Commercial Aerospace Insight Report 2022

The worst seems to be behind the aerospace industry. 2022 has seen the resurgence of consumer demand, international borders reopening and the waning effects of the pandemic as vaccines rolled out globally. Consequently, revenue passenger kilometers (RPKs) are expected to increase by 98% in 2022, with the IATA predicting a return to profitability by 2023.

Aerospace executives are cautiously optimistic about the future. Nearly one-third (31%) of those we surveyed expect revenue to grow in the next six months, and 81% expect growth over the next 12 months. Aircraft orders and delivery are set to rebound:

Overall, we anticipate that global commercial aerospace will grow year-on-year by 13% in 2022. However, significant regional variation is likely. Asia Pacific is likely to grow faster than North America and Europe.

The pandemic remains a major area of concern, along with deteriorating economic conditions. Inflation will continue to increase costs, with oil, fuel and labor costs rising sharply. There is also concern about rising interest rates’ effects on consumer spending.

Executives are also worried about a resurgence of the COVID virus as either localized outbreaks or in the form of a new variant. While supply-chain concerns persist, largely as a result of Chinese lockdowns and Russia’s invasion of Ukraine, executives are more positive than in 2021, when confidence in the timeliness and quality of supply chains fell to an all-time low. The vast majority of executives, (90%) expect that their supply chain operations will meet or exceed their expectations within the next 12 months.

Commercial aerospace original equipment manufacturers (OEMs) look set for steady recovery. Both Boeing and Airbus are increasing production and orders for new aircraft have been signed in recent months by leading airlines in response to rebounding passenger demand.

Several major airlines have signaled their intentions to renew their fleets in the coming years. Some have already begun the process of phasing out older aircraft and focusing on fuel usage to reduce carbon emissions and operating costs. This should provide a welcome boost to customer deliveries.

The steady recovery of the global MRO aftermarket is expected to continue. While 80% of executives expect MRO spending to remain flat over the next six months, 80% expect their spending to increase over the next 12 to 24 months. The number of aircraft sitting idle has reduced, with commercial aircraft utilization in July 2022, 26% higher than during 2021.

Supplier deliveries have improved and the outlook is up compared with 2021, only 22% of executives report reduced confidence in their supply chain timeliness and quality over the next six months. However, sourcing remains challenging, largely as a result of the Russia-Ukraine war, China’s zero-COVID policy and localized pandemic-related closures.

The dramatic changes ushered in by COVID have sparked more far-reaching changes to organizations and operating models. The majority of executives, 83%, say that their company will undertake large-scale organizational or operating model change within the next two years.

Organizational change of the scale executives say is required depends on the availability of talent, especially those with digital skills and know-how. More than half of executives (58%) say that talent will continue to be a challenge over the next 12 to 36 months. And the scarcity of digital talent is felt acutely in certain parts of the business. For example, while 72% of executives express high confidence in their digital engineering talent mix, only 8% say the same for their supply chain.

Commercial aerospace executives are more optimistic about the prospects for their industry than was the case in the depths of 2021. Despite lingering concerns in key areas such as supply chain and talent, most executives believe the industry is returning to growth, with brighter skies ahead.

Combining sophisticated econometric modeling methodologies to drive quantitative quarterly forecasts on the health of the commercial aviation market, with insights from leading aerospace executives worldwide, the Accenture Commercial Aerospace Insight Report provides a unique perspective on short- and medium-term trends and drivers in this market, covering a wide range of activities, from suppliers to MROs. Our poll was conducted in September 2022 and views are subject to considerable change as conditions can rapidly evolve.