AVIATION & AEROSPACE INDUSTRY CONSULTING SERVICES
MARKET DATA ANALYSIS FOR EMERGING ECONOMIES:
The aviation and aerospace sectors worldwide are growing and marked increases are being observed in the emerging markets of China and across the East Asia and the Association of Southeast Asian Nations (ASEAN), the Middle East and the Baltic Eastern European Russian regions, and even the Arctic. These markets are nuanced and offer many unique opportunities and challenges to companies seeking an exporting and foreign direct investment presence.
Aero Polaris offers clients a range of consultancy deliverables depending on their requirements. From region-wide assessments to sub-sector specific analyses, advisements are developed to facilitate client business growth in their target emerging market(s) by identifying and extrapolating key operational variables.
KEY OPPORTUNITY & CHALLENGE AREAS:
- International, regional (LCC), & general aviation airlines: size, growth, trends
- International & domestic (secondary) airports: size, growth, trends
- Fixed-wing & rotary-wing aircraft, unmanned aerial vehicles (UAV) and systems (UAS) market demand
- Maintenance, repair, and overhaul (MRO) & supply chain: size, growth, trends
- Low-cost carrier (LCC) airlines: size, growth, trends
- Indigenous and foreign competition
- Intellectual property (IP) rights and foreign direct investment (FDI)
- Indigenous research & development (R&D) and manufacturing
- Government (military) procurement
- Export controls & compliance
- Local legal and regulatory compliance
- Corporate culture and social customs
Low cost carrier (LCC) growth across Asia Pacific is creating market-specific MRO licensing opportunities and challenges in Malaysia, Indonesia, Singapore, and other ASEAN markets - how and where can Canadian aircraft parts and consumables providers optimally supply this rising demand while contending with disparate regulatory regimes and an increasing competitive landscape of indigenous, as well as western competition?
RISE OF CHINA
CLEARED FOR TAKEOFF: COMAC AND CHINESE AIR TRANSPORTATION
The civil aviation and aerospace sectors of China have experienced tremendous rates of growth and dynamism, due in large part to unwavering government policies of long-term financial and strategic commitments and a considerable domestic market. This is exemplified by the growing strength of its low cost carrier airlines and influence over regional markets throughout Asia Pacific. Significant manufacturing and maintenance, repair, and overhaul (MRO) advancements have been made by its national airline and OEM, the Commercial Aircraft Corporation of China, Ltd. (COMAC), the establishment of the Aero Engine Corp. of China (AECC), and strategic partnerships with western OEMs, such as the 10-year debt investment plan of $2.3 billion signed by Airbus and the National Development and Reform Commission (NDRC). China is the world’s second largest and one of the world’s fastest growing civil aviation markets, as this industry has grown at double-digit rates for several years and is forecast to nearly quadruple in size by 2036 to 1.6 billion passengers resulting in the world's largest domestic market and double the size of US domestic passenger traffic.
China now seeks to increase its component and subsystem strengths to meet the capabilities it has already acquired at the top and bottom of the aerospace value chain in aircraft design and final assembly respectively.
Aero Polaris identifies these specific market areas that are experiencing growth and other industry related variables and then analyzes these and their impact on the corresponding opportunities and challenges faced by product and service providers seeking to establish or expand their business presence in China.
The drone and unmanned aerial vehicle (UAV) sector in China has also made considerable strides in technological advancement and expanded global market presence in both the civilian and military sectors.
The DJI company (Dà-Jiāng Innovations Science and Technology Co., Ltd) with its Inspire and Phantom drone offerings has captured global civilian (personal and commercial) market dominance across multiple price categories at approximately 50% of North American marketshare. A key aspect to the success of DJI are its ability to strategically partner with western companies providing value in accessories (cameras, etc.) and distribution channels.
The Aviation Industry Corporation of China (AVIC) and the China Aerospace Science and Technology Corporation’s (CASC) manufacture military UAVs with surveillance and strike capabilities, such as the Wing Loong II and Rainbow Caihong 5 (CH-5) respectively, at a fraction of the price of its US based competitors (WL-2, $1M USD vs. MQ-1, $5M USD) and these offerings are seeing tremendous international growth in key markets, such as Saudi Arabia. China's military UAV exports have experienced considerable success due to low price and minimal western competition resulting from US-led multilateral export controls policy (MTCR) that currently restricts the sale of US military UAVs to many international buyers. Global market expansion is also being advanced by foreign sales agreements that combine procurement and manufacturing offsets.
Aero Polaris specializes in offering the latest consultation on UAV technological advancement and global market conditions. This is a very dynamic market space that is highly impacted by ever-changing regulations, state-funded competition, and rapid technological advancements. Aero Polaris equips UAV companies with market insight to foresee and prepare for this turbulent market landscape.
