Frost & Sullivan releases the '2024 Independent Market Research Report on Civil Aviation Parts and Components: Global and China'

Since the early 2000s, the number of flights in the global aviation industry has been steadily increasing, becoming an important driving force for international trade, tourism, and personnel mobility. By 2019, the global flight volume had reached a peak of 38.9 million flights. However, in 2020, the industry was severely impacted by global public health events, with flight volumes plummeting to 18.3 million flights, nearly halving, posing unprecedented challenges and pressure on the global aviation industry.

As the impact of the pandemic gradually subsides and the aviation industry accelerates its recovery, global flight volumes have gradually rebounded since 2021 and shown a continuous growth trend. It is expected that by 2024, with further rebound in global aviation demand and efforts by airlines to optimize operations and improve efficiency, global flight volumes are expected to reach 38.7 million flights, essentially returning to the peak of 2019.

Meanwhile, global air passenger volume has also shown a strong recovery momentum. It started to pick up rapidly from the low point of 1.76 billion passengers in 2020 and by 2023, the number of passengers on regular flights had rebounded to 4.5 billion, essentially returning to pre-pandemic levels. It is expected that passenger volume on regular flights will further increase in 2024, exceeding the historical high of nearly 5 billion passengers reached in 2019.

In 2023, the global fleet size reached 27,385 aircraft. Despite the slowdown in delivery speed due to supply chain disruptions affecting upstream OEMs, the global fleet size will continue to expand gradually driven by improvements in demand. It is expected that the number of aircraft in service globally will reach 28,398 by 2024.

Despite the continuous growth in the aviation market demand and the increasing requirement for fleet expansion, the supply chain issues in the aviation manufacturing industry have become increasingly prominent against the backdrop of global economic recovery. The fragility of this sector has had a profound impact on industry development. According to data from the International Air Transport Association (IATA), since 2021, global civil aviation aircraft orders have shown an obvious upward trend, but the actual deliveries of Airbus and Boeing, the major OEMs, are far lower than market expectations. This gap has directly led many airlines to face the dilemma of insufficient new aircraft numbers, while fleet aging has further exacerbated operational pressure. The instability of the supply chain has become the main bottleneck restricting the recovery of the global aviation manufacturing industry.

Boeing and Airbus, two major civil aviation manufacturing giants, have set plans to significantly increase production capacity in response to the recovery in aviation demand after the pandemic and have actively received a large number of orders. However, they have frequently encountered obstacles in actual production and delivery. Taking Airbus as an example, in 2023, the total number of new orders it signed exceeded 2,000, but the final delivery quantity was only 735, far below the expected target. In 2024, it set a delivery target of 800 aircraft, but due to an adjustment in mid-way to 770 aircraft, it showed difficulties in implementing the plan. As of 2024, Airbus has delivered 766 aircraft, basically completing its adjusted annual target. The situation at Boeing is even more severe. In addition to supply chain issues, its commercial aircraft production line has also experienced temporary shutdowns due to worker strikes, and the delivery of several important models has been forced to be postponed, directly affecting the global aviation market's supply capacity for aircraft.

Not only are OEMs facing difficulties, but engine manufacturers are also struggling to meet market demand. As the world's largest engine supplier, GE Aviation Group delivered only 1,392 engines in the first nine months of 2023, a significant decrease compared to the same period last year. The shortage of engine supply has further dragged down the delivery progress of complete aircraft and placed greater operational pressure on airlines.

Multiple factors have converged to predict that global aircraft deliveries will be only 1,254 units for the entire year of 2023, a 30% decrease from the initial forecast. Delays in deliveries have had a direct impact on global airlines. Several international airlines, including Emirates Airline, have had to postpone the operational plans of some aircraft models due to delays in deliveries, directly affecting route layouts and service capabilities. In the Chinese market, domestic airlines have also been affected. Southern Airlines stated at its third-quarter earnings meeting in 2024 that due to uncertainties about aircraft delivery times, the growth rate of future fleet size is expected to slow down to 2.5% - 3.5%, far lower than the expected growth rate of market demand.

The dilemmas of the supply chain are multifaceted, encompassing uncertainties about macro geopolitical and economic recovery, as well as the complexity of the aviation manufacturing industry itself. After decades of development, the aviation manufacturing industry has formed a highly internationalized supply chain network, characterized by a core engine manufacturer surrounded by suppliers at all levels that are closely aligned with core components, systems, and materials. However, this deep division of labor model also makes a disruption in any link potentially cause a chain reaction throughout the entire supply chain. For example, delays in deliveries of some Boeing models are due to insufficient supplies of components such as heat exchangers and cabin seats, which in turn are directly related to production line relocation after the Russia-Ukraine conflict and insufficient capacity at new factories. In addition, the global aviation supply chain also faces issues such as a shortage of skilled workers and poor raw material supply, further dragging down the overall capacity recovery.

