World civil aviation market. Global civil aircraft market

10.05.2020

The Russian aviation industry is beginning the largest reform since 2006, when the United Aircraft Corporation (UAC) was created. Now we are talking about the merger of UAC, Irkut Corporation and the company " Civil aircraft Sukhoi" into a single structure that will deal with all civilian programs of the UAC. It will also become the head division of the entire corporation.

This means that the UAC considers civil aircraft manufacturing to be a key area. On the one hand, in the context of a reduction in state defense orders, the inevitability of which has already been repeatedly stated in high level, aircraft manufacturers don’t have to choose. On the other hand, if Russia’s authority in the field of military aviation is not disputed by anyone, then in the civil aircraft market our country falls into the category of outsiders.

Which is quite fair, considering that last year only 30 civil aircraft were produced in Russia. For comparison, market leaders Boeing and Airbus produced 748 and 577 aircraft, respectively.

A logical question arises: what can the UAC count on in this situation?

Big Pie

According to the forecast that the United Aircraft Corporation presented at the July MAKS-2017 air show, global demand for new passenger aircraft with a capacity of more than 30 seats in the next twenty years will amount to 41,800 aircraft with a total cost of almost 6 trillion dollars.

At the same time, the greatest demand among airlines will be for narrow-body aircraft with a capacity of 120 or more seats, which will account for 63% of the total number of new aircraft. For this segment, UAC is developing the MC-21 program.

About 4.6 thousand units of new jet aircraft with a capacity of 61-120 seats will be sold by 2036 (11% of the total number). This segment of the UAC is represented by the Sukhoi Superjet SSJ 100 program.

The demand for turboprop aircraft with a capacity of 30 seats or more will be about 2.3 thousand units. In this segment, UAC is developing the IL-114 program.
The total demand for wide-body aircraft will be 7,450 aircraft. For this segment, UAC, together with the China Civil Aviation Corporation SOMAS, plans to develop and produce a new generation wide-body long-range aircraft. This year, a joint venture was opened in Shanghai to manage the program.

That is, theoretically, Russian aircraft manufacturers have something to respond to market demands. In practice, everything is a little more complicated.

Three gray horses

To begin with, today only the Sukhoi Superjet is really present on the market. This is the first domestic aircraft developed after a quarter-century break. Unfortunately, the hopes associated with this project were only partially realized.

Pilots who have had the opportunity to fly the Superjet rate the aircraft very highly - no worse than the Airbus A-320 (with better efficiency) and definitely better than the Brazilian Embraer. At the same time, they acknowledge the presence of many minor malfunctions that do not, however, affect flight safety. The main complaint of professionals is related to very poor service support, which is why planes sit idle for a long time without spare parts.

Passengers have more complaints - they note poor noise and vibration insulation ("I sat in seat 7F near the engine and received a free vibration massage - very strong noise and vibration"), as well as small and low windows.

Most often, Russians compare the SSJ 100 with the UAZ Patriot car: good transport for passengers without any special complaints. It is noteworthy that Mexican pilots (the Mexican company Interjet purchased 30 SSJ 100) called the Superjet a tank.

It is clear that with such characteristics it is not easy to conquer the world market. As a result, the project remains chronically unprofitable. To achieve profitability, UAC needs to sell at least 300 aircraft, but so far it has sold three times less. The maximum annual production of SSJ 100 was reached in 2014 - 35 aircraft were produced. In 2015-2016, due to changes in the macroeconomic situation, sales plans were adjusted to 17 and 18 units, respectively.

For comparison, the Brazilian Embraer produced 225 aircraft last year: 117 business jets and 108 regional aircraft - competitors of the Superjet. It is not surprising that UAC President Yuri Slyusar recently announced a refusal to produce large volumes of SSJs: the corporation plans to produce 30-40 Superjets per year, but does not intend to “scale this project to large volumes.”

