Geopolitical tensions, particularly Russia’s invasion of Ukraine, are driving the strongest defense market demand since 2008-09, panelists said Nov. 8 during the second day of Aviation Week’s A&D Programs event in Washington.
Aviation Week forecasts $1.01 trillion in global military aircraft deliveries from 2024-2033, the first time such a forecast has exceeded the $1 trillion threshold. It is set to be dominated by fighter jets manufactured by “Westernized” (non-Chinese and non-Russian) defense primes–which are expected to account for $800 billion of that sum. In terms of delivery value, Lockheed Martin is predicted to capture $203 billion in sales–$165 billion of which will be the F-35 program–followed by Boeing with $113 billion and Northrop Grumman with $53 billion.
While Russia’s invasion of Ukraine is the strongest driver of increased defense spending, the trend is also “a broader response to global instability and countries’ response to that around the world,” including “strategic challenges in Europe, East Asia and the Middle East,” said Craig Caffrey, head of Defense Markets and Data at Aviation Week.
“China is still the long-term driver of defense budget trends in the U.S.,” he added.
Jeremiah Gertler, a senior associate with the Center for Strategic and International Studies’ (CSIS) Aerospace Security Project, described the global market for fighter jets as being composed of three distinct segments. The top tier is made up of F-35 buyers. The middle tier of customers want less-advanced but still highly capable fighters, and the bottom tier of countries shop for Russian and Chinese military aircraft.
“If you are a country that has the desire and the resources to be inside the F-35 walled garden, that’s really the only airplane that you are going to consider,” Gertler said. “Then you have everybody else that decides they don’t need that particular capability–and they’ve got a wide range of aircraft to choose from, from the F-15EX on the top end probably down to ... the KF-21 [the South Korea-led fighter jet program], if you don’t want to be reliant on the U.S.”
Gertler added that China’s fighters were quickly becoming more advanced in terms of technology and production ability, leaving the Russians with “whatever crumbs are left” in terms of customers.
Brandon Patrick, a senior defense analyst for the Middle East and North Africa at Aviation Week, said that despite the onset of competition from China as an exporter in the region, Beijing’s gains are relatively modest, and the Gulf “continues to be the easiest place for Western primes to export to.”
With regard to the future trajectory of China’s arms exports, Patrick said the ruling Chinese Communist Party (CCP) remains risk averse. “To make significant gains in the Gulf, it [the CCP] is going to have to take bigger risks than it currently is. Opportunities for failure in the Middle East and Gulf abound.”
Beijing’s interests in the Middle East are “somewhat more narrowly focused than ours in the West,” Patrick explained. He noted that the competitive price of China’s military aircraft would resonate less with buyers in a region historically more focused on buying top-tier fighters irrespective of cost.
“For the foreseeable future, the Gulf is pretty much going to be in Western hands as far as market share goes,” Patrick said.
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