Louie DiPalma: Great. So you do expect to narrow the gap.
Oakleigh Thorne: And yes, yes. As far as 5G goes, I mean, we’ve been really smart about that whole STC program which is why there are so many aircraft in North America that will be covered almost immediately after we launch because we’ve actually got first article STC and PMA on a LX5 box already, but a 4G chip in it. So all we need to do it when that to get those STCs kind of up and running immediately substitute the 5G chip do a minor modification to the STCs that are already done. And then those STCs and that those will get quite rapid FDA approval because if it’s a minor MoD. It’s a week or two, and then we’ll be ready to fly with 5G on a whole lot of planes, too.
Louie DiPalma: Great. And then another two parter along the same StarLink theme. There was a Bloomberg article about the StarLink service quality on a Delta Airlines trial that suffered some quality issues because of StarLink sharing their aviation network with the residential network in the channel. Are you hearing if that is a customer concern? And also on the StarLink theme, are you hearing whether the $2,000 per month plan price plan is resonating and do customers think that is just introductory pricing similar to what Comcast Xfinity does or did I think that’s actually sustainable? Thanks.
Oakleigh Thorne: Yes, sure. Let’s start with the $2,000 plan. I mean, that’s just a bucket plan, right? So you paid a minimum of $2,000 and then you pay another $100 per gig. You we’ve got bucket plans, we know them well. And what happens generally is that people go over the bucket and pay a lot more for the plan than they anticipated. And with the very powerful antennas like StarLink and we are bringing out, you’re going to consume a whole lot of data. So that first 20 gigs is going to go pretty quick and people will end up spending a lot more than they planned. And owners in this space typically do not like spending more than they planned. So they opt for unlimited plans generally. So today, 80% of our aircraft are on unlimited or fleet plans, which are very similar to unlimited, and only 13% are on bucket plans.
And also just given what we’re projecting for usage, we think hit people on that plan. They’ll actually spend more than the $10,000 for the unlimited. So that doesn’t concern us very much to be honest. And we’ll have aggressive plans like that, too. But that doesn’t mean that that’s what the ARPU is, right? The ARPU is going to be a lot higher. Your other question on, on StarLink contention it isn’t an issue. I’m not flown StarLink down the eastern seaboard, I got between 16 megabits per second and 135 megabits per second. There was still good, the latency improvement that we will have and they have makes a huge difference in your perception of speed, to be honest. So I’ll give them credit for that, but there is — for all of us, depends on which StarLink satellite you get on, you could have a lot of contention or not.
So it’s the legitimate issue. But I think, frankly, the real issues are not going to be around the service itself. I think the service will be good when it’s available. The issues from my perspective are more around the equipment and what they’re doing there. I mean there’s this market is a very, very demanding market in a lot of ways. Equipment needs to be small, because space is at a premium on business aircraft, it’s needs to be aero dynamic for safety and fuel consumption purposes, needs to be ruggedized to withstand extreme vibration and temperature variations. High of all of it needs to be easy to install and HDX and FDX actually check all those boxes. StarLink, which has taken a very different approach, right? They are taking consumer off the shelf, products that they mass-produce in order to keep the cost down for consumers and they’re trying to move into residential into aero.
And that doesn’t work very well. They’re hard to install, 39 inches wide, which will make it difficult to install, a narrow diameter planes. By contrast, our HDX is 12 inches wide, it’s easy to install a narrow diameter planes, 44 inches long, RFDX, which is our big one is only 30 inches long. And that comes into — that’s important because when you’re on the top of an aircraft there’s actually all kinds of other antennas and gear up there, and the more of that stuff you have to move in order to put an antenna on, the more expensive the install is. It’s very complex to install. They’ve got like 39 pieces of equipment and 200 plus fasteners to attached on antenna to the plane. RFDX has 12 pieces and 16 fasteners, HDX has nine pieces and 14 fasteners.
I need to just throw those numbers out there, just to give you a sense of what we mean when we talk about complexity. They also have designed this thing in such a way that the FAA is requiring periodic maintenance, no other antenna and in-flight connectivity requires periodic maintenance. We build these things for the last 25, 30 years of those aircraft, and they never require maintenance. That maintenance will actually require owners to remove the headliner inside the aircraft, which can be believe it or not very complicated. And sometimes you have to take out the seats, take out the floor, so you can get the side panels out to take the headliner down and then get into the fuselage inside the aircraft and you need to do that for periodic inspections.
You’re also going to need to take the actually radome off for those inspections and you’re going to have to lubricate parts of this antenna. That’s unheard off in our space. I could go on and on. I mean, they just have all kinds of crazy things, because their consumer off the shelf, they cannot survive outside the pressure vessel. So they’re not — this equipment can’t go from 130 degrees on the tarmac to minus 60 at 50,000 feet in 10 minutes, you can’t withstand any of that. So you have to put all this stuff inside the pressure vessel. This is taking up room for luggage, seat, closet space, place to put your golf clubs, et cetera, et cetera. Obviously, where ruggedized and we can be installed anywhere you can put it inside the pressure vessel or outside the venture vessel.
And they also require a lot of different pieces of gear. They don’t — because they’re made for consumer, they are AC power. Most business aviation is DC power. So you have to have a power converter, then you need a fan in order to cool all that because it gets very hot, most passengers don’t like having a fan wearing in inside the cabin, et cetera, et cetera. So I could go on and on and on, but there’s a lot of things — a little kind of inconveniences, minor problems, but add it up, it’s sort of like, yes, you know, if you’re going to pay about the same and the services about the same, why would you put up with all those nuances and frankly a higher total cost of ownership with all the maintenance costs, you’re going to have the end of the day and the company, you know, is going to be in the business for long term and you could buy it from somebody who’s been in it for 30 years has great service provides great support.
So, any kind of product and you know, he’s going to be in the business?
Louie DiPalma: Thanks. Oak, you’re very in the weeds on that one.
Oakleigh Thorne: If one, for example, you have to go a lot further away.
Louie DiPalma: And one for Jessi, Jessi, if the 5G network is delayed, does that mean that some of the 5G costs that you’re anticipating for the second half of this year will be pushed into 2025 and that would imply that you would raise your EBITDA guidance?
Jessi Betjemann: Well, so I said that we would evaluate once we understood the exact timing, but potentially the impact would be on. Yes, on OpEx and CapEx pushed out, which would impact positively impacts EBITDA and free cash flow. But the specific value of what that would be, we don’t know yet on one of the things. I mean, we have talked about due to flight testing, we’re continuing to do flight testing, so there still will be spending. It’s just that particular milestones may get pushed out. So we’ll have to evaluate that and come back.
