Richard Aboulafia

Richard Aboulafia

Contributing columnist Richard Aboulafia is vice president of analysis at Teal Group. He is based in Washington.

Articles
Hawk Reasserts Trainer Market Dominance 

The trainer market is fast becoming dependent on shared programs. BAE Systems' Hawk won a notable victory in this market in mid-2003, with an order for the U.K.'s Military Flying Training System (MFTS) competition. While only good for an initial 20 planes (with 24 more options), the order preserves a production line that had been in danger of closing. The order, and the launch of MFTS, also cements the U.K. lead in trainer manufacturing and services.

Fighter Makers Reassess Options 

In October 2003, Singapore short-listed the Eurofighter Typhoon, Dassault Rafale and Boeing F-15 for its next fighter purchase. While for a small number of planes--only 10 at first, with another 10 to follow--this competition has broad implications for aircraft contractors in the U.S. and Europe. It also speaks eloquently about new dynamics in the fighter market.

RENEWED HIGH-END DEMAND?

Rotorcraft Market Politicized by European and American Nationalism 

Rotorcraft, like many other segments of the aerospace industry, have always been subject to nationalism and closed borders. Despite pressures in favor of globalization, rotorcraft markets are increasingly politicized.

Military Transport Market Grows 

The military transport market underwent a major change in 2003. For decades, European countries have failed to spend more than token funds on dedicated military lift. But in May, Europe's Occar (Organisation Conjoint de Cooperation en matiere d'Armement) arms agency signed the firm procurement contract launching production of the Airbus Military Co.'s A400M.

Bizjets Search for Optimism 

After two years of depression in the business jet market, it's natural to begin scanning the horizon for change. Unfortunately, there are few signs of a return to prosperity for what had been the best aviation growth sector in decades.

The worst news concerns used aircraft availability and pricing. Reports show just over 2,000 turbine-powered business aircraft are on the market, out of a total fleet of about 13,300. Pricing also remains soft, with many airplanes selling at an average 20% less than their 2000 peaks.

Future of U.S. Bomber Force Uncertain 

The Air Force's consistent preference for tactical combat aircraft continues to weigh against the entire concept of the manned strategic bomber. New bomber development programs are nowhere in sight, and even the existing fleet is under budgetary pressure. Nevertheless, the U.S. bomber fleet's continuing strong performance in recent overseas operations will go a long way toward strengthening the case for maintaining this capability.

Commercial Transport Market Still in Rough Shape 

Despite hopes for an imminent recovery, the world's air transport industry remains hobbled by slack demand and a changing business environment. Airline uncertainties and a difficult economic outlook also are complicating manufacturers' efforts to position themselves for the next market upturn. Traffic and yields remain below 2001 levels. The inactive jetliner fleet still hovers near 2,000 airplanes, more than 13% of the total fleet.

Military Rotorcraft Spending 

In the past decade, the world rotorcraft market has been hit by the downturn in military spending. The military side makes up the overwhelming majority of this market, and like other military segments, procurement has fallen as new systems are delayed and armed forces coast on existing inventories.

Airbus vs. Boeing 

Competitive tensions between Airbus and Boeing are truly at a new high point following Airbus Industrie's late-December decision to launch its A380 (formerly A3XX) mega-transport. This means Airbus and Boeing now have intense competitions going at every level of the jetliner spectrum. It also means the manufacturers have two fundamentally different philosophies of how the air transport market will develop in the coming years.

JUMBO VERSUS MINI JUMBO

Quest for Corporate Efficiency 

Business jet deliveries in 2000 have hit an astonishing all-time high of more than 700 jets worth more than $10 billion. For the first time, the business jet market is larger than the global market for combat aircraft. The market has been transformed, and fears of a market bubble have been assuaged. The only question concerns whether the market has hit a new plateau, or if it will grow further still.

A SUDDEN GROWTH SPURT

Uncertainties 

The future of the world fighter market has long been linked to the U.S. Joint Strike Fighter program. However, the prospects for JSF have grown cloudy, affecting the future of the other players.

Bombers: Legacy Fleet Upgrades 

The U.S bomber force remains one of the greatest legacies of the Cold War era. While this fleet looks set to receive extensive upgrade funding in the coming years, the prospect of it being reinforced by new aircraft is increasingly unlikely.

After the Kosovo experience, the U.S. military again began to question the possibility of a new bomber procurement effort. Options discussed include renewed procurement of Northrop Grumman's B-2, or a lighter, less expensive B-2 variant, or an all-new bomber using new technologies.

Military Airlift 

In September 2000, the U.K. Royal Air Force agreed to pay $725 million for the lease of four Boeing C-17s. This was the first export order for the C-17 and, more importantly, for any Western strategic transport. The aircraft will satisfy the RAF's Short-Term Strategic Airlift requirement (STSA) and will be delivered to the RAF by September 2001.

The U.K. decision is undoubtedly a huge breakthrough in the military airlifter market, which has always been undersized and overdiscussed. For once, a country is not just talking, but spending, on strategic lift.

Training/Combat Requirements 

There are signs that the trainer market, long considered dormant, may again come to life. Fleets are aging, and despite several trends mitigating against market growth, requirements are still in place. Several important trainer competitions have been announced, most notably in Turkey.

Engine Makers 

Jet engine manufacturers can truly say they've been to hell and back. The past decade has seen a drastic simultaneous civil and military aviation downturn, coupled with vicious market share wars and unprecedented demands on development funding.

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