Facing a series of challenges, China's aviation manufacturing industry has encountered potential opportunities. As an important participant in the global aviation market, China has not only steadily expanded its market share driven by rapid domestic demand but also gradually integrated into the international aviation supply chain system through technological research and development and industrial upgrading. Especially with the gradual maturity of the domestically produced large aircraft C919, Commercial Aircraft Corporation of China (COMAC) is rapidly developing into an important force in the global aviation industry. At the same time, China's aviation parts supply chain has shown strong resilience. Through deep integration with the international market, Chinese manufacturing is helping to alleviate bottlenecks in the global supply chain and inject new vitality into the industry. In the future, as the international aviation market further releases demand for new models, China's aviation manufacturing industry is expected to occupy a larger share in the global market. Against the backdrop of supply chain restructuring, China can not only enhance its competitiveness by strengthening the improvement of the local aviation industry chain but also play a more important role in the regional supply chain pattern. This dual driving force will continuously inject momentum into the development of China's aviation industry, making it gradually become one of the core pillars of the global aviation industry.

The industrial chain for civil aircraft manufacturing is long, involving several parts including aircraft design and research and development, aircraft manufacturing, aircraft application, and support and services. The upstream mainly consists of aircraft design and research and development activities, with major participants being various universities, research institutions, and enterprise research institutes.

Midstream aircraft manufacturing involves several links including materials and equipment, aviation parts manufacturing, aviation component manufacturing, and final assembly integration. There are numerous market participants in the global aviation parts manufacturing industry chain. After years of development, the aviation parts manufacturing industry chain has formed a stable and specialized division of labor system and industrial chain. This industry chain takes the final assembly integration of complete aircraft as its core and terminal, extending and dispersing upwards layer by layer, covering subsystem integrators, core component integrators, parts suppliers, raw material or electronic component suppliers, etc.

The aviation parts manufacturing industry is mainly divided into three categories: raw materials, electronic components, and supporting services. Among them, raw materials include new composite materials, metal alloy materials, chemical propulsion materials, etc., providing the material devices required for production and manufacturing for various manufacturers and integrators.

In terms of aerospace parts manufacturers, global aerospace part suppliers are mainly distributed in North America, Europe, and the Asia-Pacific region. The North American market holds a dominant position in the global aerospace parts sector, thanks to its developed aviation industry system and the concentration of many internationally renowned manufacturers. Companies such as GE Aviation and Intex Aerospace are important participants in the aerospace parts industry in North America and around the world, consolidating North America's core position in the aviation manufacturing sector. The European market is characterized by highly collaborative industrial chain networks formed by companies such as Spirit AeroSystems, FACC, PCC Precision Castparts Corp., and GKN Aerospace Services Limited. The aerospace parts industry in the Asia-Pacific region has risen rapidly in recent years, especially countries represented by China, Japan, and South Korea, which have vigorously developed the aerospace parts manufacturing industry through policy support, technology introduction, and independent innovation. Companies such as COMAC and Mitsubishi Heavy Industries have gradually increased their participation in the international market, while some parts suppliers have also begun to enter the supply chain systems of global aviation manufacturing giants.

In terms of the Chinese market, the main enterprises manufacturing aviation parts are mostly state-owned large enterprises and their internal supporting enterprises. These enterprises are characterized by large scale, high technical level, and strong industry influence, and they are often the formulators and holders of industry/product technical standards. Research institutes and private enterprises with production qualifications form a complementary force, focusing mostly on niche areas of the industry. The integrated assembly and application fields of aviation parts, such as aircraft main engine factories.

In downstream aircraft manufacturing, a oligopoly pattern prevails. Airbus and Boeing, the two major aircraft manufacturers, occupy about 90% of the civil aircraft manufacturing market share. In China, mainly COMAC is involved in competition.

The manufacturing of large civil aircraft is an industry characterized by high technical content, high capital investment, and high risk. Since the 1970s, with the rapid rise in aircraft research and development costs and increasingly fierce global market competition, aircraft manufacturers have gradually expanded their scope of foreign cooperation, especially adopting the subcontracting model during the development process. Through subcontracting, manufacturers can outsource some manufacturing tasks to subcontractors. Subcontractors not only earn income and profits but also acquire advanced manufacturing technology, processing techniques, and management experience in a relatively short time during the cooperation process. In addition, the subcontracting model can also promote the development of the aviation manufacturing industry in subcontracting countries to a certain extent and enhance their industrial level and international competitiveness.

