Aerospace Market Definition
The aerospace market consists of sales of aerospace equipment (including aircraft) and related services by entities (organizations, sole traders and partnerships) that produce commercial aircraft, undertake aircraft maintenance, repair and overhauling services, and produce support and auxiliary equipment, such as radar, air traffic control towers and satellites for civilian purpose.
Aerospace Market Size
The global aerospace market reached a value of nearly $342.4 billion in 2019, having increased at a compound annual growth rate (CAGR) of 3.1% since 2015. The market is expected to decrease from $342.4 billion in 2019 to $296.1 billion in 2020 at a rate of -14%. The decline is mainly due to lockdown and social distancing norms imposed by various countries and economic slowdown across countries owing to the COVID-19 outbreak and the measures to contain it. The market is then expected to recover and grow at a CAGR of 6.5% from 2021 and reach $358.8 billion in 2023.
Growth in the historic period resulted from increased demand for air travel technological advances, emerging economies, change in social behavior and low interest rates. Factors that negatively affected growth in the historic period were high exchange rate fluctuations, political uncertainties, volatile raw material prices and grounding of planes.
Going forward, growing demand for commercial use of drones, emerging economies, rapid advances in technology. Factors that could hinder the growth of the aerospace market in the future include budget airlines’ bankruptcy, order cancellations, increased cyber-attacks, global warming, poor aviation infrastructure, geo-political tensions, global recession, and coronavirus pandemic.
Aerospace Market Drivers
The key drivers of the aerospace market include:
Commercial Use Of Drones
Legal authority allowing the use of drones for commercial use is being extended more widely increasing a potential revenue channel for aircraft manufacturers. For example, in August 2016, the US Federal Aviation Authority issued a rule allowing the use of drones for commercial purposes under certain conditions without a special waiver that was expensive and time-consuming to obtain that severely restricted the use of drone. Relaxation of the regulations is expected to aid the market for commercial drones in the forecast period. Many other countries follow the FAA’s regulatory lead to clear commercial drones for take-off not just in the USA, but worldwide. Combined with the launch of reliable and stronger drones specifically for commercial use, such as the drones manufactured by a Chinese company DJI and public sales of commercial drones are expected to drive rapid growth in the drone segment of the aerospace market.
Aerospace Market Restraints
The key restraints on the aerospace market include:
Budget Airlines’ Bankruptcy
Rising bankruptcy cases among budget airlines are expected to hinder the growth of the aerospace market. In March 2019, Wow Air, an Icelandic budget airline, shut down its operations after it failed to secure funding for the company. Since Summer 2018, Wow Air had been the eighth European airline operating on small profit margins that shut down owing to “fluctuating fuel costs, over-capacity, and a continent-wide fare war”, following the Danish budget airline Primera Air that shut down in October 2018, and Swiss airline SkyWork and the Belgian airline VLM that shut down in August-September 2018. The number of bankrupt airlines, i.e. major end users of aircraft manufacturers, is expected to increase. In August 2020, companies such as Virgin Atlantic filed for bankruptcy, due to the impact of COVID-19, thus negatively impacting the market. Virgin Atlantic has faced an adverse effect of the pandemic, and has filed for bankruptcy to nail its rescue plan and the company is expected to run out of cash soon if the rescue plans are not approved.
The rise in the number of bankrupted airlines will negatively impact the demand for new aircraft hindering the growth of the aerospace market.
Aerospace Market Trends
Major trends influencing the aerospace market include:
Use Of Cloud Platforms For Developing Aircraft Designs
Companies in the aerospace market are increasingly using cloud platforms for developing their aircraft designs. All the major players in the market including Airbus, Boeing, Gulfstream and Lockheed Martin have started implementing cloud-based platforms to develop a new aircraft, engine, system or component design. The cloud platform enables simplification in the design process by bringing the suppliers, systems integrators, software developers and other stakeholders within the design and manufacturing ecosystem together over a virtual platform. For instance, in 2020, Vertical Aerospace, a UK-based aviation industry innovator, used Dassault Systèmes’ 3DExperience platform on the cloud to develop their third all-electric vertical takeoff and landing aircraft. Vertical Aerospace used the 3DExpereince platform to improve coordination between their design, engineering, testing and manufacturing disciplines and provide access to all the engineering documentation they require in the cloud to enable effective work from home. Dassault Systèmes is a France based provider of virtual solutions to business and people.
Machine Learning Algorithms In Aircraft Manufacture
Aircraft manufacturers are using machine-learning techniques such as artificial intelligence (AI) to improve aircraft safety and improve manufacturing productivity. Machine learning algorithms collect data from machine-to-machine and machine-to-human interfaces and use data analytics to drive effective decision making. These technologies optimize manufacturing operations and lower costs. For example, GE Aviation uses machine learning and data analytics to identify faults in engines, which increases components’ lives and reduces maintenance costs. Boeing has successfully built machine-learning algorithms to design aircraft and automate factory operations.
