By Courtney E. Howard
Businesses and professionals in the avionics industry have weathered an economic storm and emerged, in many cases, stronger and wiser. “Our industry (aerospace) made it through the worst recession since WWII,” recognizes Richard Aboulafia, vice president of analysis at Teal Group. The commercial market is now investing in the aerospace product and the future looks bright, especially for Airbus and The Boeing Company. Industry analysts anticipate 2012 to be a year of recovery, bringing a wealth of new orders for manned and unmanned aircraft, as well as myriad modern avionics.
Integrated and modular
Today’s avionics are really good, true fifth-generation systems and generally moving to an integrated, modular architecture (IMA), notes Wayne Plucker, senior industry analyst in the Aerospace and Defense Group at Frost & Sullivan in San Antonio, Texas. A growing number of modern aircraft take advantage of IMA-based avionics.
The Dassault Rafale twin-engine, delta-wing, multi-role jet fighter, designed and built by Dassault Aviation in Paris, boasts the Modular Data Processing Unit (MDPU) IMA from Thales in France. “The Rafale integrates the largest and most modern range of sensors by means of the multi-sensor data fusion concept that allows the pilot to access global situational awareness and make well-informed tactical decisions,” according to a company spokesperson. “This data fusion process links all sensors via the MDPU to make the Rafale a truly network-centric warfighter.”
Similarly, the Boeing 787 Dreamliner employs the Common Core System (CCS), which GE Aviation Systems engineers in Grand Rapids, Mich., developed on the VxWorks 653 partitioned operating environment from Wind River in Alameda, Calif. GE’s CCS—which has been likened to the aircraft’s central nervous system and the backbone of the Boeing 787's computers, networks, and interfacing electronics—provides the primary computing environment for the Dreamliner.
“We’re going to end up with de facto mainframes and people strapping on plug-and-play technologies, including weapons systems, sensor suites, etc.,” Plucker predicts. “Ultimately, it will lead to opportunities for smaller companies, rather than the giants of the industry.”
As avionics technology moves more and more toward a common platform, common control, and common data link, pressure will mount to convert and modernize many legacy unmanned aerial vehicles (UAVs), adds Plucker, who foresees a wealth of UAV modifications. “Look for it to continue to be strong,” he says, “but only in the sense of systems modifications to move toward some form of commonality.”
UAV maintenance, repair, and overhaul (MRO) will bring increased opportunities for providers of avionics systems, components, software, and services. “It is going to be a good area for those who are already delivering into that space to provide system tweaks,” Plucker advises. Upcoming contracts generally do not favor those trying to enter the market, however, unless they bring to the table something unique—“some unique something that the military says, ‘I’ve got to have that to modify this thing.’”
UAVs have been, and continue to be, a hotbed of avionics investment, innovation, and activity. The UAV market segment will continue to advance, expand, and prosper, extending beyond the defense realm, with growth in commercial and private UAV activities.
The worldwide UAV market will total more than $94 billion, predict analysts at The Teal Group, an aerospace and defense market analysis firm in Fairfax, Va. They credit UAVs, in fact, as the most dynamic growth sector of the world aerospace industry this decade. Teal analysts, in a 2011 market study, estimate that UAV spending will almost double over the next decade, from current worldwide UAV expenditures of $5.9 billion annually to $11.3 billion, totaling just over $94 billion in the next 10 years.
“The UAV market will continue to be strong despite cuts in defense spending,” reveals Philip Finnegan, director of corporate analysis at The Teal Group. “UAVs have proved their value in Iraq and Afghanistan and will be a high priority for militaries in the United States and worldwide.”
“Officials of the U.S. Department of Defense (DOD) plan to spend at least $5.78 billion to buy and develop unmanned vehicles and unmanned vehicle payloads next year,” explains John Keller, chief editor of Military & Aerospace Electronics and editorial director of PennWell’s Aerospace & Defense Group in Nashua, N.H., in his analysis of the Pentagon's budget documents released 13 Feb. 2012.
