The Airborne ISR Market was valued at USD 5.7 billion in 2020 and is projected to register a CAGR of 7.4% during the forecast period, to reach USD 9.44 billion by 2026.
The COVID-19 pandemic and the related lockdowns have resulted in a sudden dent in the GDPs of several countries. Also, the pandemic demanded huge and impulsive spending towards the healthcare systems of the countries, leading to a scarcity of economic resources. Although the global military spending increased in 2020, this factor is expected to force the countries to take a conservative approach towards their future military budgets, thereby hampering the airborne ISR market during the forecast period. The pandemic has resulted in severe disruptions in the supply chains of major ISR programs and has resulted in a reduction in production output. Also, delays in several developments projects in the airborne ISR industry are also observed. These factors have negatively impacted the players in the related market.
The airborne ISR market is expected to grow, as the usage of ISR is increasing and more countries are adopting the ISR technology for securing their borders. Rapid technological developments are breeding disruptive technologies in the defense industry. The increasing use of small unmanned systems for surveillance is further expected to generate demand for electronic components used in ISR missions. Advanced data integration with a multi-level comparative analysis to provide data accuracy and management may provide new market opportunities for the airborne ISR market.
Key Market Trends Unmanned Segment to Experience Highest Growth During the Forecat Period
UAVs have emerged as veritable tools for ISR missions and are, hence, under high demand globally as they provide low-cost alternatives to the nations planning to procure aerial assets for ISR and other missions. The emergence of new technologies and platforms has transformed the warfare strategies of nations such as the US, Russia, and China. UAVs are being used extensively in current warfare scenarios due to their visual superiority and capability of performing pre-emptive strikes and surveillance on specific locations. With the nations trending toward asymmetric warfare, it is expected that UAVs would be deployed in large numbers to collect crucial information that can act as a key decision-making tool. Hence, the nations and prime defense contractors are significantly increasing R&D investments to enhance their airborne ISR capabilities. For instance, in February 2019, Kratos Defense & Security Solutions received a USD 14 million contract to develop a new tactical UAV, Aethon, that is envisioned to be capable of effectively conducting ISR missions. Thus, the increasing adoption of electronic warfare is expected to drive the demand for superior ISR equipment aboard UAVs, in turn, fueling the growth of the unmanned segment of the airborne ISR market.
North America to Continue its Dominance in the Market
North America held the largest market share by geography in 2020. The US is one of the leading investors toward the modernization of its defense capabilities. The US Government and US DoD are planning to begin divesting few aerial platforms to provide resources to fund emerging ISR capabilities that can penetrate and collect data in the highly contested environment. The Air Force conducts ISR missions to analyze, inform, and provide joint force commanders with the knowledge needed to achieve decision advantage. The ISR portfolio is USD 8.8 billion in FY 2022. In April 2021, the U.S. Army’s Requirements Oversight Council approved the requirements for its Future Attack Reconnaissance Aircraft in the form of an Abbreviated Capabilities Development Document (A-CDD) that validates the designs developed by two companies competing to build the aircraft. Lockheed Martin’s Sikorsky and Bell are in a head-to-head competition to build prototypes and fly them beginning in November 2022. The Army is also in the process of bringing online a second technology demonstrator called ARES or Airborne Reconnaissance and Electronic Warfare System after awarding a contract to L3Harris Technologies in November 2020. ARES is based on a Bombardier Global Express 6500 jet that will have a different signals intelligence package on it than Artemis. There has been significant interest in multi-mission maritime patrol aircraft in the United States during recent years, which has led to the United States placing more orders for maritime patrol aircraft in order to increase its maritime surveillance capabilities. Such developments are expected to drive the market tgrowth in the region during the forecast period.
Competitive Landscape The airborne ISR market is highly fragmented, with multiple players developing ISR platforms and subsystems for various global armed forces. Northrop Grumman Corporation, The Boeing Company, Elbit Systems Ltd, Lockheed Martin Corporation, and Raytheon Technologies Corporation are some of the prominent players in the market. However, several local players collaborate with the market incumbent firms on regional projects to design and integrate smaller subsystems that effectively serve the specific requirements of the regional end-user defense forces. Vendors are competing based on their in-house manufacturing capabilities, global footprint network, product offerings, R&D investments, and a strong client base. Vendors must provide state-of-the-art systems to airborne ISR integrators to survive and succeed in the intensely competitive market environment. A majority of the defense OEMs integrate thrid party EO/IR equipment onboard their airborne ISR platforms, hence they try to minimize R&D costs of the cross-integration of such systems onboard different platforms.
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