Commercial avionics spending to increase over next decade, says Frost & Sullivan analyst

Posted by John McHale
LONDON, 9 June 2011.Avionics market analysts at Frost & Sullivan say the commercial avionics world is starting to rebound from the economic downturn as they see an increase in aircraft deliveries and new aircraft programs getting traction, which should have a strong impact on the air transport market.
Also older aircraft that are currently parked for upgrades will only boost the overall health of the avionics retrofit market, says Diogenis Papiomytis, principal consultant at Aerospace, Defence & Security group, Frost & Sullivan. More requirement-driven programs are being implemented, which also will increase avionics spending.
"In light of all of the market drivers, we should expect a substantial increase in avionics spending for years to come," Papiomytis says. "However, with the economy still at a fragile state, with oil prices pushing through the $100-110/barrel barrier and airlines announcing further capacity cuts to cope with fuel prices and new aviation taxes, there is great uncertainty among industry stakeholders."
Papiomytis says average market growth for commercial avionics is forecast at 5.2 percent, with the greatest spending expected to happened between 2014-2020, as the Boeing 787 Dreamliner hits full production levels, and the Airbus A350 and Comac C919 are introduced. Meanwhile, the retrofit market will grow as a result of major retrofit programs in the U.s. and Europe.
Regarding technology the main focus will be on communication systems and components interoperability and integration. Other technological initiatives having an impact will include Eurocontrol's Controller-Pilot Data-Link Communications (CPDLC) and Automatic Dependent Surveillance - Broadcast (ADS-B).
"The surveillance segment will play an important role in the industry, driving both the forward fit and retrofit avionics markets," Papiomytis says. "Operator requirements for commonality across supplier systems will push suppliers to create global industry standards, particularly in regards to central display controllers. As with all other segments, standardisation will come via the co-operation of end-users and suppliers, rather than regulatory authorities."
Papiomytis Rockwell Collins, Honeywell, Thales -- "the big three avionics suspplers," as he calls them -- are still dominant, but they may face challenges from a number of companies from the military avionics and business avionics sections.
Uncertainties that may slow market growth include more potential economic problems, rising fuel prices, and new aviation taxes. These might also impact modernization and upgrade programs as well, Papiomytis says.
"In the meantime, market consolidation will put pressure on smaller market participants to either partner for market share or further evolve in their niche segments," Papiomytis continues. "Mergers and acquisitions activity will intensify."