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Flying High? Charles Forrester provides an overview of the Gulf aviation industry, spending and procurement.

14 November 2019 Charles Forrester

Air force procurement budgets for the Gulf region declined by 8.5% year-on-year in 2019 to USD5.8 billion, which is down from a high of USD10.1 billion in 2014, according to Jane's Defence Budgets. However, this figure is expected to increase to USD6.1 billion in 2020 and 2021.

"As more advanced fighter aircraft have been coming online in the region, the requirements for special mission aircraft that can support advanced operations have also been maturing", said Charles Forrester, principal analyst for manned and unmanned aeroengines at Jane's by IHS Markit. "Furthermore, the changing threat environment in the region has reinforced the requirement for sovereign surveillance capabilities to ensure national and international security."

Deliveries of advanced multirole combat aircraft such as the Boeing F-15SA to Saudi Arabia and Eurofighter Typhoon aircraft to Oman have helped to bolster the combat capabilities of regional air forces, and their ability to respond to threats in the region.

Similarly, countries such as Kuwait are in the process of upgrading their capabilities by acquiring new Eurofighter Typhoon and Boeing F/A-18E/F Super Hornet aircraft. The Royal Bahraini Air Force is also upgrading its Lockheed Martin F-16C/D Fighting Falcon to the F-16V standard in addition to acquiring further F-16V aircraft.

The demand for manned and unmanned assets to support these aircraft are growing, ranging from surveillance and airborne early warning aircraft, to UAVs that can be operated from a helicopter through manned-unmanned teaming (MUM-T) technology.

"Events over the past year, as Iran has become increasingly aggressive, have shown that there is a strong need for surveillance capabilities to ensure that critical national infrastructure remains secure, and that governments have the right information to respond," Forrester said.

"As information warfare becomes an increasingly complex part of military operations, being able to know and understand the tactical and strategic picture is vital to military commanders and political leaders. Airborne surveillance assets, both manned and unmanned, are a key part of building this picture."

Air Force procurement budgets down but stabilising - with regional budgets making up just 5% of global air force spending

Jane's expects air force procurement budgets to increase and stabilise to USD6.1 billion in 2020 and 2021.

"The decline in procurement expenditure we've noted since 2014 can be attributed to the drop in oil price seen in 2014 and 2015, but also to a number of major procurement programmes having been signed off," said Forrester. "Major procurements by Saudi Arabia are still to be contracted, which will impact the broader procurement spending profile for the region."

Expenditure on air force operations and maintenance has risen from USD4.6 billion in 2014 to USD6.4 billion in 2019, and is forecast to grow steadily to USD7.1 billion by 2025.

Overall air force budgets in the region are valued at USD22.2 billion in 2019, and are forecast to increase to USD22.6 billion, or 5% of global air force spending, in 2020.

Regional industrial efforts to drive aviation capabilities?

Regional industrial capabilities in the aerospace sector are increasing, with both Saudi Arabia and the UAE continuing to build their domestic competencies in areas such as aerostructure manufacturing and maintenance, repair, and overhaul for both the civil and military markets.

Saudi Arabia is moving ahead with industrial and economic development plans under Vision 2030, and plans to enhance its integration into the global supply chain for military and civil aircraft are emerging as fundamental building blocks for domestic capabilities. Cross-border collaboration with the UAE is helping to develop these skills, while also building up the region as a centre for the global aerospace industry.

Changes to the Tawazun Economic Programme in the UAE announced earlier this year are continuing to position the UAE at the cutting edge of technology and development by leveraging major procurements to promote investment and innovation. The aerospace sector has remained a key objective for the UAE, with new areas such as blockchain, additive manufacturing (3D printing), smart sensors, and quantum computing being added to the areas of focus for the country.

"As these technologies become increasingly important to military and civilian users, the UAE will be well-positioned as both an investor and manufacturer in the global aerospace industry," Forrester said. "The recent launch of EDGE in the UAE will also help to position the country as a regional research and development investor and powerhouse."

Posted 14 November 2019 by Charles Forrester, Aerospace & Defence Industry, Emerging Markets

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