Revenue for the aircraft, engine and parts manufacturing industry is expected to rise slightly in the five years to 2018 as consumers resume air travel and airlines renew their fleets. In addition, as new, more technologically advanced aircraft come to market, companies will command higher prices, leading to improved profit, according to a new report from IBISWorld.

Despite record-high fuel prices, airlines worldwide have a ravenous need to renew or expand fleets. The aircraft, engine and parts manufacturing industry reportedly feeds this hunger by manufacturing and overhauling aircraft and aircraft engines; industry operators also manufacture aircraft-related parts and equipment. In addition, the industry has introduced new products like fuel-efficient planes, including the Boeing 787 Dreamliner that was released in September 2011.

“Meanwhile, the war against terrorism, the introduction of the Joint Strike Fighter jet and the rising popularity of unmanned aerial vehicles (i.e., drones) have all supported the industry’s military segment,” said Olawale Harrison, industry analyst. As a result, revenue is expected to increase 2.1% in 2013 to total an estimated $186.3 billion.

The aircraft, engine and parts manufacturing industry has a medium level of concentration, with the four largest major players holding more than 60% of market share. In the commercial aircraft segment, Boeing dominates the industry. “The costs associated with manufacturing aircraft and components are high, and contracts are usually awarded to existing players in similar fields or in countries that have negotiated large aircraft orders,” said Harrison.

Likewise, a few large firms dominate the production of military aircraft products and parts for the U.S. government. Consequently, the main contractors earn the majority of revenue generated by the military segment. Market share concentration is forecast to increase as the largest companies continue grow through mergers and acquisitions.

IBISWorld reports it expects strong military demand, as well as growing civil demand, to raise revenue an average of 2.1% annually during the five years to 2013. Technological improvements will drive growth in manufacturing aircraft, engines and parts; the industry’s focus on improving fuel efficiency will continue to draw interest from customers in downstream markets, especially airlines looking to save on fuel costs. While federal funding for defense will slow in coming years, based on a projected reduction in military involvement overseas, passengers returning to commercial flying will lead to consistent growth in demand from domestic and foreign airlines.

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