Investigation by the UK’s Competition and Markets Authority (CMA) has found the proposed merger between California-based satellite operator Viasat and UK based Inmarsat would remove key competitor from the aviation market and may result in higher priced and lower quality on-board wi-fi for consumers.

The CMA started their investigation into the deal back in August, as reported by Total Telecom, after the companies suggesting their complementary assets that would be used to create a “high-capacity hybrid space and terrestrial network”.

The two companies agreed to merge in a $7.3 billion deal announced in November 2021, at a time when both companies were competing aggressively for new business opportunities, against each other and against emerging players like Starlink, OneWeb, and Telesat. One of the most competitive areas for Viasat and Inmarsat is the supply of onboard wi-fi for airline passengers – an area expected to see considerable growth in the near future. A recent study published by Global Industry Analysts Inc., (GIA) predicted the in-flight wi-fi market could be worth US$5.9 Billion by the 2026, up from an estimated US$3.8 Billion in 2022.

The CMA’s investigation found it is difficult for airlines to switch providers once they have installed a connectivity solution, and therefore the merged entity could effectively lock-out other potential competitors. The resulting loss of competition could ultimately affect cost, quality and availability of services for airline passengers.

Colin Raftery, CMA Senior Director, said “Ultimately, airlines could be faced with a worse deal because of this merger, which could have knock-on effects for UK consumers as in-flight connectivity becomes more widespread.”

Rajeev Suri, chief executive of Inmarsat argued that there is no lack of competition in the sector, and certainly it is a target market for the likes of Starlink, OneWeb and Telesat, commenting “Strong players are already offering in-flight connectivity and the new low-earth orbit players . . . are aggressively and successfully targeting aviation.”

The firms now have 5 working days to submit proposals to address the CMA’s competition concerns.