Europe Aerospace and Defense Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Europe Aerospace and Defense Market is segmented by Type (Commercial and General Aviation, Military Aircraft and Systems, Unmanned Aerial Systems, and Space Systems and Equipment) and By Country (Germany, United Kingdom, Italy, France, Spain, and the Rest of Europe). The report offers market size and forecasts for Europe Aerospace and Defense Market in value (USD Billion) for above all segments.

Market Snapshot

Europe Aerospace And Defense Market Summary
Study Period: 2018-2027
Base Year: 2021
CAGR: >2.4 %
Europe Aerospace And Defense Market Major Players

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Market Overview

The Europe aerospace and defense market is anticipated to register a CAGR of over 2.4% during the forecast period.

Due to the COVID-19 pandemic, most countries had imposed some restrictions on the import and export of goods. While the current war between Ukraine and Russia has been another reason to continue to keep tight control on imports and exports, while also regulating consumption and price inflation of natural gas.

Rising demand for commercial and military aircraft along with a substantial increase in defense spending has contributed to the growth of the aerospace and defense industry in Europe. Indigenous R&D and extensive manufacturing are bolstered by the presence of leading industry incumbents such as BAE Systems, Rolls Royce, Safran, Thales, and Leonardo. For instance,

  • Total military spending in Europe in 2021 amounted to USD 418 billion, 3.0 percent higher than in 2020 and 19 percent higher than in 2012. The aggregated military spending of Central and Western Europe—two subregions that together include most NATO allies (see box 1) and all European Union member states—totaled USD 342 billion in 2021 (USD 305 billion for Western Europe and USD 36.6 billion for Central Europe). The combined military expenditure of these subregions increased by 3.1 percent in 2021. Military spending in Western Europe grew at a higher rate (3.4 percent) than in Central Europe (1.3 percent). The growth in military spending in Central and Western Europe was mostly driven by increased expenditure on arms procurement and military R&D.

The industry is closely related to the GDP of the region and the industry players work in close collaboration with regional suppliers and end-user to foster symbiotic sustenance. The European Union (EU) has also formulated the Europe 2020 Strategy for smart, sustainable, and inclusive growth. The European space program contributes to regional scientific progress in the fields of telecommunications, navigation, and Earth observation.

Scope of the Report

The study provides an in-depth analysis of the aerospace and defense industry in Europe. Europe's Aerospace and Defense Market is segmented by Type and by country and provides an overview by type of equipment/system/infrastructure in the consumption industry, with analysis on demand trends, contracts, major players, upcoming players, trade agreements, border issues, and internal security. The report provides market size and forecast in terms of value (USD Billion) for all the above segments.

Type
Commercial and General Aviation Aircraft and Infrastructure
Military Aircraft, Helicopters and Systems
Naval Vessels and Systems
Armoured Vehicles and Systems
Weapon Systems, Ammunitions and Munitions
Soldier Protective Equipment and Portable Electronics
Unmanned Systems
Space Systems and Equipment
By Country
United Kingdom
Germany
France
Russia
Italy
Rest of Europe

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Key Market Trends

Enhanced Defense Spending Bolstering Procurement

French military expenditure reached USD 56.6 billion in 2021, 1.5 percent higher than in 2020 and 13 percent higher than in 2012. France spent the equivalent of 1.9 percent of its GDP on its military in 2021. The allocation was in line with France’s 2019–25 Military Programming Law. The government initially planned to update the legislation in 2021, but this was postponed due to the financial uncertainty caused by the Covid-19 pandemic. 

Germany—the third largest spender in Central and Western Europe, after the UK and France—spent USD 56.0 billion on its military in 2021, or 1.3 percent of its GDP. Its military spending was 1.4 percent lower compared with 2020. After its formation in December 2021, the new German Government announced its goal of investing 3 percent of Germany’s GDP in diplomacy, development, and defense. 

In light of the Russian invasion of Ukraine in February 2022, the government stated its intention to increase military spending further in the coming years. It is unclear, however, how this recent pledge will affect Germany’s prior commitments to spending on diplomacy and development. Military spending in Eastern Europe increased by 2.3 percent in 2021, to USD 76.3 billion. Between 2012 and 2021, military spending in the subregion grew by 15 percent. Russia’s spending accounted for 86 percent of the total.

Europe Aerospace and Defense Market - Defense spending in USD Billion, 2018 - 2027

Increasing Investments Towards Sustainability of Aerospace Industry

Europe is actively engaged in conducting extensive R&D of emerging technologies for deployment in the aerospace sector. European programs such as CleanSky and SESAR are catalysts for the deployment of new technology-based solutions in the aerospace sector and make flying cleaner, quieter and safer.

