With international attention turning towards the upcoming Farnborough air show – among other things, the world’s window on the country’s aerospace research and development capabilities – the UK remains at the forefront of technological progress.
That, at least, is the view of the Aerospace Technology Institute (ATI), which suggests that there is “nothing quite like the ATI or the UK system” in how R&D funding is orchestrated and allocated.
However, despite frequent funding rounds (hand in hand with multi-year commitments), a holistic overview of the entire sector reveals that more could still be done to support the scaling and commercialisation of disruptive technologies.
In the 116 years since Samuel Cody made the UK’s first powered flight from close to where the air show takes place, technological focuses have evolved considerably. Today, the development of disruptive decarbonisation initiatives has become arguably the aerospace sector’s biggest challenge since the dawn of the jet age.
Fast forward more than a century since the Royal Aircraft Establishment’s first fixed-wing forays, and the UK’s “world-class aerospace sector” remains a “British success story”, said industry minister Alan Mak, speaking ahead of the UK parliament’s dissolution on 30 May, “with government and industry coming together to provide billions of pounds in unprecedented support”.
As the organisation responsible for creating the UK aerospace sector’s technology strategy and funding world-class R&D – or in the words of Sophie Lane, the ATI’s chief relationships officer, an “independent honest broker” tasked with assessing strategies and solutions – the ATI, which was created 10 years ago, has a pivotal role in co-ordinating and assisting initiatives.
The organisation itself (and the broader UK ecosystem it operates within) is unique worldwide, she says, describing the country as having a “different dynamic to what happens internationally”.
With the ATI having directed £3.6 billion ($4.56 billion) of aerospace R&D funding during its existence, understanding synergies across the ecosystem is of equal importance to financial input, Lane says.
The ATI itself has “evolved” to offer not just financial assistance but also to co-ordinate a “funding landscape to help people understand opportunities”. This enables businesses “to move forward and generate the market share [the ATI has] identified in the UK”.
As outlined in the organisation’s 2022 Destination Zero Strategy, UK industry could grow its share of global aerospace revenues to nearly 18% of a potential total market worth £4.3 trillion by 2050 – although Lane adds that ongoing investment is crucial if it is to stay globally competitive in a rapidly-evolving market.
Over the past decade, the ATI has distributed £1.9 billion of government grant money to UK organisations, and has been able to leverage a “really impressive” £7 of private investment for every £1 of public funding. Although the ATI would be able to attract more private finance with proportionally more government investment (with “no doubt that [the] industry would like more”), existing “public funding from government sends a clear signal to the market”, Lane says.
VALIDATION EFFECT
Chief executive of UK/US-based hydrogen powertrain developer ZeroAvia Val Miftakhov reinforces this sentiment, describing ATI funding as “critical for us to move at the pace we’re moving” and adding: “In addition to the funding itself, it unlocks the validation with private investments.”
As of June 2023, approximately £15 million in public grant funding for ZeroAvia’s two UK-based HyFlyer R&D programmes had been matched by over £100 million in private investment, most of this flowing into the UK as inward investment at the R&D stage.
Within the emerging hydrogen-powered aviation sector, Cranfield University, the UK’s lone postgraduate-only aerospace research facility, also secured its largest-ever funding win to date in March 2024, with a £69 million investment to create the Cranfield Hydrogen Research Incubator (CH2i).
A total of £46 million of this came from industry partners and academic institutions, while the rest was footed by the Research Partnership Investment Fund (UKRPIF), part of government agency UK Research & Investment (UKRI): a supporter of academic facilities that has awarded a total of £1 billion to 60 projects since 2012. However, the UKRPIF notes that universities must attract a further £2 from non-public sources for every £1 invested by the fund.
Admittedly this 2:1 ratio lags the European Commission’s 2021 Single Basic Act (the funding initiative covering the European Partnership for Clean Aviation), which pledges to “provide nearly €10 billion [$10.7 billion] of funding that the partners will match with at least an equivalent amount of investment”.
However, Project Newborn – a Honeywell-led consortium to develop hydrogen fuel cells, and ranked top in the EU’s €700 million, 20-project Clean Aviation Joint Undertaking initiative – will also receive funding from the UKRI for the element executed in the UK: proof of further inter-country collaboration.
Setting aside the synergies of multinational partnerships and looking purely at funding figures, it would seem that French government funding has the lead over the UK regarding sustainable aviation fuel (SAF).
The UK’s Advanced Fuels Fund competition has collectively allocated £135 million in grant funding to support UK advanced fuels projects until 2025, with an additional second round of £53 million announced in November 2023 to include provision to advance the design and construction of commercial-scale plants.
However, not only has France’s Civil Aeronautics Research Council (CORAC) pledged €200 million for SAF as part of a June 2023 promise, alongside €300 million for the wider aviation industry, French refineries have also been producing SAF at scale for several years. For example, Total Energies’ French-produced SAF has been in commercial use since 2021, while the UK’s first five scaled plants are only scheduled to be under construction by 2025.
