Rising Demand For New Gadgets In Older Airplanes Could Buoy The Sector

New research recently released by aviation analyst Frost & Sullivan indicates that the economic downturn and the high prices of fuel have combined to rein in the air transport aircraft market. This has had a greater effect on the business aircraft and the general aviation aircraft markets. While air transport aircraft production declined by 4 percent in 2010, business and general aviation aircraft production was cut by 40 percent in 2010. This downturn comes after years of record aircraft production and has had a significantly effect on avionics manufacturing. The retrofit and aftermarket sales in previous years had resulted in unprecedented profits for avionics manufacturers, but currently, they are streamlining their operations and often relying on niche markets to stay afloat. Manufacturers in both the air transport and business aircraft markets can weather this turbulent phase if there are only limited cancellations or deferrals of orders.

Although manufacturers will be hard hit by the dip in production for the next five years, the growth in the individual parts of integrated modular avionics (IMA), glass cockpits, and enhanced awareness devices will go a long way in helping them to keep their heads above water. For instance, both 787 and A350 use IMA, opening up a new window of opportunity for component manufacturers. Glass cockpits have also the expected configuration among new air transport aircraft and is becoming a regular fitting in new business and general aviation aircraft. Glass cockpits are now the standard, even in piston aircraft, says the analyst of this research. Enhanced vision systems, synthetic visions systems, and heads-up displays are also making inroads into the market.

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Avionics manufacturers have to rely on newer technologies for growth opportunities until aircraft production starts to recover in the general aviation market. They will also be heartened by the overall rise in the age of fleets across the world. Older aircraft could need significant hardware changes to comply with the 2020 U.S. implementation date of the Automatic Dependent Surveillance-Broadcast (ADS-B) and the related Required Navigation Performance programs. As the air transport market is likely to experience lesser contraction and a quicker recovery, manufacturers in that market space will be well positioned for growth after five years, notes the analyst. Manufacturers that develop newer technology systems are likely to find novel applications that traditional suppliers cannot.

FMI: www.frost.com