A shift around the globe to stealthy, or stealthier, combat aircraft designs is driving the market for fighters and jet-powered trainers. Lockheed Martin's work on the F-35 is dominating the global fighter market, for customers purchasing the single-engine, stealthy aircraft and for those countries not eligible to buy it. It is also influencing many of the requirements behind forthcoming jet trainers.

The most critical question facing the U.S. portion of the F-35 procurement, estimated at $380 billion, is how many of what type the nation can afford.

The U.S. services currently plan to buy 2,443 Joint Strike Fighters, including the conventional-takeoff-and-landing A version, the short-takeoff-and-vertical-landing B version and the C variant optimized for aircraft carriers. But that is subject to change owing to belt-tightening in Washington.

And, as goes the U.S., so go its allies. Israel and Japan have committed to F-35 purchases, along with the nine core nations already in the program. While the total number of units sold may diminish owing to the global economic downturn, a growing customer base signals that some countries are willing to weather developmental challenges and high cost to field advanced technologies.

Program costs—including development and unit pricing—have fallen under major scrutiny. Though the Air Force's fiscal 2012 budget shows buys ramping up from 40 in Fiscal 2014 to more than 100 in Fiscal 2016, the plan could be flattened.

The F-35A is likely safe, but terminating either the Marines' F-35B or Navy F-35C is often mentioned as a quick way to reduce the program's price tag.

The outlook for Boeing's F/A-18E/F Super Hornet and F-15E platforms, though not infinite, is not yet diminished. The U.S. Navy and Australia are still buying Super Hornets, and F-15E sales continue to Singapore, South Korea and Saudi Arabia. The company also is proposing its “Silent Eagle” variant, with internal weapons carriage and some stealthy features, to countries in Asia and the Middle East.

Falling European demand for fighters is the result of the post-Cold War security environment in the region. Western Europe no longer feels the need to bulk up combat aircraft fleets to deter potential Soviet aggression, and much of Eastern Europe has been brought into the NATO alliance. European fighter makers are the most affected by this development. The Eurofighter consortium—a joint project of Germany, Italy, Spain and the U.K.—once expected to have its third tranche of orders under contract by now. Instead, the partner nations split the third and final tranche into two parts in 2009, and though they ordered 112 fighters for Tranche 3A, the demand for Tranche 3B orders has evaporated. Eurofighter is slowing production to extend work into 2017. Elsewhere in Europe, France has decreased Rafale procurement to 11 annually, a minimum cost-efficient level, and Paris is forecast to buy only 250. Saab is likely to build no more than six Gripens per year over the next two years, and production may end in 2013.

With the U.S. market sewn up by the F-35, and the European market largely accounted for, the search for orders has turned elsewhere. Brazil is expected eventually to select either the Rafale or Gripen for its FX-2 program, but the rest of the Latin American market comprises demand for used aircraft from the U.S. or Europe.

Additionally, Middle Eastern nations likely to order fighters in the next decade include Kuwait, the United Arab Emirates, Qatar and Oman. Due to the web of security obligations between the U.S. military and Persian Gulf nations, Boeing and Lockheed Martin have an advantage. Saudi Arabia is moving toward finalizing its F-15 plans; Iraq has selected the F-16.

In Asia, U.S. manufacturers often compete on an even playing field with European and Russian manufacturers. Though South Korea, Japan and Singapore can be considered steady U.S. customers, Thailand has ordered Gripens in recent years, Pakistan the Chinese-made JF-17 in addition to the F-16, and Vietnam the Su-30MK2. Indonesia has acquired a small number of Su-27/Su-30 fighters, but it cannot be considered a safe customer for Russia. It is likely to acquire a significant number of used F-16s from the U.S.

South Korea is planning to eventually build a stealth fighter and has signed up Indonesia as a partner. Seoul has funded development of a light fighter version of Korea Aerospace Industries' (KAI) T-50 trainer, the F/A-50, and it has been a linchpin target for Boeing's Silent Eagle, though the F-35 is still in play.

