The military transport market will see production of almost 900 new aircraft over the next decade, but the raw numbers obscure major changes in the landscape. Production of the Boeing C-17 could end, leaving the strategic transport market to the Airbus Military A400M, while the Lockheed Martin C-130J will face a challenge for the tactical sector from Embraer’s new KC-390.

In the absence of Congressional funding for more U.S. Air Force aircraft, Boeing has restructured C-17 production to be economic at a lower rate but cannot hope to keep the line going indefinitely on export orders. Forecast International projects the last C-17 will be delivered in 2016, leaving the A400M as the only large Western transport capable of the strategic airlift mission. The A400M program has suffered delays and appeared in danger of cancellation in 2009, but a new commitment by the major customers to complete development means the aircraft will survive.

The ultimate size of the market for the A400M is an open question. Like the C-17, the aircraft is a niche product. The U.S. Air Force developed the C-17 because it needed a large number of heavy transports capable of carrying military vehicles and outsized cargo over intercontinental distances. The aircraft has been purchased in small numbers by other nations, primarily allies of the U.S. who use the C-17 in coalition military operations or disaster relief efforts far from home.

The A400M is smaller and slower than the C-17, but is designed to carry sizeable loads long distances—larger loads over longer ranges than a C-130. European nations and a few countries outside Europe see the A400M as a way of adding strategic lift capability without the cost of acquiring and supporting aircraft as large as the C-17.

The difficulty for Airbus Military is that, while less expensive than a C-17, the A400M is still too costly for all but the most well-heeled of the world’s militaries. Big aircraft need big budgets, and much of the world is cutting defense expenditures and rationalizing or pooling strategic transport capabilities.

The current sweet spot in the transport market is favors smaller aircraft, in the space largely owned by Lockheed Martin’s C-130J. The international replacement market for older model C-130s is expected to grow in coming years, and several manufacturers are developing designs aimed at replacing the large numbers of older C-130s and aging Soviet-era Antonov An-12s expected to be retired by air arms around the world.

Brazilian manufacturer Embraer is developing the KC-390 to meet a 28-aircraft Brazilian air force requirement to replace its C-130s, but is doing so with an eye to expanding its presence in the military aircraft market. The KC-390’s interior dimensions are similar to those of a C-130J-30, but its jet engines will enable it to cruise higher and faster. Embraer and the Brazilian government formally launched the program in April 2009 with a seven-year, $1.37-billion development contract including two prototypes. Since then, Brazil has secured commitments from Argentina, Chile, Colombia, Portugal and the Czech Republic to negotiate participation in development and production and place orders for the KC-390. First flight is tentatively scheduled for 2013, with deliveries to begin in 2015.

China’s Harbin, meanwhile, has been working for several years on the Y-9 design, a four-engine turboprop with modern avionics that closely matches the C-130J in size and payload. What is surprising for a country that seems intent on developing a civil airliner business is its reluctance to develop a modern military transport for countries that are largely locked out of the market for Western aircraft, either by cost or for political reasons. The Chinese government is reported to be pushing ahead instead with development of the larger, Il-76-class four-turbofan Y-20 transport. Information on the progress of both programs and on their funding is sketchy.

The joint Russian/Indian Multirole Transport Aircraft (MTA), should it move ahead as planned, will replace the Indian Air Force’s fleet of twin-engine An-32s. India is the largest user of the An-32, accounting for almost half of the 200-aircraft fleet. To be jointly developed and produced by United Aircraft and Hindustan Aeronautics, the twin-turbofan MTA will be based on the Il-214 design. But it is not clear whether a large international market exists for an aircraft that essentially occupies the gap between the larger C-130 and smaller twin-turboprop transports like Alenia Aeronautica’s C-27J and the Airbus Military CN-235/C-295 family.

Meanwhile, Kawasaki is developing the C-2, a twin-turbofan, high-wing transport to fill a long-standing Japan Air Self-Defense Force (JASDF) requirement to replace 26 aging Kawasaki C-1A transports and its C-130 fleet. The JASDF plans to acquire about 40-60 C-2s, and at this stage the aircraft remains somewhat of an open question in the airlift market. While the Japanese seem interested in getting into the market for defense-related exports to support its industry, constitutional prohibitions on weapons exports are under debate and are unlikely to be removed in the near term. It is not inconceivable for a civil variant to emerge from the C-2 program, targeted at military customers to circumvent the export ban. The C-2 aircraft is substantially larger than a C-130, however—more comparable to the A400M in size—and will face similar difficulty in lining up enough customers given the limited demand for a large transport.