Now the main hope of the UAC is the MS-21 project. This is an aircraft whose characteristics are close to today’s segment leader – the Canadian Bombardier CS300. Like the Canadian aircraft, the Russian one is built using the most modern technologies using composite materials and with the same Pratt & Whitney engines (however, in the future it is planned to install the domestic PD-14 engine on the MS-21). Economical engines and a lightweight body allow the Bombardier CS300 and MC-21 to save up to 20% of fuel compared to Boeing and Airbus aircraft of this class. At the same time, the MS-21 is more spacious than the Bombardier CS300 - it has 176 passenger seats(Canadian – 130), which makes its use more profitable.

Il-114 is a plane from the past: it made its first flight back in 1999 and until 2012 was produced at the Tashkent Aviation Production Association named after. V. P. Chkalova. A total of ten Il-114s were produced with Pratt & Whitney Canada engines. Now these aircraft are part of the Uzbekistan Airways fleet.
The United Aircraft Corporation plans to resume production of the Il-114 with Russian TV7-117ST engines at the plant in Lukhovitsy, which will produce 12-18 aircraft per year. The total production volume, including civilian and special versions, may reach 100 vehicles. The updated Il-114 should make its first flight in 2018.

Aeroflot versus the Ministry of Industry and Trade

The main problem that the UAC must solve is not related to the development or production of new aircraft, but to their sales. It is already clear that Superjet will not reach the production target of 300 aircraft required for the project to pay off. MS-21, with current investment volumes, will pay for itself after the sale of 200 aircraft. The already produced Il-114 has the greatest chance of paying off - if the planned 100 aircraft are produced and sold, the project can be considered commercially successful.

Meanwhile, according to Boeing estimates, the needs of the Russian market for the foreseeable future will be a maximum of 40 passenger aircraft all types per year. It is unlikely that MS-21, SSJ-100 and Il-114 will occupy this entire volume. Although the government is doing everything possible and impossible for this. In particular, the Ministry of Industry and Trade proposed abolishing benefits for the import of foreign aircraft, which “will establish customs and tariff protection of the domestic market in the interests of Russian aircraft - the SSJ 100 extended version and the MC-21-300.”

Aeroflot actively opposed this innovation, and 31 (!) foreign aircraft are scheduled to enter its fleet in 2018. The company sent a letter to First Deputy Prime Minister Igor Shuvalov, which notes that if the preferential treatment is suspended, additional costs for importing aircraft will exceed 25 billion rubles. As a result, Aeroflot will have to reduce its purchase plan for aircraft “both foreign and Russian-made,” which will not allow it to expand its route network, “including regional and socially significant routes.”

Photo: portal Moscow 24/Lidiya Shironina

Unreal export

Even if the main one Russian airline is not eager to refuse to import aircraft in order to support the Superjet and MC-21, what can we say about foreigners. Moreover, foreign buyers of new Russian aircraft will have to take into account a bunch of additional risks.

Firstly, the Irkut Corporation, the manufacturer of the MS-21, is known in the world as a manufacturer of fighter aircraft. The first civil aircraft produced by the corporation will be greeted by airlines with great caution. It will be possible to talk about purchases only when Aeroflot has gained experience in operating the MC-21 (which will have to purchase new aircraft on a voluntary-compulsory basis).

Secondly, any new aircraft requires fine-tuning and modification, which on average lasts about 15 years. And not a single serious airline will order large quantities of aircraft that have not passed this period. But even then, new manufacturers such as Irkut can only rely on orders from small carriers that do not have their own aircraft maintenance and repair facilities. It is these companies that are less tied to market leaders.

Thirdly, in 2018, the Chinese C919 enters the medium-haul aircraft market, which, relying on the massive support of its government, can become a serious competitor to all global manufacturers.

Thus, at least in the next 15-20 years, the Russian aircraft industry will be a planned loss-making industry, living largely on budget subsidies. Under these conditions, there is a very high probability that the Ministry of Finance will lobby for another optimization of the aviation industry, after which only the export-attractive military segment will remain from the industry.

Aircraft manufacturing involves the design and creation of a full-fledged aircraft transport and its components. The few and very expensive products are subsequently used for both civilian and military purposes.