India is the largest single market for fighters outside the U.S., and it is focused more on diversifying sourcing than creating a single strategic partner. Hindustan Aeronautics Ltd. is assembling the Su-30MKI under license through 2018. New Delhi is also partnered with Russia in delivering 250 Sukhoi PAK FA/T-50s late in the decade. The Indian government will order up to 200 Eurofighters or Rafales, and it has ordered carrier-capable MiG-29Ks. It has also developed its own light fighter, the Tejas.

Beijing's fighter work is a driver behind much of the Asian market. The Chinese built 105 Su-27s under license through 2006, but Shenyang Aircraft Corp. has been turning out instead a fighter designated the J-11B that bears a striking similarity to the Su-27, a resemblance that the Chinese government continues to deny. The J-11B can be considered part of the traditional system of fighter production in China, which has long relied on domestic versions of designs either licensed or borrowed from abroad.

Two other designs made by Chengdu Aircraft Industries Corp., the JF-17 and J-10, are heavily influenced by foreign models. Pakistan is the sole foreign customer for these aircraft, but interest in Asia and Africa is high because of their low cost compared with Western or Russian designs. The new J-20 now in development at Chengdu represents the next generation with its stealthy, twin-engine design that appears to be optimized for strike. Little is known outside of China regarding its capabilities, but the new design, like that of the Sukhoi T-50, suggests that the U.S. and its allies will not be the sole users of stealth aircraft in 2020 and beyond.

As interest in more advanced fighter designs including avionics spreads, so does a desire for integrated active, electronically scanned array (AESA) radars, a market that is blossoming to improve performance of both older aircraft and new models in development.

Demand for these new fighters naturally trickles down into the fast-jet trainer market. Manufacturers of military fixed-wing trainers are forecast to produce 1,675 aircraft worth $21 billion over the next decade. Military trainer production is projected to gradually drop from roughly 200 aircraft in 2011 to 126 in 2016, dip temporarily and then rise to about 160 in 2020.

In the next decade, production of 984 jet trainers worth $15.3 billion is projected. The jet segment is by far the most valuable compared with turboprops. Jets encompass 73% of the market.

The jet trainer segment is forecast to see substantial growth over the next decade, as nations upgrading their fighters must make commensurate improvements in their trainers. Annual production is forecast to average 90-95 aircraft through 2016.

Up to one-third of those annual sales will be the Chinese-made Hongdu K-8, a low-cost option for nations unable to obtain Western aircraft. Four other designs are competing for the rest of the market: the Alenia Aeronautica M-346, KAI T-50, BAE Systems Hawk and Russian Yakovlev Yak-130. The Yak-130 is expected to be strongest in markets traditionally aligned with Russian purchases.

Key in this ongoing rivalry will be decisions made in the Advanced European Jet Pilot Trainer (AEJPT) and U.S. Air Force T-X programs.

Turboprop production is forecast to total 630 aircraft worth $5.3 billion. The turboprop segment is expected to see a drop in output as the Pentagon's Joint Primary Aircraft Training System program winds down in the middle of the decade. Production of U.S. Air Force T-6As ended in 2010, but the U.S. Navy is expected to receive 137 T-6Bs through 2015. Thereafter, the Pentagon will be out of the turboprop market, and other nations cannot replace this demand.

Annual production in the turboprop segment will drop in 2016 from roughly 100 deliveries annually through 2015 to 35-40 per year for the remainder of the decade. Contenders are the Hawker Beechcraft T-6, Embraer EMB-314 Super Tucano, KAI KT-1, and Pilatus PC-7, -9 and -21. Of these four, the KT-1 is the aircraft most likely to be pushed out of the market by 2014, mainly due to the strength of its competitors.

Turboprop trainer manufacturers have developed light attack variants fitted with hardpoints and advanced sensor systems. These designs offer the ability to identify and attack targets; however, this is a much smaller niche than many think.

The difficulty in selling light attack aircraft is that most buyers who could afford them also maintain multirole fighter fleets equipped for attack. Light attack versions are much cheaper to operate but represent an additional capability at additional cost. The prime markets for these aircraft are those nations that cannot afford fighters but also have enough funding to purchase new turboprops with high-cost sensors and weapons.

With Douglas Royce/Forecast International/www.forecastinternational.com