Subcontracting refers to a partnership where the contractor relies on its own technology, funds, equipment, and licenses to sign contracts with the employer, manufacturing parts or integrated components for them. This cooperation model is the most common form of division of labor in the aviation industry, spanning all levels of the division system. In the aircraft manufacturing process, an aircraft can be divided into three main components: the fuselage structure, engines, and airborne equipment.

Aviation aircraft typically adopt a manufacturing model of 'complete aircraft manufacturer - multi-level supplier'. The first level of the industrial chain is the complete aircraft manufacturer, which is mainly engaged in product design, final assembly manufacturing, marketing, customer service, and airworthiness certification; the second level consists of key aviation subsystem manufacturers, providing subsystems including the main airborne equipment such as airframes, engines, and avionics; the third level mainly includes numerous suppliers that provide parts and materials to the complete aircraft and subsystem manufacturers at the upper levels of the industrial chain.

Aircraft engines, due to their complex structure, harsh operating environment, and extremely high technical barriers, often relied on outsourcing models to obtain core technical support for engines during the development of early large aircraft. In terms of airframe structure, traditionally, aircraft manufacturers purchased raw materials and independently completed the processing and assembly of the airframe structure. However, since the 1970s, the proportion of outsourcing of airframe structural parts has been continuously increasing, and aircraft manufacturers have gradually shifted from full-process manufacturing to the role of equipment integrators. They have concentrated more resources on areas of core competitiveness and strengthened their control and management capabilities over the supply chain. This model not only significantly optimized R&D and production efficiency but also greatly promoted the globalization of division of labor and cooperation in the aviation manufacturing industry.

In terms of the global market, the scale of the civil aviation parts market grew from 387.59 billion yuan in 2021 to a subsequent decline back to 408.73 billion yuan in 2024. It is expected to grow to 780.08 billion yuan by 2030, with an average compound growth rate of 11.4% from 2024 to 2030.

In terms of material types, the global market size for metal parts of civil aircraft will reach 286.11 billion yuan in 2024, while the market size for non-metallic and composite materials will be 122.62 billion yuan. By 2030, the global market size for metal parts of civil aircraft will reach 507.05 billion yuan, and that for non-metallic and composite materials will reach 273.03 billion yuan. Although the unit value of composite material parts is higher than that of metal parts, it is expected that metal parts will remain at the core of the civil aviation parts industry for a long time to come. However, with the increasing application proportion of high-performance materials and composite materials in new-generation aircraft, the market share of non-metallic and composite materials is expected to gradually increase slowly, from 30% in 2024 to 25% by 2030.

In terms of the Chinese market, the scale of the civil aviation parts market has grown from 81.39 billion yuan in 2021 to 82.46 billion yuan in 2024, and it is expected to continue growing to 163.82 billion yuan by 2030. China's share of the global market will increase from 20.2% to 21.0%. In contrast, the market share of non-metallic and composite materials in the Chinese market has increased relatively more slowly, expected to rise from 25% in 2024 to 30% by 2030.

The global and regional layout and development of Chinese and global aviation parts manufacturers reflect the industrial advantages and characteristics of different regions. Globally, aviation parts manufacturers are mainly concentrated in North America, Europe, and the Asia-Pacific region. North America and Europe lead in the field of high-end parts due to their profound aviation industry history and technological accumulation. In the Asia-Pacific region, especially in China, the industry has gradually emerged in recent years with the rapid development of its aviation industry chain.

After multiple strategic and specialized reorganizations, China's aviation industry has currently formed an industry pattern with the Aviation Industry Group mainly focusing on military aircraft, the Commercial Aircraft Corporation of China (COMAC) mainly on civil aircraft, and the Aero Engine Corporation of China (AECC) mainly on aircraft engines. Each enterprise, based on its own positioning and technical strength, undertakes the research, development, and manufacturing of different types of aircraft products. Among them, the aircraft factories under the Aviation Industry Group are both main manufacturers of military aircraft and subcontractors for civil aircraft.

