RESEARCH REPORT
Navigating new altitudes in commercial aerospace
5-MINUTE READ
October 18, 2024
In brief
- Commercial aerospace revenues are expected to see at least 3% year on year (YoY) growth, primarily driven by aftermarket services and inventory build-up.
- Executives are optimistic on aftermarket: 42% expect maintenance, repair and overhaul (MRO) spend to rise in 6 months and 72% see growth in 24 months.
- Supply chain challenges persist, with 94% of executives reporting production delays from parts shortages, and 83% citing quality issues.
- 67% of executives see challenges increasing for sourcing titanium, semiconductors, advance alloys and rare earth elements.
2024 continues to be a defining year for commercial aerospace, with revenues projected to surpass 2019 levels. However, growth remains modest, weighed down by ongoing supply chain and quality challenges affecting original equipment manufacturers (OEMs) and suppliers. Engine manufacturers remain a bright spot, with expectations of strong double-digit growth.
Ongoing supply chain challenges, including parts shortages, quality issues and the recent strike at Boeing are of concern. Despite these challenges, executives are confident that their supply chains will meet delivery and quality targets in the next six months. Companies are beginning to turn to AI-driven platforms and digital twins to improve supply chain visibility and better manage risks, but slow adoption remains a hurdle. As the industry recovers, supply chain resilience will be critical to sustaining growth momentum.
3%
Commercial aerospace is expected to see at least 3% year on year (YoY) growth, primarily driven by aftermarket services and inventory build-up.
54%
The Asia-Pacific region will drive growth, with revenues up 54% from 2019, driven by strong MRO demand and increased production in China.
11%
Airlines are experiencing their second consecutive year of profit growth, with an expected 11% YoY increase compared to 2023.
The momentum continues despite challenges
Despite ongoing challenges, major suppliers, particularly engine manufacturers, are driving growth, supported by a strong MRO market that is struggling to keep pace with increasing demand for maintenance services. The Asia-Pacific region will drive growth, with revenues up 54% from 2019, driven by strong MRO demand and increased production in China.
Airlines soaring back up
Airlines are experiencing their second consecutive year of profit growth, with an expected 11.3% YoY increase compared to 2023. The global airline industry's net profits are set to reach $30.5 billion in 2024. The revenue passenger kilometers (RPKs) are forecast to rise by 11.6%, led by the Asia-Pacific region at 17.1%.
Supplier and quality issues slowing growth
Commercial aerospace continues to struggle with persistent shortages of essential parts, particularly for engines, aerostructures and cabin equipment. Our survey reveals 64% of executives are allocating all or most parts to new production, highlighting the struggle to meet demand amid supply shortages. Simultaneously, the industry is dealing with critical material shortages with materials such as titanium and composites.
The outlook for material availability is even more concerning over the next 12 to 24 months. Almost two-thirds of executives we polled anticipate significant increases in sourcing challenges for advanced alloys, semiconductors and rare earth elements. To navigate these challenges, companies must enhance supply chain visibility using AI tools and digital twins, improve supplier collaboration and restructure supply chains. Despite these difficulties, optimism remains high, with over 90% of executives expecting suppliers to meet or exceed delivery expectations within the next two years.
67%
of executives see challenges increasing for sourcing titanium, semiconductors, advance alloys and rare earth elements.
Aftermarket on steady track to continued growth
The MRO sector is poised for strong growth in 2024 as demand for its services continue to rise. This is driven by extended aircraft lifespans due to delays in new aircraft deliveries and rise in air passenger travel. Aerospace executives expect increased MRO spending over the next six to 24 months. Companies are expanding capacity to tackle labor and supply chain issues, and sustained investor confidence is reflected with deals up by 8% in merger and acquisition activity during first six months of 2024.
What keeps aerospace executives awake at night?
Rising concerns over economic instability are clouding the outlook for the aerospace industry over the next 12 to 24 months. Executives are also worried about adverse currency fluctuations over a longer timeframe of 24 months, which could further strain operations.
Executive geopolitical risk concern levels
(relative to current concern levels)
About the Accenture Commercial Aerospace Market Insight Report
The Accenture Commercial Aerospace Insight Report combines sophisticated econometric modeling methodologies to drive quantitative quarterly forecasts on the health of the commercial aviation market. It also incorporates insights from leading aerospace executives worldwide, providing a unique perspective on short- and medium-term trends and drivers in this market, covering a wide range of activities from suppliers to MROs.