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National Defense > Blog > Posts > Analyst: It’s the End of an Era for Military Aviation Industry
Analyst: It’s the End of an Era for Military Aviation Industry
By Sandra I. Erwin

In a few years, Lockheed Martin Corp. might be the sole U.S. manufacturer of military fighter aircraft. Lockheed's current rival, The Boeing Co., would limit its offerings to jetliner derivatives such as refueling tankers and surveillance planes.

This is the picture that is emerging from the Pentagon's buying decisions over the past decade, says Richard Aboulafia, aviation analyst at the Teal Group.

What he sees in the U.S. military aircraft budget is "death and destruction" for the industrial base, Aboulafia tells executives Feb. 19 during a lunch meeting of the National Aeronautic Association.

The problem is not a shortage of money, he says, but that a disproportionate amount is being spent on the F-35 Joint Strike Fighter, made by Lockheed Martin.

"We put all the eggs in one basket," Aboulafia says. "A whole lot of programs are dying."

During the post-Cold War military drawdown, manufacturers merged and the industry shrank, but the Pentagon kept most of its major assembly lines, and only shut down the Navy's F-14 fighter and the Air Force's B-2 bomber. 

The coming defense downturn likely will mark the end of production of the Air Force's C-17 cargo planes, F-15 and F-16 fighters, and the Navy's F/A-18, says Aboulafia. "There is a day of reckoning coming," he says. "Frankly, there is not a lot of ways to save these lines."

The winners are the F-35 and the C-130J cargo plane, also made by Lockheed Martin. which the Pentagon intends to buy in large numbers. There is a chance the Air Force will build new bombers, but that will not happen for another 10 years. "This is not a happy picture from the standpoint of the military aircraft industrial base unless you have a share of the F-35 program," he says.

The Pentagon did a poor job recapitalizing its aviation fleet when defense budgets were soaring after 9/11, Aboulafia notes. Military spending on new equipment is still relatively high, at $94 billion in 2014, compared to $130 billion during the war peak. But the high cost of new aircraft and a lack of forward planning has left the military with an aging fleet and with its biggest program, the F-35, that is ramping up much more slowly than expected. "This is disastrous," says Aboulafia. He noted that, in current-year dollars, at the peak of the Reagan buildup in 1986 the Defense Department purchased 387 aircraft. At the high point of the Iraq/Afghanistan spending surge, it purchased 75.

"We have this aging fleet that is not getting replaced," he says. This will transform the U.S. market considerably as more money will be spent on upgrades and repairs than on new production.

According to current projections, Boeing's legacy fighters, the F-15 and F/A-18 Super Hornet will remain in production for a few years and all of a sudden they fall off the cliff, Aboulafia says. "Right now Boeing needs to decide as a company if the line is going to be kept alive with long lead money." How the Pentagon invests procurement dollars this coming year could have long lasting consequences, he says. "The budget battle will determine the future of America's last fixed-wing combat aircraft production lines."

Export sales cannot be counted upon to make up for Pentagon cutbacks. Losing the Brazil competition was a tough blow to the Super Hornet, he says. He credits Boeing leaders for making a full-court press four years ago to win the Air Force tanker program and ensure the company maintains a presence in the military market. "If you were Boeing and you saw all this happening a few years ago, you put all your political capital in the tanker program," he says. "And that's exactly what they did. They saw this coming."

Boeing might have to transition out of the tactical fighter business and focus on jetliner derivatives for the military such as the KC-46 refueling tanker and the Navy's P-8 maritime surveillance aircraft. "This is a major sea change," says Aboulafia. "The composition of this industry is changing. The next couple of years are going to be a jarring experience for those involved."

Photo Credit: 
F-35C Lockheed Martin


Re: Analyst: It’s the End of an Era for Military Aviation Industry

The reason Boeing isn't building 5th gen fighters is because they designed a failure.  Buying crappy planes in the name of preserving industrial base is idiocy of the highest order. 
sferrin at 2/20/2014 9:39 AM

Re: Analyst: It’s the End of an Era for Military Aviation Industry

Sferrin, you should know that Boeing was not given a proper chance to compete for the X35 design.

It's a shame for the whole aviation industry and a sign of decadence of political and military leadership the USA.
Manolo at 2/20/2014 11:26 AM

Re: Analyst: It’s the End of an Era for Military Aviation Industry

Yeah, the F-23 was a crappy plane. What planet are you on?
Robbieracer at 2/20/2014 1:13 PM

Re: Analyst: It’s the End of an Era for Military Aviation Industry

Aboulafia is bought and paid for. Why is Northrop Grumman investing $100 million in a brand new plant? Are fighters the only fixed wing aircraft the military buys? How manydarn cargo planes do we need, anyway?
 In my early days in this business I remember opening up A-6's that were built before I was born. They were getting SDLM and going back out for more. The same can be done with all the aircraft in inventory now. Just a lot more profitable to build new ones, that's why he is squealing.
fred sanford at 2/20/2014 1:29 PM

Re: Analyst: It’s the End of an Era for Military Aviation Industry

6th Gen fighters are going to be UAV's.
Nebris at 2/20/2014 11:58 PM

Re: Analyst: It’s the End of an Era for Military Aviation Industry

Later on, US will not have the number to counter Russian and Chinese fighter planes. With the deficit and budget cuts, F35 & F22 may not be sustainable in the long run.
In addition, Russian and Chinese are developing not only 5th generation fighter but also deadly surface to air missile technologies which can deny both F35 and F22 air superiority of enemy skies.
Alan at 3/2/2014 9:15 AM

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