DOD officials plan to buy at least 690 unmanned vehicles next year, including: a planned $769.88 million Army buy of 40 General Atomics MQ-1 Reaper weaponized UAVs, a $25.8 million Army purchase of 234 RQ-11 Raven UAVs, a $786.79 million U.S. Navy buy of 19 InSitu Small Tactical Unmanned Air System (STUAS) unmanned aircraft, a $314.22 million U.S. Air Force buy of four MQ-9 Reaper UAVs, and a $217.24 million U.S. Special Operations Command purchase of one AeroVironment RQ-11 Raven UAV.
Analysts at Visiongain, an independent business information provider in London, expect the military aircraft avionics market to reach $16.94 billion in 2012, as militaries around the world continue to develop and upgrade the avionics capabilities for a number of military settings and roles.
“The market for military aircraft avionics is set for expansion over the coming years, as not only will prominent militaries, such as the U.S., want to continue to upgrade their airpower capabilities, but emerging nations, such as India, China, Brazil, and Saudi Arabia, will also be seeking to develop their own air forces,” a Visiongain analyst says. “The recent campaign in Libya highlighted that air power is still very much relevant to today's world, and avionics are a central part of this.”
The UAV payload market is projected to grow from $2.6 billion in Fiscal Year 2011 to $5.6 billion in Fiscal Year 2020, according to Teal Group analysts. Investment will increase in a variety of UAV payloads, including electro-optic/infrared sensors (EO/IR); synthetic aperture radars (SARs); signals intelligence (SIGINT) and electronic warfare (EW) systems; command, control, communications, computers, and intelligence (C4I) systems; and chemical, biological, radiological, and nuclear (CBRN) sensors.
“Few now question the U.S. Air Force's claim that ISR (intelligence, surveillance, and reconnaissance) is 'the centerpiece of our global war on terrorism' with production beginning for major endurance UAV systems, such as MP-RTIP (Multi-Platform Radar Technology Insertion Program) and ASIP (Aircraft Structural Integrity Program); new RDT&E (research, development, test and evaluation) programs, such as wide-angle EO/IR systems; a variety of ground and foliage-penetrating radars; and future development efforts to bring large-aircraft capabilities to small UAVs,” says Dr. David Rockwell, senior analyst, Teal Group Corp. “Tactical and mini/micro/nano-UAVs will continue to offer some of the best electronics opportunities over the next decade.”
The UAV electronics market will grow steadily, with especially fast growth and opportunities continuing in SAR and SIGINT/EW, Rockwell says.
“We’re going to continue to see a strong market for ISR (intelligence, surveillance, and reconnaissance) platforms, systems, and supporting avionics,” Plucker predicts. “The problem is: That’s a small market. It’s not ‘glass cockpits for everyone,’ but [there is demand for] some targeting systems and ISR data storage, especially in the UAV world.”
“Unmanned vehicle-related DOD procurement planned for next year includes a $271.98 million Army purchase of 34 MQ-1 UAV payloads, an $83.34 million Army project to modify the AAI RQ-7 Shadow UAV, a $79.25 million Air Force plan to modify the MQ-9 UAV with new payloads, and a $682 million project to support the Northrop Grumman MQ-8 Fire Scout unmanned helicopter,” Keller continues.
Level playing field
“As defense austerity has hit, U.S. military UAV spending is coming under pressure. Despite this pressure, there is a shift towards making existing platforms more useful,” Finnegan admits. “That has meant that despite the reductions in the numbers of MQ-9 Reaper and MQ-1C Gray Eagle UAVs that would be purchased in the budget (from a combined 91 in 2012 to 43 in 2013) funds have been shifted toward increased training and ground stations. That means total Predator/Reaper spending goes from $2.07 billion to $1.91 billion, a relatively small reduction despite significantly fewer platforms acquired.”
“Platform-specific avionics upgrade programs may suffer with coming budget cuts, as opposed to more universal C4I systems, such as UAV full-motion video, processing, analysis, etc. Data links and other systems for multiplatform use will also fare better than things such as internal navigation system upgrades, etc.,” Rockwell notes. “The focus has been transfer funding to ISR, and I see these budgets continuing to grow. Hard-wired military platform avionics will likely see delays to upgrades as UAVs and ISR get what funding increases exist.”
