Let’s be blunt: The aviation industry got clobbered in 2009. Few analysts are optimistic that the pain will substantially ease in 2010, but as we gird for the uncertainties of a new year, bright spots are apparent. One of the most promising niches in aviation is the military.

Many places on the planet remain wracked by strife. And despite budget deficits and recessionary economies, the world’s militaries won’t be financing their purchases with bake sales. Case in point: the Pentagon’s 2010 military budget is $680 billion, more than all of the rest of the world’s military expenditures combined. In 2009, the Pentagon budget was $651 billion. These figures don’t even include many of the expenditures for the Iraq and Afghanistan wars.

According to G2 Solutions, a consultancy based in Kirkland, Washington, the world’s air forces are at various combat aircraft replacement and upgrade cycles. Most NATO countries are in an active replacement phase for their 1970s designed aircraft, while emerging nations such as India will evaluate entirely new aircraft sources in the near future. More than 5,000 combat aircraft will be entering service globally over the next decade, with a peak of 524 deliveries in 2014.

The continued growth of military spending in 2010 will be scrutinized during a new Aviation Today webinar, “Aviation in 2010: Challenges and Opportunities in the Year Ahead”, December 10. Among those on the speaker panel will be Richard Aboulafia, vice president of analysis, the Teal Group, and Michel Merluzeau, managing partner, G2 Solutions, an aviation consultancy in Kirkland, Washington.
The military market also will be fueled in 2010 by expanding airlift operations worldwide and the corresponding need for new communication, navigation and surveillance equipment that allow military aircraft to share airspace with commercial aircraft.
Programs such the Lockheed Martin F-35 are set to dominate the marketplace through 2029. The Lockheed Martin Joint Strike Fighter Cooperative Avionics Test Bed ("CATBird") aircraft recently completed a two-week deployment to Edwards Air Force Base in California, where it demonstrated the capabilities of the advanced military avionics systems under development for the F-35 Lightning II. The CATBird deployment featured airborne testing of the F-35 Lightning II radar, electronic warfare and communications/navigations systems.

What’s more, G2 Solutions expects aircraft such as the Dassault Rafale to gain more traction on the export market through 2014. “Rafale has had issues with some export tenders this decade, due to a mix of unfavorable political considerations and system overall technical maturity,” said G2’s Merluzeau. “However, the outlook has improved, with market potential for Rafale around 300 aircraft to 2019, more if it wins the Indian MMRCA competition.” The Rafale’s cockpit equipment includes Thales’s Spectra integrated avionics suite.
Airframes of concern this decade include the Saab Gripen and Boeing F-15 Silent Eagle (SE). Gripen has been relatively successful, but now competes for tenders in Brazil and India where the aircraft is clearly at a disadvantage against the Boeing F-18E or Dassault Rafale. Failure to gain additional orders might see the program come to a standstill by 2015. However, smaller opportunities, such as Argentina’s military shopping list, are ideally suited for Gripen.

“The upgraded F-15SE is an interesting niche option for existing F-15 operators, but the market opportunity window is tight and the addressable market is probably fewer than 100 aircraft,” stated Merluzeau.

Merluzeau also highlighted the remarkable longevity of the Lockheed Martin F-16 series, soon to be supplanted by the F-35. G2 Solutions predicts that more than 200 F-16s will be delivered between 2008 and 2019 – a remarkable achievement, because it has been 30 years since the aircraft’s entry into service. Lockheed Martin will maintain a commanding lead with a market share greater than 43 percent, ahead of Boeing, AVIC1, Eurofighter-EADS and Dassault Aviation.

Richard Aboulafia said that as the commercial aviation sector continues its slump in 2010, military spending will come to the rescue. “In the Pentagon’s FY 2010 budget, pretty much every branch of the military has suddenly realized they’ve got aging C-130 fleets, and they now need C-130Js with every conceivable letter appended,” he Aboulafia said. “KC-130J tankers, H/MC-130J special operations tankers, AC-130J gunships, basic C-130Js lifters, and the list goes on. The new budget plan will fund scores of them.”

It all adds up to big money-making possibilities in the aviation military market, regardless of global economic conditions. To learn more, attend this week’s Aviation Today webinar.

Register here:    video.webcasts.com/events/pmny001/viewer/index.jsp