar expectations that you would at your office or at home is really cool. I think for me, for my job, I travel almost constantly. So my use cases are a little bit more benign and less exciting. So the fact that our SpaceX VPN will connect automatically,

that my emails won't take minutes to download, it'll just happen automatically. There's a bunch of exciting things like that. But I think regardless of the passenger type, there's a ton of really cool and unique experiences that having high-speed broadband to the plane will enable. And this is, in many ways, it's more than just the speed, which will be sort of hundreds of megabits to individual planes and individual devices on the plane. But it's also about the whole experience, about walking down the jet bridge, immediately connecting to the Wi-Fi and being online seamlessly without interruption. And so you really don't have any portion of the flight where you feel disconnected or unable to do what you want on the

internet. It's pretty amazing to talk about it that way. I know I personally am excited to experience something like that. There's nothing worse than getting on a plane, you log in, you pay for the Wi-Fi, and then it crashes and you can't get it and do the work you need to do or whatever it is when you're in flight. What does it take to basically fit aircraft to be able to connect to Starlink? This is a huge innovation, we feel, and not just the constellation we've made, but also the experience of installing the terminal on the aircraft.

We've already been able to, working with the Hawaiian team, get the installs to be overnight installs on their fleet. And so it's not about taking a plane out of service for days or weeks, as you might traditionally have expected. We're able to unload passengers in the evening, overnight, install the terminal and configure it and connect it to the network. And in the morning, the next round of passengers hops on and is immediately connected to broadband. So it's, sorry, this is for connecting the planes to the Constellation. As a passenger getting on the planes,

it is like a paradigm shift. Historically, the amount of bandwidth available to the plane has been an incredibly scarce resource. So a little bit of the game is making it a bit painful so fewer people use it. And so at least those people can have something. We now have a totally different paradigm, which is we have incredible amounts of capacity

and bandwidth that we can bring to the plane. So our goal is actually the opposite, which is how can we make it as easy and seamless to get as many people and as many devices connected without friction? And so it's, I guess, when you can bring the technology that unlocks this crazy amount of bandwidth, you can approach the problem totally differently.

And it's been amazing working with Hawaii. And I think they sort of broadly have a real deep investment in delighting their customers and delivering a great customer experience. So working with them, sort of expanding that sort of focus into the internet space has been super rewarding. How big is the opportunity around airline connectivity? And I guess, how do you parse that out versus some of the other areas that Starlink has been expanding to on the enterprise and business side, whether it's cruises or even the recent deal with Deere, for example? I guess, how big is airlines and then how big is enterprise, especially at a time

where so much of the focus, at least up until now, has been on the consumer side of the business? Yeah, this is a great question. So we're incredibly excited about the opportunity in aviation broadly for two aspects. One, aviation, there's billions of passengers that fly every year. And so in terms of a space where, if we think about our broader goal of Starlink to expand connectivity and grow the pie of places where people can consume broadband,

it just represents a huge market, a huge opportunity to expose more and more people, both to a great product and a great experience, but also to Starlink. And I think we're super excited about the number of passengers that will maybe learn about Starlink or learn about how great Starlink is for the first time flying on airplanes.

I think broadly for Starlink, our main goal was let's go build a constellation that can provide incredible broadband to a super demanding customer, like a teenager that's playing games upstairs in their, in their parents' house. And so we've been focused really, really a ton on, okay, how do we go deliver that service? And it turns out if you can deliver and meet that expectation, I'm not saying we're there yet, but this is sort of what we're striving towards.

It, it unlocks a ton of other applications that you can build on top of that. So as the network has gotten to a more stable place, as our residential business has grown, it's really unlocked the team's ability to go explore other applications, other business segments that you can layer on top of that network. And I think we're just scratching the surface. I think you mentioned some of the things that we've been doing on the cruise lines, which are incredibly exciting. The work with Deere I'm incredibly excited about.

And I think this aviation, this go live with Hawaiian is just the first step in the aviation market as well. Yeah, when you talk about scratching the surface, I guess, any sort of sense or thoughts on how that balances against residential in the years to come as more companies and more industries realize that the connectivity options here are perhaps even greater than they anticipated? I don't know if I totally tracked the question, but I think what it gets to for us is there's just a, like there's just this huge opportunity in spaces where broadband connectivity

has not historically been available. And it's exciting for us to go attack those. And one of the things I do think is important to stress is, although I said scratching the surface, it's very important to note that it's not like this Hawaiian go live will be our first flight with providing connectivity to. Already to date, Starlink has been used on over 30,000 flights, on flights across the U.S. and around the world. And so it's definitely a springboard and sort of a step into the next phase of this adventure. But we already have great success across both commercial and business aviation fleets. Okay, great. Anything else to keep in mind or anything else I should be asking you that I'm not?

No, the thing that your last question did remind me is making sure that people understand that this is a service that exists. It's not a promise of a thing we're bringing to the market in the future or, hey, we're just getting started and there's not an existing infrastructure that we're going to be building upon as we go into the future. Got it. So total addressable market for Starlink. From a business operations standpoint, any kind of sense or number to put to it or is it really sky is the limit?

I think sky is the limit. This is a thing I tell our teams and people around me all the time. We generally are trying to come to work every day and thinking about how can we expand access to broadband, whether that's on aviation or deer, getting connectivity out to the last acre in the field. When you think about broadly, there are still billions of people who lack access to reliable broadband around the world.

So I'm sure there is an addressable market ceiling, but right now we see a ton of opportunity just continuing to expand and grow our business. Great. Chad Gibbs, VP of SpaceX's Starlink Business Operations. Thanks for joining me. Appreciate it. That does it for this episode of Manifest Space. Make sure you never miss a launch by following us wherever you get your podcasts

and by watching our coverage on Closing Bell Overtime. I'm Morgan Brennan.