Europe has historically been at the forefront of space exploration, investing massively in space infrastructures such as in the Copernicus and Galileo programs. The EU has invested over EUR 12 billion in space activities as of 2021. Major technological shifts, such as digitalization, miniaturization, artificial intelligence, or reusable launcher, are disrupting traditional business models in the space sector, reducing the cost of accessing and using space. Hence, notable EU Union programs such as the EU Investment Plan, the European Fund for Strategic Investments (EFSI), and the Union Framework Programme for Research and Innovation, are aimed at scaling up of start-ups to stimulate several investments into the space sector. The ESA is at the forefront of the ongoing search for new habitable planets. Hence, as part of its ambitious exoplanet mission, For instance,

  • In July 2022, The European Parliament drafted a law proposal aiming to increase the use of sustainable fuels, known as the ReFuelEU Aviation Initiative. The proposed rules oblige fuel suppliers to increase the share of SAFs supplied to EU airports. To have more options for sustainable fuels for aircraft, the definition of sustainable aviation fuel would cover synthetic fuels or certain biofuels, with an exception for feed and food crop-based fuels, including those derived from palm oil.
Europe Aerospace And Defense Market - Space Expenditure (%), by Country, 2021

Competitive Landscape

The emerging security environment, fueled by the growing geopolitical unrest in several countries, is resulting in the growing demand for advanced aircraft, UAVs and satellites. In order to gain long-term contracts and enhance the market share, players are investing significantly towards R&D of sophisticated product offerings. Furthermore, continuous R&D has been fostering the technological advancements in platforms and associated products and solutions of the European aerospace and defense market. The market is fragmented, with many global players present in the market. Some of the prominent players in the market studied include Airbus SE, BAE Systems plc, Leonardo S.p.A., Safran SA, and the Thales Group, among others.

  • In July 2022, Airbus and Singapore’s Defence Science and Technology Agency (DSTA) are adding helicopters to the scope of their agreement signed at the Singapore Airshow earlier this year, to advance the co-development of digital solutions for the Republic of Singapore Air Force’s (RSAF) military aircraft platforms.
  • In July 2022, Embraer and BAE Systems have announced the signature of two MoUs The first MoU aims to establish a strategic partnership between BAE Systems and Embraer to collaborate in markets in which BAE Systems has a significant presence, including selected markets in the Middle East, for example, the Kingdom of Saudi Arabia. The second MoU confirms an intent to create a joint venture to develop a defence variant of Eve’s electrical vertical take-off and landing (eVTOL) vehicle.

Major Players

  1. Airbus SE

  2. BAE Systems plc

  3. Leonardo S.p.A.

  4. Safran SA

  5. Thales Group

Europe Aerospace And Defense Market Concentration

Recent Development

In July 2022, Leonardo and BAE Systems are actively progressing UK-Italy collaboration opportunities on the demonstrator aircraft as part of the Future Combat Air System (FCAS) programme, in the framework of a cooperation path launched by Italy and the UK in the Defence sector.

In July 2022, PZL-Świdnik, the Polish company fully owned by Leonardo, has been awarded a contract by the Polish Ministry of Defence (MoD) worth 8.25 billion PLN gross (approximately EUR 1.76 billion) for the supply of 32 AW149 multirole helicopters.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET DYNAMICS

    1. 4.1 Market Overview

    2. 4.2 Market Drivers

    3. 4.3 Market Restraints

    4. 4.4 Porter's Five Forces Analysis

      1. 4.4.1 Bargaining Power of Buyers/Consumers

      2. 4.4.2 Bargaining Power of Suppliers

      3. 4.4.3 Threat of New Entrants

      4. 4.4.4 Threat of Substitute Products

      5. 4.4.5 Intensity of Competitive Rivalry

  5. 5. MARKET SEGMENTATION

    1. 5.1 Type

      1. 5.1.1 Commercial and General Aviation Aircraft and Infrastructure

      2. 5.1.2 Military Aircraft, Helicopters and Systems

      3. 5.1.3 Naval Vessels and Systems

      4. 5.1.4 Armoured Vehicles and Systems

      5. 5.1.5 Weapon Systems, Ammunitions and Munitions

      6. 5.1.6 Soldier Protective Equipment and Portable Electronics

      7. 5.1.7 Unmanned Systems

      8. 5.1.8 Space Systems and Equipment

    2. 5.2 By Country

      1. 5.2.1 United Kingdom

      2. 5.2.2 Germany

      3. 5.2.3 France

      4. 5.2.4 Russia

      5. 5.2.5 Italy

      6. 5.2.6 Rest of Europe

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Vendor Market Share

    2. 6.2 Company Profiles*

      1. 6.2.1 Airbus SE

      2. 6.2.2 BAE Systems plc

      3. 6.2.3 Dassault Systemes SE

      4. 6.2.4 Fincantieri S.p.A.

      5. 6.2.5 GKN Aerospace (Melrose Industries plc)

      6. 6.2.6 Leonardo S.p.A.

      7. 6.2.7 Naval Group

      8. 6.2.8 QinetiQ Group plc

      9. 6.2.9 Rheinmetall AG

      10. 6.2.10 Rolls-Royce plc

      11. 6.2.11 Rostec State Corporation

      12. 6.2.12 Safran SA

      13. 6.2.13 Thales Group

  7. 7. MARKET OPPORTUNITIES AND FUTURE TRENDS

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Frequently Asked Questions

The Europe Aerospace And Defense Market market is studied from 2018 - 2027.

The Europe Aerospace And Defense Market is growing at a CAGR of >2.4% over the next 5 years.

The Europe Aerospace And Defense Market is valued at 1 Billion USD in 2018.

The Europe Aerospace And Defense Market is valued at 2 Billion USD in 2027.

Airbus SE, BAE Systems plc, Leonardo S.p.A., Safran SA, Thales Group are the major companies operating in Europe Aerospace And Defense Market.

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