Market Trends of NATO Military Aircraft Modernization And Retrofit Industry
Fixed-wing Segment to Continue its Dominance During the Forecast Period
The NATO countries are avid users of fixed-wing aircraft. The demand for this segment is driven by the rising defense expenditures of major NATO countries such as the United States, Canada, the United Kingdom, France, Germany, and Italy. For instance, these countries' defense expenditures accounted for USD 1.11 trillion in 2022. These prominent NATO member countries have consistently ranked amongst the highest global defense spending nations each year, signifying substantial investments toward the R&D of advanced weaponry and procurement of sophisticated military assets.
For instance, in March 2023, the French government achieved a significant milestone when they received their most advanced Rafale fighter jets after four years of development. The F4 standard underwent flight tests by France's DGA in April 2021 and is expected to be fully available by 2025. The F4 boasts new features such as the Thales Scorpion helmet-mounted display, MBDA's MICA NG air-to-air missile, and Safran's AASM hammer precision-guided munition with a 1,000-kilogram variant. Similarly, in June 2023, the United Kingdom announced that it is upgrading its fleet of Beechcraft King Air 350ERs that was used to train personnel for the Royal Air Force (RAF) and Royal Navy (RN). The fleet is expected to undergo a major capability upgrade, with the updated aircraft to be capable of serving from 2023 to 2033. The upgrades include an active electronically scanned array radar, an electro-optical camera, and reconfiguration of the cabin area and mission consoles as part of a USD 155 million rear crew sustainment deal. Such developments are envisioned to drive the growth prospects of the market studied during the forecast period.
United States Dominates the Market During the Forecast Period
In 2022, the United States accounted for the largest market share due to its gigantic defense spending, which is multifold compared to other NATO countries. The US defense expenditure witnessed a 9% YoY growth, accounting for USD 877 billion in 2022. The demand for military aircraft modernization and retrofit market in the United States is primarily driven by the rising defense expenditure and increasing geopolitical tensions, especially between China and Russia over the years, which in turn drives military aircraft procurement.
In FY2024, the US Department of Defense (DoD) has requested a defense budget of USD 61.1 billion aimed at developing, modernizing, and procuring lethal air forces, including a focus on fighters, such as F-22, F-35, F-15EX, B-21 bomber, KC-46A, and other aircraft. In line with this, in November 2023, the US Air Force awarded Boeing a USD 2.3 billion contract to deliver 15 KC-46 Pegasus tanker aircraft to bolster its aerial refueling and cargo transport capacities. Apart from new aircraft procurements, the United States is also making significant investments to upgrade its military aircraft fleet to maintain its fleet readiness. For instance, in November 2023, the US Army awarded Boeing a contract to upgrade the Army’s fleet of Apache helicopters. Under the contract, the Army decided to buy new engines and install the latest software version for the Apache. Such contracts and developments are expected to drive the demand in the US during the forecast period.
