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Monday, January 1, 2007

Outlook 2007

Projected growth in business and commercial aviation will drive new avionics equipage needs, just as navigation and surveillance technologies enter a new era

By Bill Carey

The forecasts are impressive. Despite trepidation last year over a cooling economy and spiraling oil prices, the corporate and air-transport aircraft sectors are on the ascent, and with them the potential for growth in avionics. The timing couldn’t be better, for coinciding with the robust predictions for new-aircraft deliveries is a generational shift in communications, navigation and surveillance technologies, creating new “performance-based” equipment requirements.

The military aircraft sector is advancing technologically, but overall market growth will be constrained. Tight budgets and the ground-centric nature of the Iraq war have shifted developmental funding from new aircraft platforms, but also accelerated spending on countermeasures and refitting older aircraft. Helicopters, offering mobility, lift and firepower in support of ground troops, represent the strongest growth area.

Where are the avionics growth markets? On the civilian side, they include weather radar and surveillance systems for hazard avoidance and runway conflicts; technologies to enhance pilots’ situational awareness, including enhanced and synthetic vision systems and head-up displays; precision navigation sensors, including augmented GPS systems; data communications; integrated avionics and cockpit automation.

In demand on the military side will be technologies contributing to Intelligence, Surveillance and Reconnaissance (ISR) missions and “network-centric” operations, including tactical datalinks and integration of sensors and datalinks; bandwidth management, satellite communications and networking. Head-up displays, electronic warfare/countermeasures and unmanned aerial vehicles also will be funded.

Michel Merluzeau, director of military and commercial airborne systems with consulting firm Frost & Sullivan, estimates the combined military and commercial market for cockpit avionics will range from $125 billion to $135 billion over the next decade.

“It’s really a dynamic place,” said Jim Cudd, vice president of marketing and product management with Honeywell Aerospace. “There’s a changeover occurring from what have been the traditional navigation and surveillance technologies that go all the way back to the 40s and 50s to what we’ve been doing the last couple of years. As we look ahead, you’re going to see avionics systems become simpler. Instead of being able to do DME/VOR, GPS, inertials — all that stuff together — we’ll change over to a couple of reliable approaches to how you both navigate and fly the aircraft.

“What’s also happening is the ability to integrate information in the cockpit has moved light years in the past decade,” Cudd added. “If you look at a cockpit from the mid-90s and the state of the art today, it’s hard to imagine they’re doing the same thing.”

Clouds on horizon

The way forward is not entirely clear, however. Political, regulatory, funding and user acceptance issues remain around automatic dependent surveillance broadcast (ADS-B), the satellite navigation construct considered a stepping stone to the Next-Generation Air Transportation System. NGATS, envisioned in 2025, will be needed to accommodate a potential tripling in passenger demand. One of the aircraft best equipped to provide new capacity, the 555-seat Airbus A380, has been troubled by delays. The program suffered a further hit in November, when FedEx Express canceled its order for 10 A380-800F freighter versions, replacing it with an order for 15 Boeing 777 freighters and options for 15 more.

And hovering in the background is the ever-present threat of terrorism. The airline industry only now is returning to profitability after the Sept. 11, 2001 terrorist attacks.

“The biggest risk of all is an exogenous shock — terror,” said Richard Aboulafia, vice president of analysis with Teal Group. “I don’t think higher oil prices is anything like the type of risk we thought it was. We got close to a worst-case scenario, and it missed our vital parts.”

Bizjets booming

Last year and 2007 are expected to be record years for business jet deliveries. According to Honeywell, first-half 2006 deliveries of 403 aircraft, worth $7.2 billion, represented a 26 percent increase in units and 26 percent increase in constant 2006 dollars. New jet orders were up 6 percent over 2005 levels, with manufacturers reporting half or more of orders coming from non-U.S. customers.

“Overall, the outlook is solid,” Rob Wilson, Honeywell Aerospace president of business and general aviation, told reporters at the National Business Aircraft Association convention last October. “It’s a great time to be in business aviation.”

Based on its survey of 1,400 corporate flight departments, Honeywell projects 12,000 new bizjets in the next decade, valued at $195 billion. Brazilian airframer Embraer predicts 11,115 new bizjets valued at $169 billion for the same period.

