Aerospace & Defence – What’s in the Air for 2020?

After soaring in 2018, the worldwide aerospace and defence (A&D) industry has fallen back to earth in 2019. Although growth continued in the defence sector, the commercial aerospace sector has seen a slowdown.

In 2020, the A&D industry is expected to see renewed growth across the board and a recovery for the commercial aerospace sector. The defence sector got a boost in 2019, but not for the happiest reasons - security threats worldwide have intensified, pushing governments to pour more money into their defence budgets.

Defence spending is expected to rise another 3-4% in 2020, hitting an estimated US$1.9 trillion, 1 as the global drive to modernise and recapitalise the military continues. The US is expected to drive most of the growth, with China and India not far behind thanks to the sheer size of the populations they have to defend.

Meanwhile, the commercial aerospace sector has been dogged by production issues in certain aircraft models, leading to a decline in deliveries. The order backlog of commercial aircraft has also fallen a bit, from its 2018 peak of 14,700 aircraft to just over 14,000 by the end of August 2019. This was partly caused by order cancellations and partly by a drop in new orders. However, it’s expected to bounce back as demand for commercial aircraft remains robust, with nearly 40,000 new planes expected in the next two decades.

The outlook for 2020

  1. Defence
    Military spending is expected to keep rising as security threats continue to increase
  1. Commercial aerospace
    Although the commercial aircraft backlog has fallen from its peak, regional jet demand is taking off
  1. Space
    We can expect a lot of innovation in space as technologies drive towards modernisation.
  1. Mergers & acquisitions
    M&A activity continues to expand in response to long-term A&D industry growth drivers.

What’s on the horizon beyond 2020?

The A&D industry is continually shaped by new developments in technology. Some significant innovations that are likely to affect the industry in the medium to long term include:

Electric propulsion aircraft - which would reduce carbon emissions, make flights quieter, and decrease costs.

Urban air mobility - driverless electric passenger drones could make Blade Runner-style cityscapes a reality.

Automated flight deck - the commercial aerospace sector is aiming to transition to fully automated flight decks, i.e. pilotless planes.

Growth in the A&D industry calls for big tech investments

As production requirements for both commercial and military aircraft continue to rise, and A&D customers demand more customisation faster, A&D companies need to get on board with the latest manufacturing technologies and develop agile production and predictive quality controls. Investing in digital technologies could put the industry at the forefront of manufacturing, boosting efficiency and productivity.