●Internal supporting parts manufacturing units of complete machine manufacturing enterprises

Due to historical reasons, China's aerospace manufacturing industry exhibits distinct regional distribution characteristics. For instance, in the Northeast region, there are Shenyang Aircraft Corporation (COMAC) and Harbin Aircraft Corporation (HAC), in the Northwest region, Xi'an Aircraft Corporation (XAC) and Shaanxi Aircraft Corporation (SAC), in the Southwest region, Chengdu Aircraft Corporation (COMAC) and Guiyang Aircraft Corporation (GAC), and in the Central South region, Changchun Aircraft Corporation (COMAC) and Hongdu Aviation Industry Corporation (HAC). Additionally, influenced by the planned economy system, many workshops, branch factories, or subsidiaries were commonly established within each complete aircraft manufacturing group, engaged in the supporting production of complete aircraft parts and components. This has led to an industry characteristic of being 'large and comprehensive.' These parts production units have a long history in aerospace business, possess certain production experience and capacity. In addition to supporting their own complete aircraft production, they also undertake some international subcontracting orders and are currently important participants in domestic aerospace parts production.

● Aerospace research institutions with supporting production capabilities

Some domestic research institutions have gradually developed a certain scale of component production capabilities during the research and development of special materials and processes for aerospace vehicles.

● Joint Venture Aerospace Parts Manufacturing Enterprise

As China's participation in the international aviation manufacturing industry chain deepens, more and more domestic enterprises have received subcontracting orders from aircraft and engine manufacturers such as Boeing, Airbus, and GE. These enterprises have a high level of management and technical capabilities, as well as relatively advanced production equipment, but mainly serve the international subcontracting business.

● Private aerospace parts manufacturing enterprises

Restricted by China's aerospace industry's long-term closed-ended and 'big and comprehensive' production model, domestic private parts manufacturers generally provide targeted supporting services for specific complete machine manufacturing enterprises. Due to business scale limitations, their development has been relatively slow. Currently, most private parts manufacturing enterprises can only carry out simple rough processing, their production equipment is relatively outdated, and they are characterized by 'numerous quantities, backward technology, and limited capacity'.

Centering on the industrial layout of the aviation industry, China's aviation parts manufacturing industry has formed a market competition pattern dominated by internal supporting enterprises, effectively supplemented by scientific research institutions, joint ventures, and private enterprises.

In the global and Chinese aircraft manufacturing supply chains, companies in the fuselage and engine sector are mostly concentrated in complete aircraft manufacturing and the supply of major components. In the avionics and electromechanical sector, European and American companies have an advantage in technology leadership, but Chinese local suppliers are rapidly emerging. In the interior sector, primary suppliers are still concentrated abroad, and manufacturers have a very high market concentration. For example, Safran's revenue from the interior sector in 2023 reached 18.87 billion yuan, with a market share of 33.5% in 2023. The industry's CR5 exceeded 85% in 2023. In the seat sector, which accounts for the largest proportion of the interior sector, the top four seat manufacturers are all foreign companies. However, in the secondary interior component segment, Chinese companies have gradually formed competitiveness in the fields of seats and cabin modules.

With the progress of China's aviation industry, the design and manufacturing of domestic aircraft parts are developing towards large-scale integration, thin-walled structures, and precision. This trend meets the high-performance demands of new aircraft but also poses higher challenges to aviation manufacturing technology. Large-scale integral structural components reduce the number of parts, shorten assembly cycles, improve strength and reliability, and are widely used in components such as fuselage frames and cabin doors. However, the processing difficulty of large-scale integral parts increases. The application of thin-walled structural components in aviation manufacturing helps with lightweighting but is prone to deformation due to the processing process, requiring solutions to the challenges of machining accuracy and surface quality. With the advancement of precision manufacturing, the high consistency and high-precision requirements for aviation parts have become the core direction of development.

The special process treatment technology of private aviation parts manufacturing enterprises is continuously improving, covering areas such as non-destructive testing, heat treatment, and surface treatment. These technologies are directly related to the quality and service life of parts. Private enterprises have gradually mastered advanced technologies such as ultrasonic, radiographic, and eddy current testing, improving the accuracy of testing. Heat treatment processes eliminate residual stress in parts to ensure quality stability. Surface treatment enhances the corrosion resistance and wear resistance of parts. By obtaining NADCAP certification, private enterprises are gradually aligning with international standards in the field of special processes, providing a foundation for their competitiveness in the global industrial chain.

With the increasing demand for lightweighting and green manufacturing in the aviation industry, the widespread application of titanium alloys and composite materials has become an important force driving aircraft design. Titanium alloys are widely used in aircraft due to their high specific strength and corrosion resistance, and domestic aircraft such as the C919 also use titanium alloys to enhance performance. The use of composite materials can significantly reduce aircraft weight and improve aerodynamic performance, but due to high costs and technical challenges, China still faces gaps in this field. However, the synergistic use of titanium alloys and composite materials is gradually promoting the optimization of aircraft structures and will jointly drive the development of lightweighting and green manufacturing in the future.