While the defence sector is showing only modest growth, rising commercial traffic continues to power the industry, driven particularly by growing passenger traffic in Asia-Pacific and the Middle East buoyed by rising demand, falling fares and increased infrastructure.
Passenger and freight traffic are forecast to grow at average annual growth rates of 4.6% and 4.4% respectively over the next 20 years¹. Given such forecasts, it is little surprise that Airbus has announced that it is increasing production of two of its newest aircraft, the A320neo single aisle and the A350 wide-body. However, plenty of new models from other OEMs are on the horizon too.
Military budgets across the world are increasing in the wake of heightened global security threats.
Leading the way is the US which still accounts for more than a third of total global military spending and where many significant defence programmes are now entering the engineering manufacturing design phase, including: the F-35 fighter jet; the KC-46A aerial refuelling tanker; the Long Range Strike Bomber; the USAF T-X trainer; and the Rafale fighter programmes.
The UK, another significant military spender, recently acquired nine Boeing P-8 maritime patrol aircraft and announced an acceleration of the F-35 combat aircraft programme.
Hostilities across the Middle East are driving continued strong demand for military aircraft from governments across the region, while India is also seen as a major market. Last year its defence budget rose 8% and similar growth rates are forecast over the next five years.
The major OEMs are all building new military aircraft. For instance, Airbus is developing the A400M military transport aircraft, while Boeing is building the KC-46A aerial refuelling tanker for the US Air Force.
In response to volatility in oil and gas markets, which are big drivers of demand for helicopters, the industry has adopted a cautious outlook. The market is forecasting 4,300 to 4,800 civilian-use helicopters will be delivered from 2016 to 20204, roughly 400 helicopters lower than the 2015 five-year forecast.
The market recently saw its most significant transaction in many years when Lockheed Martin acquired Sikorsky, the world’s biggest supplier of military helicopters by sales. The deal was part of Lockheed’s move to diversify away from its military business.
Meanwhile, Airbus announced plans to assemble helicopters in China as part of a ¤700m deal to supply 100 H135 light helicopters to the country. Airbus already makes short-haul passenger jets in China, and plans to build helicopters at a factory in Qingdao by 2018.
Hot topic: Unmanned Aerial Vehicles
Global spending on the production of Unmanned Aerial Vehicles (UAVs) for both military and commercial use is forecast to reach $93bn6 (€83.7bn) over the next decade, making it one of the most dynamic growth sectors in the global aerospace industry.
The market is being driven by the next generation of unmanned combat systems, and the development of new markets such as civil and consumer drones. In particular, the consumer UAV market is growing rapidly as the boundaries between commercial and consumer markets becomes increasingly blurred.
For instance, non-military drones are making inroads into logistics and transport as they are perfect for use in remote locations such as oil rigs, offshore wind farms or pipelines. Drones also offer a growing range of applications in the fields of security and surveillance.
2016 saw the Federal Aviation Administration in the US unveil new rules which formalise the commercial use of drones.