There is no doubt that the most convenient means of transport for traveling is an airplane. There is no need to talk about the importance of aircraft in the country’s defense matters. All this makes the aircraft manufacturing industry a priority and places the world's largest aircraft manufacturing companies in a special category.

Aviation giants

The aircraft industry today uses almost all mechanical engineering products. In addition, all innovative scientific and technical processes are undoubtedly used in it. It is logical to assume that if a state is able to locate such a production complex on its territory, this means its financial solvency and the ability to show itself as a reliable business partner.

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The constant development of the industry involves the use of super-new information technologies (we are talking not only about the manufacture of aircraft, but also the components for them). From the economic side, this is, of course, a definite and very serious financial investment. On the other hand, every state needs the aviation industry. This formulation of the question makes it necessary to provide assistance to such enterprises from the state.

Below is a list of the ten largest aircraft manufacturing companies in the world. The Forbes rating was based on the market value of enterprises, which placed them in the top 10.

Table 1. Rating of the top 10 largest aircraft manufacturing companies

	Place in the general Forbes list	Name of company	Country of location	Market value for 2016, billion dollars
		Rolls-Royce Holdings	Great Britain

			Great Britain

		Northrop Grumman

		General Dynamics
			Netherlands

		The Boeing Company

10th place: we start with Rolls-Royce Holdings

A division of a well-known company specializes in the production of engines for civil aviation. The organization has been working in the aircraft sector since 1904. Over more than a century of history, the corporation has earned worldwide recognition and the desire of foreign customers to cooperate with it. In this regard, Russia is not lagging behind: it is Rolls-Royce that offers to supply its engines for the future Russian-Chinese long-haul airliner.

The company employs 54,100 people. Annual revenue last year was $20.18 billion.

9th place: French company Thales

The company's 20.6 billion capital value is deservedly due to the diligent work that dates back to 1918. Today the organization is busy producing information systems of aerospace importance. The company's products include components for military aviation and electronics for fighter aircraft.

The organization is named after Thales of Miletus, an ancient Greek philosopher. Offices are located in more than 50 countries around the world, and the total staff of all employees reaches 68,000 people. Sales revenue for 2016 was $16.5 billion.

8th place: British company BAE Systems plc

BAE Systems is essentially a British defense company promoting its products in the aerospace field. It works with foreign customers (mainly from the USA) through its subsidiary BAE Systems Inc. The British Aerospace (BAe) division works directly with the aerospace environment.

The organization actively lobbies its interests in the former Soviet republics. For example, since 2001 it has owned 49% of the national Kazakh carrier Air Astana.

According to the latest data, the organization employs 88,200 people worldwide. The headquarters itself is located in London. Now about the financial component: in 2016, the corporation’s revenue amounted to $24 billion.

7th place: French corporation Safran

Aerospace and aviation equipment are among several areas of this French industrial conglomerate. The company mainly specializes in commercial and military engines, as well as the restoration and repair of jet engine models. There is also a turbo direction - turboshaft engines for helicopters and turbines for rockets. In addition, other components for aircraft and engines are manufactured.

In total, the company employs 57,495 people. Revenue for 2016 was $18.23 billion.

6th place: Northrop Grumman Corporation (NOC)

This corporation was organized in 1994 and united Northrop Corporation and Grumman Corporation. Aviation and space are not the only areas of its activity. As equipment for this, the company produces military fighters and even airships (Airlander 10).

Northrop Grumman Corporation received revenue for 2016 equivalent to $24.51 billion. In total, this organization employs 67,000 people.

5th place: Raytheon

The top five starts with the American manufacturer, which receives more than 90% of its revenue from defense orders. The products are quite specific in nature - these are radio-controlled missiles and guidance systems, components of space systems, guidance technologies.

Raytheon's name is interestingly translated - "Divine Ray", which is associated with the initial production of ray tubes since 1922. Raytheon retrained itself as an aviation-related enterprise during World War II. The project was the development of protection against Japanese kamikaze attacks, which turned into large-scale production.

