This new entrant challenge has induced very different reactions by the two legacy regional jet market leaders. One is reinventing itself to survive, while the other seems content to gradually fade away.
Teal Group’s overall, cumulative forecasts indicate the military electronics market available to U.S. manufacturers will continue to rise slowly, while platform hardware procurements will decline. The shrinkage of new-platform hardware procurements began as long ago as the 1990s (remember the Cold War? The Peace Dividend? Backfire bombers, SS-20 MIRVs and Nuclear Winter?), and has shrunk again more recently after a hardware procurement surge for Iraq and Afghanistan war buys and then after-action refits (ground systems, especially, such as armored vehicles, MRAPS, base security, etc.).
The Federal Aviation Administration (FAA) has moved to begin the opening of US airspace to commercial operations with the issuance of the first rules for the operation of commercial drones in national airspace. Over the past several years the FAA has shown increasing flexibility in working to open airspace to UAS.
The Part 107 rules, which went into effect in August 2016, are the latest indication of the new FAA attitude. The rules specify a series of criteria that must be met before small UAS can undertake commercial operations. Small UAS is defined as systems that are 55 pounds and under.
In terms of aerospace, the market for civil UAS promises to be one of the most dynamic growth sectors for the next decade, expanding from a $2.8 billion market in 2017 to more than quadruple to $11.8 billion by 2026. Over the next ten years the market totals almost $74 billion.
Although consumer systems represent about half of the overall market through the decade, the fastest growth comes from commercial systems, which surpass consumer systems in 2024 and continue to widen the lead throughout the rest of the forecast period.
Despite the challenges associated with entering this market, three new regional jet producers have thrown their hats in the ring. The biggest success, and a major surprise, has been the Mitsubishi Regional Jet (MRJ) Powered by Pratt & Whitney’s Pure-Power PW1000G Geared Turbofan, (GTF).
In October 2009, the MRJ scored a notable breakthrough with a tentative order for 50 firm and 50 option planes from Trans States Holdings, the parent company of Trans States Airlines and GoJet Airlines. A firm contract was expected by the end of the year, but did not arrive until February 2011. Also, in July 2012 Sky-West announced a tentative commitment for 100 MRJ90s. This order, for 100 firm and 100 option planes, was firmed up in December 2012.
In terms of units produced over the next 10 years, turboshafts account for 23% of the overall aero turbine market. Measured by value of engines produced, the 'shaft segment is only 4% of the total market.
The joint kings of the turboshaft market are General Electric and French manufacturer Turbomeca, a subsidiary of the Safran Group. The former leads handily in terms of value of units delivered, but they are at parity when unit deliveries are considered.
Electro-optical and infrared sensors (EO/IR) have been in service with European navies for many years. Newer systems combine better sensors with primary tracking and fire control on small ships. But the US Navy was late getting into the market (aside from submarine systems), and only ramped up buys after September 11, 2001. The market for systems for smaller ships and boats was initially cornered by FLIR Systems, Inc. (FSI), and these systems are treated in a separate report (see FLIR Systems, Inc. Naval EO/IR Sensors – also updated this month).
Teal Group’s most recent analysis of Future Naval Ship EO/IR Sensor Systems covers naval EO/IR systems at the sophistication level (and expense) of the Mk 46/Mk 20 or greater. This is a very different market from the FLIR Systems, Inc. (FSI) SeaFLIR and other simple FLIR balls, and indeed, the US Navy’s earlier Shipboard Protection System (SPS), though now cancelled, was developed as a parallel situational awareness system for naval ships – in addition to the EOSS. Our forecast may prove conservative, or else future developments to simpler SPS systems could eventually replace the higher-end EOSS-type gun systems. The US Navy’s future plans are currently unclear, and international navies have typically bought the more prolific European naval EO/IR systems.