Aerospace & defence market in India likely to reach $70 bn by 2030

Aviation aftermarket MRO (maintenance, repair and overhaul) is a value-added service that accompanies the delivery of new aircraft. While aftermarket plays a crucial role in the aviation industry, it doesn't receive the enthusiastic headlines that often accompany new aircraft. It's easy to understand why.

As demand for passenger travel is correlated to ticket prices, which, in turn, depend on jet fuel prices, a quick and sustained rise in jet fuel prices can affect traffic and increase market volatility. To address this challenge, aircraft manufacturers are investing in aircraft and engine design to make them more fuel-efficient, lower operating costs, and explore lower- and zero-emissions commercial aircraft for the future. The strong recovery in air travel is leading to increased aircraft orders and aftermarket activity. Domestic traffic levels registered about 81 per cent of the pre-pandemic 2019 levels (in September 2022), and international traffic levels have shown strong growth with easing travel restrictions worldwide. Leading global commercial aerospace original equipment manufacturers (OEMs) estimate that global passenger traffic will return to 2019 levels by the end of 2023 or early 2024. This could, in turn, result in production ramp-ups to remediate the growing backlog and drive industry revenue in 2023. The A&D (aerospace and defence) supply chain with multiple tiers of suppliers is very complex. An average American commercial aerospace company has more than 12,000 tier-2 suppliers. This creates unique challenges, such as a lack of visibility beyond tier-1 suppliers. The ongoing disruption is affecting the industry’s manufacturing plans by raising costs and increasing the shortage of materials and components. Major defence primes have also recently highlighted supply chain challenges as the leading cause of missing revenue targets and cutting back growth forecasts. Most defence suppliers supply to both aerospace and defence equipment manufacturers, which complicates the challenges for the entire industry. The digital thread, which connects engineering, supply chain, manufacturing, and aftermarket to enable a model-based enterprise (MBE), is expected to play an even more prominent role in building agility in 2023. The growing needs and expectations of A&D customers have forced many companies to digitally transform through the MBE.

MBE is the first step to digital transformation that integrates multiple processes from design to build into a unified environment, and data created by one step in the process is directly used by the next, which can help evaluate the impact of changes on the product across the value chain. 2023 could be another milestone year for the AAM market as eVTOL aircraft companies will likely see significant technological and regulatory progress. The Federal Aviation Administration (FAA) has modified the regulatory approach for aircraft certification for powered lift and pilot certification in 2022.54 The FAA also released a ‘draft’ engineering brief for vertiport design to guide operators in handling vertical takeoff and landing (VTOL) operations. The European Union Aviation Safety Agency (EASA) published a new regulatory framework for eVTOL aircraft certification and operations. Growing investments and a fast-moving certification process for eVTOL aircraft globally will likely shift AAM companies’ focus on pilot training to achieve commercial operations by 2025.

The A&D market in India is estimated to reach around $70 billion by 2030 as the momentum is expected to further pick up with improving infrastructure and government thrust. The growth of airlines and passenger traffic in India has been highly rapid in the past five years at over 15 per cent per year and this has increased from around 70 to 200 million passengers in the past 10 years in domestic and international air travel. Further, the number of flyers from India for international travel is also estimated to be around 100 million last year which indicates high demand for airline services and seats.

As regulatory agencies work to establish standards and practices specific to AAM, they will also likely stress long-term training procedure changes to meet AAM’s ultimate objective - autonomy. NASA is likely to accelerate eVTOL flight testing in 2023 as part of its AAM National Campaign, which would benefit the industry by advancing the inclusion of AAM aircraft in the national airspace system. In 2023, eVTOL and A&D companies may also increase collaboration with automotive OEMs to drive mass production and supply chain management expertise. Legacy aerospace players could increasingly partner with AAM startups to work toward launching their eVTOL aircraft in the market. For instance, Wisk Aero, an AAM startup, received $450 million from a leading A&D OEM to advance the certification of eVTOL aircraft.