BROAD ASSURANCES
Equally crucial is not just the overall financial value of the investment but the consistency offered over time, suggests Lane, who says that simply comparing monetary figures does not take into account the value of broader assurances provided by government input.
The £975 million pledged in the UK government’s 2023 Autumn Statement (the equivalent of £195 million per year between 2025 and 2030) sends a “really clear signal of intent”, she says.
Once confirmed, such a funding commitment will help to negate ongoing challenges of the long lead times disruptive aerospace technologies require before they begin to show a return on investment.
Specifically, the ATI’s flagship Strategic Programme (co-ordinated and managed in conjunction with UKRI unit Innovate UK and the Department for Business and Trade) also provides potential recipients opportunities to apply every three months, something Lane describes as a system “responsive to industry”.
This differs from the German equivalent, which calls for proposals once every two years. Instead, the ATI’s Strategic Partnership permits recipients to apply more often, albeit for comparatively smaller amounts; something Lane says “allows [companies] to mature their concept and thinking but not lose opportunity”.
Recent ATI initiatives include the SME Programme, which has been open to applications since February 2024 and pledges an additional £10 million per year to small and medium-sized firms. Winning candidates will receive grants of up to £1.5 million each.
Research organisations can use this to cover 100% of a project’s eligible total costs, with larger SMEs still able to request up to 50%. Although William Hynett, chief executive of UK airframer Britten-Norman, says that “money has been hard to come by in recent years… other than through [Britten-Norman’s] own performance”, the fund is intended to help SMEs in a competitive area described by Lane as “oversubscribed” in recent years.
According to Ayantika Mitra, business supply strategy director of metal composites pioneer TISICS, SMEs comprise 97% of the aerospace supply chain in terms of numbers of organisations. With upcoming decarbonisation targets (both mandated and elective) further driving innovation within the sustainability sector, SMEs are also likely to play an increasing role through work on disruptive technologies.
Highlighting the establishment and evolution of decarbonisation projects within the UK, sustainability has only received its current focus within the past five years, says Lane. She emphasises that despite these incentives being a “key thing for UK market share and market growth”, it is important to consider this emerging ecosystem as part of the wider aviation spectrum.
Citing the example of the ATI having incorporated back into the Hydrogen Europe project, she describes UK funding structures as “comparable” to European counterparts, but with different initiatives in different places. Nevertheless, there are still “synergies as well”.
However, helping emerging technologies move closer to commercial maturity involves a new phase of investment with unique challenges.
Despite UK government support having been very important to Cranfield Aerospace Solutions (CAeS) – with an initial government grant (£7 million from the ATI) having played “a significant part in ‘crowding in’ approximately £24 million of additional private investment” – funding disparities remain in helping to scale up the manufacturing capability that is required.
“This is because there is a scarcity of funds at the series B+ stages, which possess the risk appetite to invest in higher-cost aerospace-specific development and also in the relatively high capital expenditure costs involved in equipping a high-volume aerospace-grade manufacturing capability,” explains Scott Pendry, director of external relations at CAeS.
“Generally, UK investors prefer low capital-intense industries, allowing business to scale without significant upfront investment in technology, plant, machinery or other assets,” he says.
RISK ASSESSMENT
With many private investors often lacking in-depth knowledge of the aerospace sector, “this unfamiliarity can hinder their ability to assess the risks and rewards, creating a barrier to investment,” Pendry adds.
Although Lane highlights that the ATI’s investment into R&D is “helping to de-risk those investments”, she agrees that the same strategic priorities of “strengthening the ecosystem and delivering innovation alongside technology alone” are vital to enable an environment for the adoption of advances like SAF and hydrogen.
Notably, this is also outside the ATI’s remit. “New solutions should be explored by the government to address the ‘industrialisation’ phase of new technologies in the UK aerospace/aircraft manufacturing industry in the same way that the Automotive Transportation Fund does for the automotive industry,” says Pendry. He points to the automotive Battery Industrialisation Centre as an example of an organisation successfully “bridging the gap between initial product development and commercial manufacturing”.
Admittedly, the challenges brought about by Brexit remain valid, as do other political factors. However, Lane says the general perception of the UK is that it remains an “attractive place to do business”, citing a number of private investments made and several companies that have come to the nation from abroad, some receiving ATI funding.
Crucially, given the number of companies that have stayed in the country, Lane says that the ATI must be “doing something right”. She concedes, however, that the landscape is nevertheless “competitive” – with the USA working particularly hard to attract aerospace companies.
She says that the one thing the ATI could have done better over the past decade is raising a general awareness of “how we can continue to expose to people, not just funding, but advice and support on how to navigate the system”.
However, although she admits that the UK system can sometimes be challenging to understand for external parties, she says the ATI’s unique “bridge between government and the rest of the ecosystem”, spanning academia and industry, brings distinctive opportunities – ones that, as CAeS stresses, need favourable government incentives to help set the stage for their implementation.