Today, Raytheon Corporation employs 63,000 people. Revenue for 2016 was $24.07 billion.

4th place: American General Dynamics

One of the giants in the production of military and aerospace technical arsenal is the fifth on the planet in concluding contracts related to the supply of aircraft for defense needs.

The organization is a supplier of powerful information systems, which include intercontinental missiles, satellite data processing systems and similar equipment. For a long time, General Dynamics collaborated with NASA.

In addition to aerospace products, the company is also involved in the production of naval and combat systems. The leading role here lies in the development of information technologies. In total, the organization employs 98,800 employees, who generated revenue of $31.35 billion for the past 2016.

3rd place: Bronze Dutch Airbus Group (formerly EADS)

The organization today is better known under the name Airbus Group. It is the largest aerospace corporation in Europe, with headquarters not only in the Dutch capital, but also in Paris and Ottobrunn.

The company is relatively young, formed by the merger of other large specialized organizations in 2000. EADS was renamed Airbus Group only in 2013. At the same time, management announced a restructuring, after which three divisions are expected: Airbus will engage in commercial aircraft manufacturing, Airbus Helicopters will specialize in the production of helicopters, and Airbus Defense & Space will become a platform for the production of military and space equipment.

The company's revenue for 2016 was $73.7 billion. The Airbus Group employs 133,000 people.

2nd place: silver medalist Lockheed Martin

Lockheed Martin Corporation is a global company that specializes in the defense and space segment of the market. Prominent examples of production include fighter-bombers (5th generation F-35) and models of F-22 class fighters.

The company's main client is the native American government, which brings in approximately 82% of revenue. The rest is provided by international contracts (work under the arms sales program). The number of commercial orders is only 1% of revenue. The company's full profit for 2016 is $79.9 billion.

In total, this organization employs 97,000 people. The headquarters is located in the US state of Maryland, in the city of Bethesda.

1st place: undoubted leader Boeing

The headquarters of this largest global manufacturer is located in Chicago. Specialization - production of aviation, military and even space equipment. The military arsenal is handled by the Boeing Integrated Defense Systems division, and the civil direction is under the wing of Boeing Commercial Airplanes.

In addition, one of the largest aircraft manufacturing companies in the world produces a wide range of military equipment (including helicopters) and participates in large-scale space programs (an example is the CST-100 spacecraft).

The company's capitalization is $108.9 billion, and revenue for the past year is $94.6 billion. Today this structure employs 150,500 people. Factories operate in 67 countries, and goods are supplied to 145 countries. And that’s not all the numbers: the organization’s partners are more than 5,200 suppliers from 100 countries.

Features of the aircraft industry

Initially, the aircraft industry was formed as an industry of a military nature. They began to think about releasing civilian objects later. This made the aircraft manufacturing sector monetized and gave certain specific features:

The production of military products is determined by the military orders of one’s own state and the possibilities of world export supplies.
Aircraft production civil purpose entirely dependent on the receipt of national and global orders. Naturally, these figures can fluctuate greatly depending on demand.

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A separate issue concerns the cost of production itself. It may be surprising that back in the mid-90s it was valued at 4 times less than the automobile industry, i.e., only $250 billion. Everything is explained simply: airplanes cannot be called a mass product, they are piece production. The annual production of civil aviation objects hardly exceeds the volume of 1000 pieces; for the military structure, the figures may be even less, only 600 pieces per year.

The situation is somewhat saved by the established production of so-called light aircraft. The great demand for them is also due to affordable price- from 20 to 80 thousand dollars. Most often, such products are used for educational, sports or business purposes.

Great importance It also has a high knowledge intensity of the entire process. Typically, the development of any aircraft (both military and civilian) can take from 5 to 10 years. High prices for the design and creation of aircraft objects are so large that few companies in the world can afford such activities:

Position on the Russian market

The leader of the domestic aircraft industry is the United Aircraft Corporation (UAC). It was created in 2006 and united all previously existing aircraft design organizations in the country.

