MENU

Teal Group gathers, classifies, and analyzes information from a wide range of sources. Our analysts publish News Briefs several times a year. Subscribe via email to receive each News Brief when it is published

Get News Briefs Delivered Via Email

By Analyst

  • Dr. David L. Rockwell

    Dr. David L. Rockwell

    This email address is being protected from spambots. You need JavaScript enabled to view it.

  • Jean Tullier

    Jean Tullier

    This email address is being protected from spambots. You need JavaScript enabled to view it.

  • Joel Johnson

    Joel Johnson

    This email address is being protected from spambots. You need JavaScript enabled to view it.

  • Marco A. Cáceres

    Marco A. Cáceres

    This email address is being protected from spambots. You need JavaScript enabled to view it.

  • Philip Finnegan

    Philip Finnegan

    This email address is being protected from spambots. You need JavaScript enabled to view it.

  • Richard L. Aboulafia

    Richard L. Aboulafia

    This email address is being protected from spambots. You need JavaScript enabled to view it.

  • Steven J. Zaloga

    Steven J. Zaloga

    This email address is being protected from spambots. You need JavaScript enabled to view it.

  • Thomas J. Zoretich

    Thomas J. Zoretich

    This email address is being protected from spambots. You need JavaScript enabled to view it.

  • William C. Storey, Jr.

    William C. Storey, Jr.

    This email address is being protected from spambots. You need JavaScript enabled to view it.

14 September 2018

Global Aircraft Market Forecast

Author: Richard L. Aboulafia, Drawn From: World Military & Civil Aircraft Briefing

Global Aircraft Market Forecast

Topline output continues at near record levels. Key segments look set for growth through the next three years, at least. There are areas of concern, and not all manufacturers will benefit equally, but overall the industry is in excellent shape.

World industry output in 2017 came to just over $180 billion. Deliveries in 2014-2016 have all been at about this level in constant 2018 dollars (2015 was the all-time record, at $183.5 billion).

However, the industry has been stuck on this plateau not for market reasons, but rather for reasons relating to production ramp difficulties with key new programs. Single aisle jetliners represent 25% of the value of this industry, and difficulties in transitioning between the last generation and the next generation have resulted in the present level of stalled output. The F-35 Joint Strike Fighter’s slow production ramp has contributed to this problem.

But these numbers represent only the value of deliveries; they exclude the broader footprint of the industry, which is about two to three times as large as the value of total new build aircraft. The numbers also exclude research and development funding, and the generally more lucrative aftermarket sustainment business.

Therefore, since the new aircraft market is worth $180-$210 billion per year, we reckon that the total aircraft industry contributes $700-900 billion annually to the world economy (that covers the broader industry footprint plus research and sustainment). And this figure excludes numerous related industries, such as airlines, air traffic control, and military air base support services.

For the past 15 years, topline deliveries growth has come primarily from the civil markets, with a 3.7% compound annual growth rate (CAGR) by value. Military markets have grown at a 2% pace, but higher defense budgets will grow this in the coming few years.

US primes’ share of this industry has remained relatively steady at just above 50% by value of deliveries for the last two decades. As the industry topline has grown, so has US output. While this metric measures output solely at the prime level, US industry continues to do very well at the subcontractor level, exceeding the 50% mark in most key segments (engines, avionics, etc.) and equaling the 50% level in others (aerostructures, control systems, etc.).

The primary drivers of US industry at the prime level include Boeing jetliners and fighters, Lockheed Martin fighters, Gulfstream business jets, and rotorcraft from all three primes (Boeing, Textron/Bell, and Lockheed Martin/Sikorsky). Many other smaller manufacturers play a supporting role.

Given the relatively steady state nature of this industry, where there are few major disruptions and product life cycles are measured in decades, it isn’t surprising that the US’s aerospace trade surplus is relatively steady. The US has enjoyed a roughly 2.5-1 aerospace trade advantage by value with the rest of the world for decades. This higher ratio of recorded exports (compared with 1-1 output at the prime level) reflects US industry’s success at the subcontractor level, along with success in space systems, missiles, and in other markets.

About the Author

Richard L. Aboulafia

Richard L. Aboulafia

Richard is Vice President of Analysis at Teal Group. He manages consulting projects in the commercial and military aircraft field and analyzes broader defense and aerospace trends. He has advised numerous aerospace companies, including most prime and many second- and third-tier contractors in the US, Europe and Asia. He also advises numerous financial institutions on aerospace market conditions.

Respected Analysis
Highly respected analysis and opinions on global aircraft supply and demand and the competitive profiles of leading manufacturers.
UAS/UAV Authority
The leading authority on the global markets for Unmanned Aerial Systems (UAS) and Unmanned Aerial Vehicles (UAV), including military, government and commercial markets.
Comprehensive Coverage
The industry’s most comprehensive coverage of the global aerospace sector, including military and civilian markets.