2022 Aerospace and Defense Industry Outlook
Innovation to drive new opportunities
In 2022, the aerospace and defense (A&D) industry is expected to focus on innovation to develop new technologies and solutions, create new markets, and expand growth opportunities. Rapid evolution and commercialization of new technologies and processes can improve efficiencies and reduce costs. As the world heads into 2022, trends in commercial air travel and customer order activity are in much better shape than earlier post-COVID expectations, which is a positive sign for the industry. Global distribution of COVID vaccines is helping to clear a path toward normalization of air travel, though the current surge in Delta-variant infections in certain regions will likely keep demand for travel subdued into early 2022. But current macroeconomic trends suggest that demand for small- and medium-sized aircraft will continue to recover to reach pre-COVID levels in 2022, with aircraft manufacturers focused on narrow-body aircraft being well positioned to benefit from this buoyant demand. Furthermore, with air travel volumes now well off the lows seen in 2020, aftermarket revenues could recover strongly in 2022 as air traffic rebounds. Defense markets are expected to remain stable as military projects continue to be a strategic priority and countries further strengthen their militaries. There are more reasons to be optimistic. Private sector innovation will likely continue to increase the potential value that space, as an economic resource, can create for industries and organizations. Furthermore, new technologies, evolving business models, and increasing M&A activity will likely further accelerate the shift toward digital and operational efficiencies. In particular, digital thread and smart factories present a host of efficiency- and productivity-enhancing technologies that can accelerate time to market and reduce cycle times. A&D firms that focus on innovation will likely be better prepared for 2022.
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