North America, historically 70 to 75 percent of corporate jet demand, will drop to 61 percent over the next five years, Honeywell says, while Asia and Europe will be roughly equivalent at 13 percent. Aircraft age was the overwhelming reason behind new jet purchases in all regions, followed by a desire for more range.

Steve Shea, senior partner with STS Research Group, Wakefield, Mass., said the medium to medium-large business jet category will grow fastest, spurred by the fractional ownership and charter markets. Popular new platforms will be the Cessna Citation Sovereign, the Gulfstream G150, and Raytheon’s Hawker 850XP and 4000. Dassault’s Falcon EX trijet, capable of flying eight executives 3,075 nautical miles at Mach .8 is “just the right design for corporate America,” he said.

Large bizjets including the Bombardier Global Express, Global 5000, and Challenger 604/605, the Gulfstream G450/500/550, and the Dassault 900DX, 900EX and new 7X also will sell well, Shea said. Last September, fractional company NetJets Europe ordered 24 Falcon 7Xs from Dassault, a $1.1 billion transaction described as Europe’s largest business jet order. The aircraft will be delivered from 2008 through 2014.

Rockwell Collins’ Enhanced Vision System, using CMC Electronics’ Sure- Sight infrared sensor integrated with the HGS-4860/5860 Head-Up Guidance System, will be offered to operators of Dassault aircraft, including the 7X.

The installed base of enhanced vision systems will grow from a few hundred units to about 3,100 units by 2015, with the vast majority going to business aircraft, Frost & Sullivan predicts.

Capability for enhanced and synthetic vision “has gone beyond buzz,” said Bryan Vester, Rockwell Collins vice president of strategic development. “Clearly, both those technologies will be initially adopted in the business aircraft market segment for Part 91 operations. We’re clearly investing in that direction.”

Gulfstream Aerospace has completed flight tests of both an Enhanced Vision System II, based on a Kollsman forward looking infrared camera, and a Synthetic Vision Primary Flight Display (SV-PFD). Available this year, the SV-PFD represents the first application of Honeywell’s Integrated Primary Flight Display (IPFD), a synthetic vision system combining the company’s Enhanced Ground Proximity Warning System database and head-up display symbology.

“It’s basically using a terrain database, coupling it with the ability to know where the airplane is physically in relationship to the surface of the Earth, and being able to generate, as a result of that, an artificial or synthetic picture of what the flight situation is,” Cudd explained. “Adding to that things like infrared or overlaying navigation information or weather information — those things are going to continue to advance, and we spend a lot of energy working in that area.”

Head-up displays (HUD) will be an important component of cockpit systems going forward. Frost & Sullivan predicts more than 6,000 HUDs will be installed on commercial aircraft over the next decade, with another 3,000 for business aircraft, with Rockwell Collins and Thales Aerospace among leading suppliers.

At the lower end of the bizjet spectrum, there has been “a lot of chatter” about sub-10,000-pound takeoff weight Very Light Jets, but Shea believes the emerging market will be relatively small, ranging from 200 to 400 units in the next five years. Embraer, manufacturer of the Phenom 100 VLJ, sees it differently; the company projects 2,715 VLJ deliveries from 2007 through 2016, representing a quarter of the bizjet market.

In the air-transport category, Boeing  projects the world market for airliners will be worth $2.6 trillion by 2025, with 27,210 new aircraft delivered. The total world fleet, including regional jets, single and twin-aisle jets and large jets, will more than double, from 17,330 aircraft in 2005 to 35,970 in 2025.

Of the new deliveries, 17,630 airplanes will be needed to accommodate anticipated growth in passenger travel and air freight; 9,580 new airplanes will replace less-efficient aircraft. Most of those will be permanently retired, but 2,220 passenger airplanes will be converted to freighters, and 770 new freighters will be delivered.

Commercial aviation will be the major beneficiary of ADS-B, which is slated for operation by 2010 and deployment across the National Airspace System by 2013. Last October, Lockheed Martin signaled its intention to pursue the FAA program, introducing a team that includes Sensis Corp., Harris Corp. and Honeywell. Assuming the infrastructure is funded, the cost/benefit case is proven to airspace users and new standards, including a common data protocol, are agreed upon, ADS-B represents a new opportunity for avionics suppliers.

“ADS-B is obviously going to drive change into the avionics systems,” said Rockwell Collins’ Vester. “All of the equipment associated with surveillance is potentially going to have to be upgraded in the field, and then new products that we’re releasing into the marketplace are obviously going to have ADS-B ‘in’ and ‘out’ capabilities, and already do in some cases. ADS-B ‘out’ is pretty well understood. The field of aircraft have not all been upgraded, obviously, but the capabilities are there.”

