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Market Opportunity

The overall air transport market is expected to continue its current rate of expansion over the next 20 years, driving growth in today’s main fleet segments (widebody, narrowbody and regional aircraft) at approximately 3.4 per cent compound annual growth rate (CAGR). Narrowbody aircraft represent the fastest growing segment, with fleet growth closer to 5 per cent. Behind this expansion are rising global income levels, notably in developing economies, and societal desire to connect and travel.  The maintenance, repair and overhaul (MRO) market stands to benefit, with various forecasts projecting between 3.5 and 4 per cent CAGR. However, the market is facing growing headwinds from environmental challenges, trade disputes, pilot shortages and supply chain expansion pains to name a few. The latter is expected to drive further mergers and acquisitions to reduce costs and increase productivity.

The value of commercial aircraft platforms over the next 20 years is expected to reach approximately $7 trillion, dominated by over 35,000 narrowbody and widebody air vehicles.  Based on ATI’s own modelling, the UK can expect to compete for over $1.5 trillion of this market over the same period.  The UK ranks amongst the top nations exporting aerospace products including all variants of Airbus wing, half of all engines sold for widebody aircraft, helicopters and a vast array of other advanced high-value systems within the structure and cabin. 


Existing Markets

The Airbus A350-1000 has successfully entered service and the re-engined B777 with higher aspect ratio wings and folding wingtips is scheduled to enter service in 2020. Boeing has been promoting a new medium-sized aircraft (NMA) to sit between the B737 and B787. The future of this concept remains uncertain and the industry awaits a formal launch. Airbus announced the end of the A380 programme due to unsustainable order levels. Russia and China are working on joint development of the C929, with entry into service expected in the mid-to-late 2020s. Driven by the need for ever greater efficiency, the B787 and A350 aircraft could accommodate further engine and aerodynamic upgrades in the next 10-15 years.  These would exploit next generation ultra-high bypass ratio (UHBR) engines and new wing designs using technology such as the folding tips featured on the 777X. We do not anticipate entirely new widebody aircraft until the 2040s, when new high-power hybrid propulsion and associated aerostructure technologies have been matured.

The A320 and B737 aircraft families dominate this market with target production rates approaching 60 per month.  Recently re-engined variants of these aircraft brought around 18 per cent fuel efficiency improvement while avoiding the cost of developing entirely new platforms.  However, both aircraft have experienced issues entering service. Expansion of point-to-point networks and low-cost carriers have driven demand for longer range variants such as the A321XLR, which aims to enter service in 2020. Airbus and Boeing are now primarily focused on reducing costs and resolving delivery problems as production rates increase. China continues to develop the C919, with an entry into service expected by 2021 or shortly after.  The Bombardier C Series has been taken forward through Airbus as the A220 with reports of interest in a stretched version. Our base scenario for this sector puts entirely new airframes beyond 2030, when technologies such as hybrid-electric propulsion or high-aspect ratio wings could be exploited to achieve the next step in environmental performance. This does not rule out further technology insertion in the interim.  In all respects, future designs will need to cater much more effectively to the demands of higher rate manufacture and heavy automation.

Market growth for traditional regional and turboprop aircraft is generally expected to be subdued, some forecasts even projecting negative growth over the next decade.  This trend is driven by the success of more capable and efficient narrow-body jets. However, technology could disrupt this trend.  New electric aircraft, perhaps powered by hydrogen fuel cells or battery/jet hybrid systems, could provide a step change in efficiency to out-compete current single aisle aircraft on shorter routes. 

The business jet market encompasses a broad mix of aircraft of varying range, size and capability.  The market is led by Bombardier, Gulfstream and Dassault and is expected to be worth $650 billion over the next 20 years, growing at around 3 to 3.6 per cent CAGR for the next 10 years. Buoyed by a growing number of high and ultra-high net worth individuals, the outlook for larger aircraft is strong and will drive continued innovation. This includes the prospect of supersonic jets. Boeing is investing in the Aerion concept, Gulfstream on a low boom demonstrator with NASA,  and BOOM aims to test a scale demonstrator in the next few years. However, the cost and environmental impact inherent in supersonic flight will be a major barrier to the market. Discerning business jet buyers are attracted by performance and cutting-edge technologies, providing more rapid opportunities for innovative suppliers to reach market.

The civil and para-public rotorcraft market will be worth above $200 billion over the next 20 years. Most analysts project growth of over 3 per cent CAGR for the early period. There is ample room for innovation including electric powertrains and architectures that increase speed and efficiency such as tilt rotor/tilt wing and compound aircraft configurations.

New Markets

Over 50 per cent of today’s passenger traffic is on routes of less than 500 nautical miles (NM), many flown by narrowbody aircraft capable of 3500 NM or more, that could be replaced by new aircraft optimised for shorter routes. By 2030, we expect to see the emergence of entirely new aviation markets in the intra-regional and urban environments.

Rethinking aircraft and associated ground and air operations in the sub-regional context could bring substantial mobility benefits and lower environmental impact. 

The concept of urban air mobility (UAM) has attained a higher profile over the last five years. Helicopters have long served flights into and around cities, and in this respect the concept is not new. However, the UAM ambition is to bring about mass-market solutions, many of which require vertical take-off and landing (VTOL) capabilities.  Today there are in the order of 200 projects developing new electric aircraft concepts around the globe, attracting funding in the billions of dollars from angel and venture capital investors.  Rotorcraft manufacturers are also considering the UAM market and will look to leverage many of the same technologies to improve the viability of their products.  Only a handful of these are likely to succeed in the next ten years.  Critical to their development and introduction will be the availability of skilled engineering resources, new infrastructure and new airspace management regimes. To gain societal acceptance, air vehicles and their operation will have to demonstrate no additional environmental impact and high standards of safety.

Together with technologies accelerated through the ATI, the UK’s Future Flight Challenge aims to help these market concepts mature and bring about the required shift in air space management and operations.  The market potential is highly uncertain, but we estimate niche sub-regional and UAM operations for passengers and drone operations for goods to have a global potential of between $210 billion and $360 billion over the next 20 years.