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The Aerospace Opportunity: What foreign governments are buying

Posted by The CCC Team on December 20, 2018 at 5:28 PM

THE AEROSPACE OPPORTUNITY

Significant investments in R&D have helped make Canada a world leader in aerospace products, ranking in the top three countries for civil aircraft, engines and flight simulators.[1] That’s a good position to be in considering that the global aerospace and defence industry has grown fairly steadily in the last five years and shows no signs of stopping.[2]

CCC Aerospace Sector Director says there are significant opportunities for Canadian aerospace exporters today: “It’s a competitive world out there, but Canada is known for its highly capable companies and for delivering safe and effective air transportation. Other countries respect that and want to do business with us.”

He says the expanding middle classes of countries in Southeast Asia, India and China are driving growth in demand for domestic and regional air travel — and for fleets to meet that need. Over the next 20 years, an estimated 36,800 commercial jets will be required to meet global demand.[3]

In many cases, airlines are owned directly by the national government, creating opportunities for a government-to-government contracting approach. On the defence side, militaries around the world are currently renewing their capabilities, generating demand for aircraft, technology system upgrades, and maintenance, repair and overhaul (MRO) services.

WHAT FOREIGN GOVERNMENTS ARE BUYING

Wheeler lists the following as the top five aerospace needs of foreign government buyers today:

1. More sustainable commercial fleets

In addition to larger fleets to support growing demand for domestic and regional travel, many countries are eager to acquire aircraft that will keep airline costs down through greater fuel efficiency and reduced maintenance requirements. Innovative Canadian companies have a definite window of opportunity in this arena for both airplanes and helicopters.

2. Advanced flight simulators

Simulators are essential for training both civil aviation and military flight personnel. Canadian simulators are considered to be among best in the world,[4] putting our country’s exporters in an advantageous position for this portion of the market.

3. MRO services

To optimize and extend the life of their aerospace investments, countries continue to spend heavily on MRO services. This is a good area of opportunity for Canada. While our country is not a prolific manufacturer of military aircraft, for example, we do have recognized expertise and capacity to support on the MRO front — as with the current overhauling of C130 transport planes.

4. Intelligence, surveillance and reconnaissance (ISR) systems

Canadian companies are bringing these high-tech, analytics-driven systems to new markets. While the field is highly competitive, Canadian firms that bring reliable, innovative solutions to market may have an advantage — amplified by CCC government-to-government contracting — because our country is a NATO member and perceived as being a trustworthy partner and a secure supply source.

5. Components

Critical components, including engines, avionics and landing gear, make up 60% of Canada’s aerospace exports, and demand for Canadian-built parts is growing. In the past 15 years, Canada’s share of the global market in aerospace parts has increased by almost 50%.[5]

REGIONAL TRENDS AND HIGHLIGHTS

Different geographic regions have different requirements, presenting a range of opportunities for Canadian aerospace exporters. Wheeler says there are a couple of particularly hot pockets of commercial aerospace activity Canadian exporters might want to take note of today:

China, India, Southeast Asia — These regions have growing populations with rising disposable incomes. Reliable air travel is an enabler of economic development, a social connector and an asset that makes countries attractive as tourist destinations.

Caribbean — While there may be less demand for whole fleets, regional airlines in the Caribbean are looking to overhaul their existing inventories of aircraft to meet short-range travel and transport demand, creating opportunities for sales of parts and MRO services.

Africa and South America — Countries in these regions fit a profile similar to the Caribbean, with overhaul requirements not only for civil aviation but also for military aircraft to protect their sovereignty.

Corinne Petrisor, Senior Trade Commissioner to Bangladesh, says Canadian aerospace companies should absolutely consider these markets.

“Canada and Canadian aircraft already have a strong strategic advantage in terms of reputation and quality standards,” she says. “Buying Canadian also provides the unique advantage of CCC’s G2G contracting approach, which is often preferred in both the private and public sectors.”

Wheeler says that’s why CCC is a great tool for Canadian exporters.

“Our G2G contracting approach satisfies foreign government requirements for cost control, a reliable source of supply and transparent transactions. It’s a great way of opening doors for the abundance of aerospace innovation and expertise Canada has to bring to the table.”

[1] Aerospace Industries Association of Canada. AIAC Guide to Canada’s Aerospace Industry. 2018.
[2] Deloitte. 2018 Global aerospace and defense industry financial performance study. 2018.
[3] Deloitte. 2018 Global aerospace and defense industry financial performance study. 2018.
[4] Government of Canada. State of the Canadian Aerospace Industry 2018. 2018.
[5] Aerospace Industries Association of Canada. AIAC Guide to Canada’s Aerospace Industry. 2018.

Tags: Market opportunities, Civil Aerospace

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