But, Vester added, “until the benefits are clearly stated and the operational procedures required to take advantage of all this technology are established, the market’s not going to develop.”

Military sales

Civil aircraft sales are growing by double digits, and catching up with military sales in the United States. The Aerospace Industries Association said U.S. aerospace sales in the civil, military and space sectors increased 9 percent to a record $170 billion in 2005. Of that amount, military aircraft sales represented $50 billion; civil aircraft sales were $39 billion.

AIA has estimated that 2006 aerospace sales will increase 8 percent to $184 billion, with civil aircraft sales growing 26 percent to $49.5 billion and military aircraft sales increasing just 1.7 percent to $50.8 billion. [The association’s 2006 report was not available at this writing.]

Shea said a tight budget environment and focus on the Iraq war are shifting military dollars away from research, development, technology and evaluation programs and big-ticket platforms like the F-35 and F-22, to electronic systems supporting ground troops. More aviation money is being spent on spare parts and support, or “resets and sustainment” of aging equipment.

Helicopter modernization fits that scenario. Among programs being funded are Bell Helicopter Textron’s Armed Reconnaissance Helicopter (ARH), a militarized version of the Bell 407 awarded a U.S. Army contract in 2005 worth $2.2 billion; and the Boeing CSAR-X combat, search and rescue version of the Chinook helicopter, winner of a $10 billion contract from the U.S. Air Force last November.

“There doesn’t appear to be the political will to invest significantly in anything that we really don’t need or won’t win the conflict,” said Shea. “It very much is a ground forces mission, because that’s the nature of the threat.”

The military depots involved in aircraft service life extension programs also are cost-pressured, and are looking to innovative contractor support and logistics solutions, and form, fit and function replacement of equipment, Shea said.

For “those avionics companies that may have an incumbent position [on military aircraft], there certainly is a greater willingness, if a form, fit and function solution can be brought forward, to substitute that,” Shea advised. “The message is that early involvement in the upgrading of existing systems and the design and engineering of new systems incorporating outsourced products will be key.”

Teal Group military analyst David Rockwell said insurgencies the United States faces placed new emphasis on electronic warfare and countermeasures solutions for aircraft. He cited the U.S. Army’s award last year of a contract worth up to $1.4 billion for BAE Systems’ Common Missile Warning System, tied to flare dispensers, to protect helicopters from man-portable missiles. Another program, Northrop Grumman’s Large Aircraft Infrared Countermeasures for cargo planes, accelerated production.

“In terms of airborne, the greatest influence of Iraq has been on countermeasures systems,” primarily on helicopters and fixed-wing transports, Rockwell said. “Electronic warfare and countermeasures have gotten the funding that people have been saying for the past 10 years they needed.”

Growth Markets

Michel Merluzeau, director of military and commercial airborne systems with Frost & Sullivan, says the following areas have the greatest growth potential.

  • Enhanced/Synthetic Vision Systems (EVS): EVS grow from a few hundred units in 2006 to 3,100 by 2015, mostly for business aircraft.

  • Head-up Displays: More than 6,000 will be installed on commercial aircraft and 3,000 on business aircraft in the next decade.

  • Automatic Dependent Surveillance-Broadcast equipage

  • Electronic Flight Bags

  • Flight-data recorders

Dreamliner Takes Flight

This year will see the expected first flight of Boeing’s 787 Dreamliner, representing the state-of-the-art in structural composites, systems and engines. Boeing at this writing had logged 458 orders and commitments for the airliner, which is scheduled to enter service in 2008. The following companies are supplying avionics and systems:

  • Rockwell Collins: cockpit displays, communications and surveillance systems, pilot control system.

  • Honeywell: navigation, maintenance/crew information systems, flight control electronics, exterior lighting.

  • Smiths Aerospace: Common Core System central computing system, landing gear actuation and control system, high lift actuation system, enhanced flight data recorder.

  • Goodrich: fuel quantity indicating system, nacelles, proximity sensing system, electric brakes, exterior lighting, cargo handling system, flight deck lighting system.

  • Moog Inc.: flight control actuators.

  • Thales: electrical power conversion, integrated standby flight display, wireless in-flight entertainment system.

