Aerospace & Defense Industry Trends

Emergence of “Micro Jet” Airplanes

Several companies are introducing smaller, more affordable planes designed to provide passengers more efficient travel. This emerging market is driven primarily by business travelers' dissatisfaction with flying conditions, large airports, and increased security. Several new aerospace companies have introduced air taxi services that transport travelers from point to point, avoiding commercial aviation’s hub-and-spoke system. Eclipse Aviation, Honda Motor Company, and Safire Aircraft have all tested micro jets that seat four to eight and two crew members and are more affordable than commercially available jets.

Increased Emphasis on Operational Efficiency

Continued oil price rises and increased competition from discount and new airlines has led to greater focus on efficiencies. US carriers have demanded a more fuel-efficient plane. Boeing responded by developing the 7E7, scheduled for delivery in 2008. Eclipse, a small jet manufacturer, has introduced friction stir welding that eliminates the need for rivets and creates stronger and lighter joints, making jets more fuel-efficient.

Outsourcing Development, Manufacturing

Similar to what happened in the auto industry, the aerospace industry is developing partnerships and alliances to outsource significant components of both development and manufacturing. Boeing is introducing the 7E7, a smaller but more efficient commercial aircraft. Boeing will outsource development and assembly of the 7E7 to several of its partners and suppliers, in hopes that these components will be produced just-in-time and faster than Boeing could internally, creating greater efficiencies.

Industry Consolidation, Partnerships

Since the 1990s, the aerospace industry has consolidated into five major firms that dominate, with several hundred suppliers competing for subcontracts. Much partnering with suppliers exists, and even the Big Five are suppliers to each other. Boeing and Lockheed Martin each have a 50 percent partnership responsible for all ground processing of the space shuttle fleet.

Growth of Business Jets

The business jet segment is growing faster than other industry segments, due in part to the greater connectivity to more than 5,300 US airports as opposed to the 550 airports serving commercial aircraft. Forecast growth is driven largely by fractional ownership, where an aircraft has multiple owners. More than half of back orders are due to fractional ownership companies.

Increasing Use of Automated Controls

Operations of commercial, military, and business aircraft are becoming more automated through advances in avionics. New computerized controls and software systems are allowing planes to "fly themselves" without continual pilot involvement. Avionics and related parts suppliers must keep pace with this technological innovation to remain competitive.