Monday, February 7, 2011
Interview with Michael Small, Aircell
This morning, Aircell (www.aircell.com), which operates the Gogo in-flight Internet services, announced that it has raised another $35M in a financing round from private equity investors. We spoke with Michael Small, the firm's President and CEO, to hear more about the funding.
Thanks for the time today. Tell us a little bit about the financing round?
Michael Small: We closed a $35 million dollar financing. For us, that's significant, given that we've now raised over $500 million since we got into the air to ground business, to provide the Gogo service. I feel it marks a transition from the startup phase to an ongoing, established operating company. We've made a lot of progress over the last year, and feel like it's a lot different taking money this time, as it is to add to our ongoing growth.
Is that growth coming from your business aviation or commercial aviation business?
Michael Small: Both businesses had a fabulous year in 2010, and we expect to do the same in 2011. We now have over a thousand aircraft, almost 1100 commercial aircraft in the U.S., out of approximately 1300 installed globally with our in-flight connectivity. We've established ourselves, far and away as the leader on the commercial side. On the business aviation side, we have close to six thousand jets installed, with both air to ground and satellite solutions. We're the world's leader on that side, as well. For 2011, we expect to install over three aircraft per day , well over a thousand aircraft this year.
There have been a number of in-flight Internet providers (ie Boeing) which did not do so well in this market. What makes you different?
Michael Small: I've been with the company for about a year and a week or so, and that was exactly the questions I asked myself when joining. There are two critical answers to that. one, is our air to ground networks have crossed into what I think of as the "good enough" category. Before, lots of the in-flight solutions were slow and clunky, and frustrating to use. We're in the business of providing bandwidth, and people always wants more--that never ends. However, at some point, you cross the threshold where it really works for customers, and there are plenty of things they can do. I was familiar with EVDO Rev. A technology from my prior job, and I was convinced that it could provide a good customer experience. The second change, is there really has been an adoption of mobile Internet. About 70 percent of passengers are now carring Wi-Fi enabled devices, and that wasn't true a few years ago. Now that customers have a device, the service is going to make them happy. Today, as we sit here, we are rapidly approaching 10 million sessions from customers. They know it works. We get great feedback that customers are not only routinely choosing flights based on the availability of our service, but also even willing to give up their frequent flyer status if the can get Gogo on another flight. The customers are loving it.
So, what will you do with private equity funding?
Michael Small: It will go to fund our growth. The profitability trends have been very encouraging in 2010. Going into 2011, we feel the rate of planes we're adding and the rate of revenue growth means we need a little more funding to support that rapid growth.