  • Labinal: wiring

  • Panasonic: cabin services system, wireless in-flight entertainment system.

  • Korry Electronics: flight-deck control panels.

  • Diehl Luftfahrt Elektronik: main cabin lighting Securaplane: wireless emergency lighting system

  • Astronautics Corp.: electronic flight bags

  • Hamilton Sundstrand: auxiliary power unit, environmental control system, remote power distribution units, electrical power generating and start system, primary power distribution, nitrogen generation, ram air turbine emergency power system, electric motor hydraulic pump subsystem.

Securing Embedded Systems

The market for embedded software and real-time operating systems is estimated at somewhere north of a billion dollars and growing. With a similarly fast-growing reliance on networked systems, security of software code for mission-critical functions has become paramount.

"That’s the major challenge going forward," said Inder M. Singh, chairman of LynuxWorks.

"As everything is getting networked, security is becoming more and more important. Also, the software is getting more complex, and the more complex it is the more chance you have of there being some unexpected problems that someone can exploit."

Said Dan O’Dowd, president and CEO of Green Hills Software: "There’s a huge concern that we’re putting a lot of software in these systems and they’re communicating through outside systems. With the unmanned aerial vehicle — they don’t fly without remote control. Somebody can hack into that communication and either disable (the UAV) or commandeer it. There are increasing requirements for security in the software and avionics."

LynxWorks and Green Hills Software are among companies seeking high-level security certification for operating system architectures based on Multiple Independent Levels of Security (MILS). Green Hills says its Integrity system is the first to undergo U.S. government evaluation to the highest security level.

The idea behind MILS, which dates to the 1980s, is to partition an operating system in such a way that the failure or corruption of any one partition does not affect any other part of the system or network. Each partition can be evaluated and certified for security separately, so that no partition needs to be evaluated at a higher level than required for its function.

MILS architecture is divided into three layers: a separation "kernel," which divides the computer into separate address spaces and scheduling intervals; middleware supporting distributed applications, and the applications. Now the race is on to certify mission-critical applications to the highest Evaluation Assurance Level (EAL), a grading system ranging up to 7, under the International Common Criteria for Information Technology Security. The evaluation is performed by the National Security Agency.

"What you have to do is prove separation; you have to prove that nothing this program can do can affect the other program, it can’t make it crash, it can’t make it slow down, it can’t give it bad data," O’Dowd said. "That’s the whole trick, proving separation. Even though there are two programs running on your Windows machine, your Linux machine, your Mac, and one application goes wild, it can’t affect the other applications. The tricky part is implementing that concept and not sacrificing performance, getting full real-time performance and full separation. We figured it out 10 years ago and have spent nine years getting it right."

Green Hills is using its Integrity real-time operating system (RTOS), which has been certified by FAA to the DO-178B Level A standard for airborne equipment, as the basis for a security product certified to EAL6+. (The company says it has offered Level 7 certification, but no one has requested it.) The first applications of the secure RTOS will be on the F-35 Joint Strike Fighter and unmanned aerial vehicles.

"We’re in the middle of that process right now, expecting to get that certification [in 2007]," said O’Dowd. "Everybody’s goal is to get this done and get it out there and deployed on the latest generation of systems."

LynuxWorks last November announced "LynxSecure," a MILS-compliant embedded separation kernel, combined with Intel’s Virtualization Technology silicon enhancements. Together, the technologies enable multiple secure and non-secure operating systems to perform at the same time. The company says LynxSecure will be certifiable to both EAL 7 and DO-178B Level A for avionics and military applications.

"LynxSecure represents the future of embedded software security and secure operating systems," said LynuxWorks CEO Gurjot Singh. "Security is the key to the embedded landscape." — Bill Carey

UAV Spending Will Triple

Driven by the United States military, spending on unmanned aerial vehicles (UAV) will more than triple over the next decade, from current expenditures of $2.7 billion to $8.3 billion, according to Teal Group.

The firm’s 2007 UAV forecast suggests the United States will account for 77 percent of worldwide research, development, test and evaluation (RDT&E) spending on UAV technology over the next decade, and 64 percent of procurement.

"The most significant catalyst to this market has been the enormous growth of interest in UAVs by the U.S. military, tied to the general trend toward information warfare and net-centric systems," said Steve Zaloga, Teal Group senior analyst. Visit www.tealgroup.com.

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