Trade relations and foreign policy will continue to have a significant impact upon the growth of China's air transportation and aerospace markets. The One China Policy and Cross-Strait Relations are important drivers of the marked increase in air traffic growth between mainland China and Taiwan. China's involvement in the ASEAN +3 organization is also an important growth enabler to its own civil aviation and aerospace markets, as well as to the market growth of its partners in Southeast Asia. The operation and coordination of China's Air Defense Identification Zone (ADIZ) with those of its neighbours also has a substantial market impact on flight planning and trade relations. And above all, robust US & China relations are indispensable to the current market growth of its air transportation and aerospace sectors, whether maintaining compliance with ICAO safety standards and an optimal FAA flight safety rating or minting the new Boeing and COMAC partnership for a B737 completion and delivery facility in Zhoushan China.
Aero Polaris offers trade and policy assessments to clients seeking to gauge the impact of trade associations and agreements, government relations, and geopolitical events on the market performances of specific aviation and aerospace sector and companies in China and its regional partners.
Indeed, there are many opportunities for profit growth in China, however there are also many barriers to market entry and challenges to profit maximization. For example, advisement to the affects of ever-changing airspace liberalization and the Civil Aviation Administration of China (CAAC) on the high-growth air transportation sectoral areas such as, secondary (regional) airports, general aviation, and corporate jets is crucial to conducting viable business in China. Air transportation market volatility in China remains significant and for western companies to export and conduct FDI operations effectively in China, expert regulatory consultation should be sought.
Aero Polaris offers greater transparency to the airworthiness and safety standards and recommendations of the Civil Aviation Administration of China (CAAC), such as to increased airspace liberalization that has a direct impact on the accelerating growth of general aviation, business and corporate jet, secondary (regional) aerodrome, and other market specific sectoral areas.
MENA & BEER TURBULENCE
DESTABILIZATION IN THE MIDDLE EAST & EASTERN EUROPE:
The Middle East and North Africa (MENA) region and the Baltic, Eastern Europe, and Russia (BEER) region have hosted civil aviation markets producing spats of significant growth across several sector areas including the maintenance, repair, and overhaul (MRO). These regions however, have been plagued by increasingly persistent market externalities, such as state sponsored sanctions and terrorism, resulting in market disruptions that have created operational uncertainties, such as airline rerouting due to the Crimean Crisis and increased airspace safety risk throughout Eastern Ukraine.
The performance of the civil air transportation sector in the Baltic, Eastern Europe, and Russia (BEER) region is greatly impacted by strained regional relationships and their manifestation into significant geopolitical events. Aero Polaris uses industry and policy publications, white papers, and its extensive network of diplomatic and c-suite contacts to gather and interpret the latest market and political data and trends effecting the regional BEER commercial aviation sector.
The Middle East is undergoing significant economic, political, and security shifts and the civil aviation industry across its various regional markets are being impacted and their profitability undermined. The Superconnector airlines of Emirates Airlines, Etihad Airways, and Qatar Airways have been effected by state-subsidization accusations and a regional economic slowdown due to historically low oil prices. Increased competition from European and Asian low cost, long haul (LCLH) airlines, the advent of low cost carrier code sharing agreements (Emirates and Flydubai), and natural attrition are also taking effect, while Qatar Airways is effectively being knocked out of the sky due to Gulf State economic sanctions and political isolation. And security risks are ever-prevalent due to terrorism and these are having a significant impact on airport security and safety, airspace risk, and travel and electronics bans.
The air transportation marketplace in the Middle East is very dynamic with many moving parts. Aero Polaris offers expert market intelligence to companies seeking to capitalize on these ever-changing externalities.
THE ARCTIC FRONTIER
THE ARCTIC AND COMPETING GEOPOLITICAL & ECONOMIC INTERESTS:
Shipping lanes and energy and mineral resource deposits will be yearly accessible throughout the Arctic, which is resulting in significant economic opportunities for Canada, the US, and their NATO allies. New commercial and military airborne opportunities and challenges are on the horizon and preparations are already being developed to support new lines of communication and resources deposits in the Arctic and along the Northwest Passage.
Peer competitors are also asserting their sovereign claims on this strategically important region, which is resulting in heightening geopolitical security risks. The Arctic thaw offers greater ability to extract energy and mineral resources, as well as extend military force projection across the region creating new operational advantages (and disadvantages if proper measures are not taken). NATO allies are already increasing their interoperability and remote operational self-sufficiency capabilities while NORAD and other bilateral defence initiatives between Canada and the US are being updated. Intergovernmental military alliances and trade organizations are pivoting to the Arctic resulting in technological advancements and usages in unmanned aerial vehicles (UAV) and systems (UAS), intelligence, surveillance, reconnaissance (ISR), aerial refueling, precision navigation, sensors and communications, and other advanced airborne platforms and systems.
Whole-of-government presence is a crucial element to the development of the Arctic and to further substantiate legal precedent with the United Nations' International Court of Justice (ICJ). This will involve greater budgets and funding towards aviation infrastructure and aerospace investments for the Canadian Coast Guard (CCG) and its Search and Rescue (SAR) operations and the Canada Border Service Agency (CBSA) and protection against smuggling and illegal fishing.
Aero Polaris offers clients thorough assessments of the products and services required for effective aerial operations in the Arctic by the commercial operators and armed forces of Canada, the US, and their NATO allies. Policy and political analyses are also conducted for clients to gauge future government and military procurement demand.