As the global economy steadily recovers from the impact of the COVID-19 pandemic, the aerospace and defense (A&D) industry is experiencing a strong rebound in 2023. However, the industry’s growth is hindered by ongoing supply chain issues and talent shortages, posing challenges that need to be addressed.
Expectations are high for the global, commercial aerospace industry as it anticipates a substantial 14% year-on-year revenue growth in 2023. This positive trajectory is driven by a resurgence in air traffic and improving macroeconomic conditions, positioning the industry to come remarkably close to its pre-pandemic levels. With just a 9% gap from the 2019 high, the global aerospace sector demonstrates a promising recovery outlook and represents a significant stride towards restoring stability and fostering growth within the aviation domain.
1. Navigating the challenges of carbon reduction
While aviation currently accounts for approximately 2.5% of global CO2 emissions, its path towards reducing its carbon footprint is not as straightforward as some other industries. While offsetting emissions is one option, it requires more oversight and regulation and is considered a temporary rather than a long-term solution. The primary focus in the near term is on Sustainable Aviation Fuel (SAF), but there are significant challenges in terms of availability and cost. Some lessors have begun exploring partnerships related to SAF, but a collaborative effort involving the entire aviation sector and governments worldwide is crucial to achieving the carbon reduction goals.
2. Drone technology
A comprehensive study of 23,526 publications from 2000 to 2021 highlighted the leading countries in drone technology research as the United States, China, and the United Kingdom. Prominent affiliations included CNRS, the Chinese Academy of Sciences, and Beihang University.
The commercial drone market has experienced remarkable growth, reaching a value of around $1 billion in the United States by 2017. Its annual impact on the country’s GDP is projected to range from $31 billion to $46 billion. The infrastructure sector presents the largest potential market for commercial drone applications, estimated at $45.2 billion.
Technological advancements in cameras, drone specifications, mapping software, and sensory applications drive the market’s expansion. Regulatory concerns regarding health, safety, privacy, and national security pose challenges. Additionally, satellite imagery services, despite their cost, present a competing industry without similar regulatory hurdles.
Growing sectors such as agriculture, energy, tourism, construction, mapping and surveying, and emergency services contribute to the demand for drone technology. Navigating regulations, addressing concerns, seizing opportunities, and mapping services are vital for the continued expansion of the commercial drone market. This market has the potential to revolutionize industries and significantly contribute to economic growth.
3. Space
The space industry is experiencing a surge in private company investments and the emergence of ambitious new space startups. Over the past two years, the segment has witnessed substantial growth in both orbital and spacecraft launches. In 2021 alone, there were 145 reported orbital launches, representing a remarkable 27% increase compared to the previous year. Private companies are eagerly exploring various opportunities in the space sector, such as in-space manufacturing, asteroid mining, space tourism, and space-based solar power, which have sparked significant interest and investment. In 2023, there can be anticipated notable advancements in earth observation/remote sensing, satellite communications, and technology development within the space industry. With a growing focus on combatting climate change, space companies are well-positioned to play a crucial role in monitoring and tracking Earth’s vital signs. Moreover, these companies can provide manufacturers with advanced technologies like the Internet of Things (IoT), enabling them to enhance productivity and minimize emissions, thereby contributing to sustainable practices.
4. Staying ahead in the aerospace industry landscape will rely heavily on digital transformation
Incorporating Big Data, AI, machine learning, digital modeling, and other cutting-edge technologies significantly enhance the efficiency of the aerospace design and testing process. AI and machine learning enable companies to achieve more precise inventory forecasting and evaluate macro global factors that may affect supply chains. Boeing, for instance, leverages data from previous forecasts, current demand, raw material availability, supplier capacity and quality, and other variables to enhance the accuracy of cost, quality, and supply predictions for essential resources.
In conclusion, to thrive in the aerospace sector in 2023, companies must adopt an agile and resilient approach to their supply chains, harnessing the power of digital technologies, fostering collaboration with suppliers, and embracing sustainability and innovation. These strategies will enable cost reduction, enhanced efficiency, and the development of more sustainable and responsible products and practices. By prioritizing these key areas, aerospace companies can position themselves for success in a rapidly evolving industry landscape.