The corporation's revenue is 295 billion rubles. During its operation, more than 200 aircraft were delivered. Special emphasis in last years goes to the development of the short-haul line Sukhoi Superjet 100 (SSJ100). In 2016 alone, 34 deliveries of this aircraft model took place. Today, more than 50 such machines are in operation, and 13 of them are used outside of Russia.

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Another promising direction of UAC is the new generation of medium-haul airliners MC21, the first flight tests of which took place last year. There is a demand for them: immediately after the tests, 175 orders and applications for the production of such equipment were received. UAC plans to produce 72 such airliners per year.

The American concern Boeing has raised its forecast for the growth of the market for new passenger aircraft. On Thursday in London, the company presented its annual Current Market Outlook, estimating the total cost of new aircraft required at $5.2 trillion. The concern predicts demand for 36,770 new aircraft over the next 20 years. The previous forecast was about 35 thousand aircraft worth $4.8 trillion.

“This is a strong and stable market,” said VP of Marketing, Boeing Commercial Airplanes. “With the introduction of new, more fuel-efficient aircraft, air travel growth is being driven by customers who want the ability to fly wherever they want, whenever they want.”

Demand figures have been boosted this year by the single-aisle aircraft market, which is forecast to become the fastest-growing and most dynamic segment as low-cost airlines continue to enter the market. This segment will require 25,680 new aircraft at $2.56 trillion, representing 70% of projected demand.

“Given the staggering forecast for orders and deliveries, we see the single-aisle market as the backbone of aircraft with a passenger capacity of 160 people,” Tinseth said. “This market undoubtedly gravitates towards this dimension, which allows us to combine operational efficiency with the flexibility of the route network. The Next-Generation 737-800 and new 737 MAX 8 aircraft offer our customers the highest revenue potential in this category."

Boeing's main competitor, the European aircraft concern Airbus, is also betting on the narrow-body market. Sales of the flagship A321 model in the narrow-body aircraft segment increased by 20% and now account for about half of the total volume of narrow-body aircraft produced by the concern.

Demand for other types of aircraft will also increase. The forecast for sales in the regional airliner segment increased by 25%, to $100 billion, or 2,490 units. In 2013, the company forecast deliveries of regional jets at $80 billion, or 2,020 units.

Sales will also increase in the small wide-body and medium wide-body aircraft segments. At the same time, the number of orders in the segment of small wide-body aircraft, despite the growth in market volume, will decrease from 4,530 to 4,520 units.

Unlike the small and medium wide-body aircraft segment, the market for large wide-body aircraft with a passenger capacity of more than 400 seats will shrink, Boeing analysts predict. The concern expects a reduction in sales from $280 billion to $240 billion, and the total number of aircraft sold will be reduced from 760 to 620 units. According to Boeing estimates, the capacity of an average wide-body airliner for two aisles will increase by 20 seats in the next 20 years, and a narrow-body - by 10. Airplanes will become longer, aisles will become narrower, and the distances between seats will be reduced.

Over the next two decades, the market for new aircraft will gradually become more balanced with geographical point vision. At the same time, the main driver for market growth will be the Asia-Pacific region.

Over the next 20 years, the Asia-Pacific market, including China, will lead in the total number of aircraft supplied to the region. According to Boeing analysts, in 2033 the total size of the Asia-Pacific aircraft fleet will increase from the current 5,470 to 15,220 aircraft. The CIS market will also grow significantly. Over the next 20 years, the number of aircraft operating in the CIS will increase from 1,180 to 1,820 units.

The American aviation concern's immediate plans include the presentation of a new generation of the medium wide-body Boeing 787-9, which is 7 m longer than the current top model Dreamliner 787-8 and can accommodate 40 more passengers. The aircraft should be presented to the general public for the first time early next week at the Farnborough Air Show. Boeing's main competitor, Airbus, will also present a new long-haul aircraft, the A350, with deliveries scheduled to begin at the end of 2014.