“As pressure is increasing on the military side for UAVs, there is new hope for progress on the commercial side,” Finnegan says. In February, Congress established Sept. 30, 2015 as the deadline for the Federal Aviation Administration (FAA) to allow full integration of UAVs into the national airspace. “If it moves ahead and no glitches develop, the most immediate benefit will be for manufacturers of small UAVs, such as AeroVironment,” he adds. “The bill requires that UAVs under 55 pounds be allowed to operate within 27 months.”
"Smaller companies can successfully compete against larger players, as AAI Corp., Insitu, General Atomics, and AeroVironment have all shown," Finnegan says. "Now, the prime contractors are buying the successful smaller companies." In the past year, L-3 Communications bought Airborne Technologies, a small UAV developer and manufacturer, and VT Group purchased Evergreen's UAV fee-for-service operations.
As prime contractors and small companies compete in the dynamic UAV market, they are adopting widely different strategies, ranging from outright acquisitions to teaming arrangements and internal development of new UAV systems, Finnegan adds.
Onward & upward
Industry analysts at G2 Solutions in Kirkland, Wa., forecast a combined avionics market of nearly $105 billion for forward fit and retrofit segments of the air transport market through 2020. “Markets will witness a shift toward larger wide-body aircraft deliveries during the forecast period with narrow-body replacements from Airbus and Boeing entering service between 2020 and 2025.”
“Nearly 80 percent of the forward fit market is controlled by three avionics giants: Rockwell Collins, Honeywell, and Thales,” a G2 Solutions analyst explains. “Thales’ market share continues to rise, thanks to record years at Airbus. Rockwell Collins will benefit from the 787, while GE Aviation continues to augment its market footprint with the acquisition of PBN provider NAVERUS.”
Avionics for spacecraft and satellites also hold promise, with China growing aggressively. China is following Soviet Russia with its government-run aerospace market; and, who wants to drive a car produced by the DMV (Department of Motor Vehicles)?” Aboulafia ponders. China is making the same mistakes that Soviet Russia made with state-built vehicles, looking after the local economy rather than thinking and designing globally. China would be better off privatizing its aerospace industry, he says.
Civil rotorcraft is expected to make a strong recovery, achieving a compound annual growth rate of seven percent through 2016, compared to a decline (on the order of negative five percent) in 2010 and 2011, Aboulafia says. The military rotorcraft market segment is expected to maintain a strong plateau.
The business aircraft segment is another bright spot, predicted to log a 9.8 percent compound annual growth rate through 2016, according to Teal Group numbers presented by Aboulafia. Providers of business aircraft, avionics, and avionics service and support are already reporting growth, including contracts and orders signed during the National Business Aviation Association annual meeting and convention.
Avionics for manned and unmanned aircraft will require greater computing capacities, especially given expected growth in data acquisition and analysis via ISR, SIGINT, and EO/IR sensor equipment. Graphics processing units (GPUs) will enable more complex computing algorithms to be deployed at the point of data capture or data collection (e.g., in the field) and at the edge, says Kevin Berce, defense manager at Nvidia in Santa Clara, Calif. “One example is full-motion video captured via unmanned UAVs or other aerial platforms. The amount of data being collected is greater than the ability to push to the ground for processing. The ability to process data at the source, and only pushing down the necessary data to the field, will be enabled by GPUs that dramatically accelerate data analytics in-vehicle.”
“Onboard processing, which is part of the avionics picture, is going to be a big deal,” Plucker adds. “The more that can be done onboard the better, which says the best market is for the players that aren’t usually part of the avionics world—the computer specialists and imaging specialists—working together on avionics.”
The future looks bright for virtually market segments, especially with industry players and associations working together toward common goals, including recovery, health, and prosperity. Keep pace with the industry, including the latest trends, technologies, and market news and information by taking part in the Avionics Europe conference and exhibition (www.avionics-event.com), as well as by subscribing to the weekly Avionics Intelligence e-newsletter (www.avionics-intelligence.com).
Courtney E. Howard is executive editor of Avionics Intelligence (http://www.avionics-intelligence.com) and Military & Aerospace Electronics (http://www.militaryaerospace.com).