Aerospace Industry and Defense Trends in 2016

Boeing 787 Boeing 787

The aerospace industry and defense sector are part of the same group but they seem to be moving in the opposite direction these days. While the commercial aerospace business is developing rapidly, the defense companies are coming face to face with customers who are fiscally under pressure. This is due to the bouncing back act of the global economies and the growth of regions which were invisible in the past. It is expected that the global aerospace and defense industry will make its mark once again in 2016 with an estimation of the total gross revenue at 3.0 percent as stated by Deloitte Touche Tohmatsu Limited (Deloitte Global) Consumer and Industrial Products Industry group’s 2016 Global aerospace and Defense sector outlook. This is an optimistic sign because in the past few years the revenue had decreased up to 3.2 percent in 2013, 1.9 percent in 2014, and an expected but by no means welcome reduction of revenues at minus 0.5 percent in 2015.

In the last three years, shrinking profits in the United States (US) defense subsector largely influenced the global A&D industry profit. We can see that the return on investment in 2016 is expected to take place because of the rise in the US defense budget, a revival of worldwide security threats, and expansion of defense budgets of important nations all around the world. Additionally, solid and stable growth in global gross domestic product (GDP), prices of crude oil and other products, and constant rise in the demand of passenger travel are causing the growth for future commercial aircrafts.

In both West and East (Middle Eastern countries), the defense budgets are growing at a time when national security is under immense threat. It is predicted that worldwide return on investment will take place in 2016, as soon as the governments of different nations provide their armed unit with present-day defense weapons and technologies which are modern and up to date with intelligence gathering, cyber, defense electronics, etc.

The A&D industry is well known for its capability to achieve remarkable technical accomplishments and also permitting distinct companies to indulge in a cut-throat competition in a quickly advancing market. Innovations like Global Positioning System (GPS) and Space X’s Falcon 1 have changed the entire industry function wise. Several developing trends have the similar potential to achieve that kind of effect once again.

  1. Globalization: With a fixed multinational customer support, the sector is well equipped to conquer deep-rooted globalization issues and obtain benefits from the flourishing profit-oriented markets of the Asia Pacific and defense markets in Asia and Middle East. Moreover, A&D markets are unfolding themselves in India, Brazil, Turkey, Mexico and China too for commercial aerospace. The production, research, development and customer base in many companies have reached a global scale; and now we see that their MROs are also becoming international in nature. Apart form the US, some nations which are appealing for MRO allied investments are China, UAE and Brazil. These investments are shaping the general environment of the aerospace maintenance infrastructure and one can be hopeful that it will keep on altering the dynamics in the future.
  2. Alternate Fuels: The industry is looking into the probability of alternative fuels to diminish the revelation of variations in oil price and lowering the dependence on crude oil. Lufthansa, Ryanair and easy Jet are all airline companies who have made a deal with Solena; an American group which manufactures aviation bio fuels, thus taking a step forward to carry on with this trend. The reason for the sudden demand of bio fuels is the modern technological progress of acquiring biofuels from waste. Tests have already been carried out by airlines like Qatar Airways, Japan Airlines, Air New Zealand, Continental and United with immediate success.
  3. Optimized Usage of Turboprops and Jets: The design of an aircraft and its engine plays a vital role in calculating the size of the airline fleet for making the best and effective use of networks and at the same time lessening the fuel bills. Airlines have started reusing turboprops as a means to save cost; these not only diminish the fuel burning but also play a physical role in reducing emissions. Airlie and passenger choices are proportional to environmental considerations and thus the benefits of turboprops are many.
  4. Increasing Usage of Composites: The main reason for composite materials’ appeal to the aviation industry is their outstanding longevity and also their stiffness-to-density ratios; which are higher. Using composite materials is profitable in this business because composites are known to shrink the weight of the airframe as a result of which better fuel efficiency is activated. Composites can save the airlines 20 percent not only in terms of weight but also contributes to lower production time and better damage tolerance. The A380 has utilized 20-22 percent of composites by weight and they have also extensively used GLARE (glass-fiber-reinforced aluminum alloy). Other airlines need to exploit the advantage of using composites since traditional metallic materials and their descendants are being pursued still to increase performance.