Outlook for Civil and Defence Aerospace in 2025: Challenges and Opportunities
The industry insights presented below stem from the wealth of expertise of Alan Fisher FRAeS, CEO of Farnborough Aerospace Consortium (FAC).
As we look ahead to 2025, both civil and defence aerospace sectors are facing a mix of recovery, innovation, and ongoing challenges. The year promises a cautious optimism for both industries, with significant opportunities emerging alongside some key hurdles. Here’s a closer look at what’s in store for each sector:
Civil Aerospace: Growth Amid Recovery and Innovation
1. Supply Chain Improvements
Although supply chain constraints have hampered production in recent years, by late 2025, companies are expected to achieve better visibility and efficiency, which will help address delays. With improved free cash flow, aerospace firms are likely to invest in both short-term operational needs and long-term sustainability initiatives.
2. Rising Air Traffic and Economic Conditions
Air traffic is projected to grow nearly 12% in 2025 as pent-up demand for travel surges. The aerospace industry will also benefit from increased defence spending as geopolitical tensions prompt higher budgets. These factors, combined with an economic recovery, should fuel continued demand for civil aerospace products.
3. Technological Innovations
The integration of AI in operations and supply chains is expected to significantly improve efficiency, cost management, and inventory oversight. Digital technologies will help better track materials and ensure supplier compliance, while advancements in AI will help aerospace companies overcome persistent operational challenges.
4. Sustainability Efforts
The civil aerospace industry will maintain its focus on sustainability, prioritising investments in Sustainable Aviation Fuels (SAF) and other environmentally friendly technologies. While short-term operational improvements may take precedence, the long-term goal of achieving net-zero emissions will remain a priority.
5. Advancing Air Mobility
Progress in Advanced Air Mobility (AAM) is expected to continue, with efforts to achieve certification and build community acceptance. However, regulatory frameworks will need to evolve to keep pace with innovations in electric vertical take-off and landing (eVTOL) aircraft. Investment in infrastructure like vertiports and charging stations will be essential for AAM solutions to take flight.
Defence Aerospace: Strategic Shifts and Adaptability
In the defence sector, the UK’s Strategic Defence Review (SDR) and Defence Industrial Strategy (DIS) will play a crucial role in shaping defence policy and priorities for 2025.
1. Defining the Future of Defence
The SDR and DIS will outline the UK’s defence strategy in response to emerging global threats. These reviews will inform military planning, resource allocation, and the UK’s role in NATO, ensuring it can respond effectively to geopolitical challenges.
2. Adapting to Global Instability
The ongoing conflict in Ukraine and tensions in other regions highlight the need for a flexible and robust defence strategy. The SDR and DIS will guide the UK’s military response, adjusting its capabilities to address these evolving threats while strengthening relationships with allies.
3. Economic Resilience
The defence sector’s role in fostering economic stability is a key theme in the SDR and DIS. By positioning defence as a driver of growth, these reviews emphasise the sector’s importance not only for national security but also for economic resilience.
4. Collaboration for National Security
Effective implementation of the SDR and DIS will require ongoing collaboration between the UK government and the defence industry. This partnership will strengthen the UK's defence capabilities and contribute to economic growth through a resilient and adaptable defence sector.
Conclusion: A Year of Transformation and Strategic Growth
For both civil and defence aerospace in 2025, the year will be defined by strategic investments, technological innovation, and the navigation of complex geopolitical and operational challenges. The civil aerospace sector is poised for recovery, with improvements in deliveries, supply chain efficiency, and sustainability, while defence aerospace will focus on adaptability and collaboration to meet new global security demands. With careful planning and execution, both industries are set to thrive amidst evolving challenges and opportunities.