Opportunities And Recommendations In The Aerospace Market
Opportunities – The top opportunities in the aerospace market segmented by type will arise in the aircraft maintenance, repair and overhauling services market segment, which will gain $8.8 billion of global annual sales by 2023. The top opportunities in the commercial aircraft market segmented by type will arise in the commercial gliders and drones market segment, which will gain $5.3 billion of global annual sales by 2023. The top opportunities in the aircraft maintenance, repair and overhauling services market segmented by type will arise in the commercial aircrafts MRO services market segment, which will gain $3.0 billion of global annual sales by 2023. The top opportunities in the aerospace support and auxiliary equipment market segmented by type will arise in the commercial radars market segment, which will gain $1.7 billion of global annual sales by 2023. The top opportunities in the aerospace market segmented by size will arise in the narrow-body segment, which will gain $9.3 billion of global annual sales by 2023. The top opportunities in the aerospace market segmented by end-user will arise in the private sector segment, which will gain $15.7 billion of global annual sales by 2023. The top opportunities in the aerospace market segmented by operation will arise in the manual segment, which will gain $16.1 billion of global annual sales by 2023.The aerospace market size will gain the most in the China at $1.69 billion.
Recommendations – To take advantage of the opportunities, the business research company recommends the aerospace companies should focus on use of robots, adopt new technologies, automation to achieve standardization, focus on merger and acquisitions, expanding in emerging markets, offer competitive pricing, increase adoption of internet and social media, and participate in trade shows and events.
Aerospace Market Segmentation
The Aerospace market is segmented by type, by size, by end-user, by operation, and by geography.?
By Type -
The aerospace market is segmented by type
a. Commercial Aircraft
The passenger aircrafts market was the largest segment of the commercial aircraft market, accounting for 53.5% of the total in 2019. Going forward, commercial gliders and drones’ segment is expected to be the fastest growing segment in the commercial aircraft market, at a CAGR of 18.9%.
- i. Passenger Aircrafts
- ii. Aircraft Engines
- iii. Commercial Helicopters
- iv. Aircraft Turbines
- v. Commercial Gliders And Drones
- vi. Rocket Engines
b. Aircraft Maintenance, Repair And Overhauling Services
The commercial aircrafts MRO services market was the largest segment of the aircraft maintenance, repair and overhauling services market, accounting for 63.6% of the total in 2019. Going forward, commercial gliders and drones MRO services’ segment is expected to be the fastest growing segment in the aircraft maintenance, repair and overhauling services market, at a CAGR of 52.3%.
- i. Commercial Aircrafts MRO Services
- ii. Aircraft Engines MRO Services
- iii. Commercial Helicopters MRO Services
- iv. Rocket Engines MRO Services
- v. Aircraft Turbines MRO Services
- vi. Commercial Gliders And Drones MRO Services
c. Aerospace Support Auxiliary Equipment
The satellites market was the largest segment of the aerospace support and auxiliary equipment market, accounting for 69.1% of the total in 2019. Going forward, commercial radars segment is expected to be the fastest growing segment in the aerospace support and auxiliary equipment market, at a CAGR of 4.5%.
The commercial aircraft market was the largest segment of the aerospace market segmented by type, accounting for 71.1% of the total in 2019. Going forward aircraft maintenance, repair and overhauling services segment is expected to be the fastest growing segment in the aerospace market, at a CAGR of 3.0%.
- i. Satellites
- ii. Commercial Radars
By Size –
The aerospace market is segmented by application
The narrow-body segment was the largest segment of the aerospace market segmented by size, accounting for 55.5% of the total in 2019. Going forward, others segment is expected to be the fastest growing segment in the aerospace market, at a CAGR of 1.3.
- a. Wide-Body
- b. Narrow-Body
- c. Regional
- d. Others
The aerospace market is segmented by end-user into
The private sector segment was the largest segment of the aerospace market segmented by end-user, accounting for 92.1% of the total in 2019 and is expected to be the fastest growing segment in the aerospace market, at a CAGR of 1.2%.
- a. Government
- b. Private Sector
The aerospace market is segmented into
North America was the largest region in the global aerospace market, accounting for 49.7% of the total in 2019. It was followed by Asia-Pacific, Western Europe, and then the other regions. Going forward, the fastest-growing regions in the aerospace market will be Asia-Pacific, and Western Europe where growth will be at CAGRs of 3.7% and 1.5% respectively. These will be followed by Middle East, and North America, where the markets are expected to grow at CAGRs of 1.1% and 0.1% respectively.
- o North America
- o Western Europe
- o Asia Pacific
- Hong Kong
- New Zealand
- South Korea
- o Eastern Europe
- Czech Republic
- o South America
- o Middle East
- Saudi Arabia
- o Africa
- South Africa
Aerospace Competitive Landscape
Major Competitors are:
Other Competitors Include:
- • Airbus Group
- • The Boeing Company
- • United Technologies Corporation
- • General Electric Company
- • Safran S.A.
- • Rolls-Royce Holdings plc
- • General Dynamics Corp
- • Honeywell International Inc.
- • Bombardier Inc
- • Embraer S.A.
- • Hindustan Aeronautics Limited (HAL)
- • BrahMos Aerospace
- • Commercial Aircraft Corporation of China, Ltd. (COMAC)
- • Shanghai aircraft manufacturing factory
- • Aviation Industry Corporation of China
- • Superior Aviation Beijing Co., Ltd.
- • Mitsubishi Aircraft Corporation
- • Kawanishi Aircraft Company
- • ShinMaywa Aircraft Industries, Ltd.
- • Subaru Corporation
- • Foxcon Aviation
- • Dirgantara Indonesia
- • Advanced Composites Solutions
- • Nostromo Defensa.
- • Israel Aerospace Industries
- • Iran Aircraft Manufacturing Industries and
- • Israel Aerospace Industries
- • The Airplane Factory
- • Jonker Sailplanes
- • Dassault