F-35 Drives Global Military Aircraft Market

Tuesday 13 December 2011, Amsterdam

The US has recorded budget cuts and is expected to also record budget cuts during the forecast period. Despite this,North America is expected to account for the largest share of 42.9%, of thetotal global expenditure on military aircraft during the forecast period. Thehigh demand in the region is primarily driven by the development of 2,456 F-35multi-role fighter aircraft as part of the Joint Strike Fighter program and 452V-22 Osprey transport aircraft. Europe and Asia are also expected to accountfor a significant portion of the total military aircraft during the forecast period, with shares of 24.1% and 21.8% respectively (reference see figure 2 below).

Many countries are expected to replace their ageing military aircraft fleet during the forecast period. The wars inAfghanistan and Iraq has meant that the US, which is the biggest market formilitary aircraft and other allied countries in Europe, Asia-Pacific, LatinAmerica and the Middle East, need to replace their aircraft which have been incontinuous use over the last decade.

The global environment is characterized by ongoing tensions and conflicts among various countries around the world whichs supporting demand for military aircraft. Historically, countries follow apolicy of enhancing their military as a deterrent to hostile nations andconsequently the military aircraft market is recording strong growth despitethe commercial aircraft industry exhibiting a downward trend.

The market for advanced trainer aircraft across the globe is growing, which is attributed to the significant number ofcountries involved in the process of upgrading to next-generation combataircraft fleets. In meeting this growing demand, manufacturers are developingtrainer aircraft that are able to perform a number of training roles for thearmed forces of the countries involved in the procurement process.

Many nations around the world are involved in border disputes which have resulted in strained military relations. Some ofthese disputes could be resolved amicably through talks while others have thepotential to escalate into a military conflict. Therefore countries across theworld are expected to invest in reconnaissance and surveillance aircraft to safeguard borders.

In terms of categories, the multi-roleaircraft is expected to account for the highest proportion of spending in theglobal military aircraft market. Following the budget cuts announced by variouscountries as a result of the global economic recession, the procurement ofmulti-role aircraft has increased significantly due to their ability to carryout various missions including attack, reconnaissance, rescue operations andtransport.

To increase the capabilities of modern military aircraft, the global defense industry is investing significantly inR&D which has led to the development of technologies to enhance the speed,power, stealth capabilities, destructive force and takeoff and landingcapabilities of the various types of military aircraft.

The global economic slowdown has reduced military expenditure worldwide, as a consequence of which a significant numberof countries are establishing joint projects in order to share R&D costs.Partnerships between defense firms have also increased as a significant numberof countries are investing in the development of their domestic militaryaircraft development capabilities, by establishing strategic alliances andtechnology-transfer agreements with global military aircraft manufacturers.

The global economic slowdown has reduced the defense budgets of most leading spenders in the world, including the US,France, Germany and the UK. Cuts to military expenditure have led to thecancellation and indefinite delays of various military aircraft programs, andare having a detrimental impact on the growth of the industry.