The aerospace industry is cautiously looking forward to a year of continued recovery, but forecasts remain mixed
GRAHAM WARWICK / WASHINGTON DC
The second century of flight is off to a brisk, if mixed, start. Boeing has booked its first orders for the 7E7 widebody twinjet and Airbus its first commitments for the A350. The ultra-large A380 rolls out this month, and in February Bombardier decides whether to offer its CSeries small airliner.
But the year opens with the USA and Europe at odds over government subsidies for Airbus and Boeing, with the World Trade Organisation expected to arbitrate.
On the defence side, orders for the Dassault Rafale and Eurofighter Typhoon have secured production into the next decade and boosted export prospects, with Singapore set to select a new fighter this year. But the USA's Quadrennial Defense Review could place key programmes under threat, more fallout from the US Air Force tanker procurement debacle is expected, and the White House is considering reining in defence spending.
Iraq will continue to cast a shadow. Supplemental spending to cover operations will squeeze US defence procurement; the US budget deficit will depress the dollar; security fears will keep the oil price high; and the terrorism threat will hang over all sectors of civil aviation.
But barring further terrorist action involving civil aircraft, 2005 looks like it will be a better year than 2004. Airbus and Boeing are forecasting increases in commercial aircraft deliveries; Embraer expects its deliveries to be at least flat; and although Bombardier is slowing regional-jet production, the cutbacks will be offset by increased business-jet deliveries.
Airline traffic is back at around 2000 levels, and aftermarket suppliers are seeing the flow of spares pick up as aircraft utilisation recovers. The threat of major airline bankruptcies continues to haunt the US market, but some carriers should re-emerge in stronger form this year.
The problems faced by manufacturers are in restarting the supply chain and recruiting to staff the recovery. The supply tap was turned off and workforces cut back brutally after 11 September and there is wariness and unwillingness to invest to be overcome. With the commercial and business aviation markets recovering more quickly than expected, manufacturers are keen to avoid an unsustainable ramp-up.
For some sectors, the recovery has yet to come and may not be seen in 2005. The commercial space market has been depressed for years and forecasts are downbeat. NASA has more money to spend, but much of it will be consumed by returning the Space Shuttle to flight, completing International Space Station assembly and repairing the Hubble Space Telescope.
For the space industry, 2004 ended with the Boeing Delta IV Heavy launch, and 2005 begins with the delayed attempt to return Arianespace's Ariane 5 ECA to flight. These two launch vehicles will form the enabling core of US and European plans to explore the Moon, Mars and beyond. But with last year's successful X-Prize bid by SpaceShipOne, the buzz in 2005 may come from the suborbital space tourism industry.
Airlines
MARK PILLING / MANAGING EDITOR, AIRLINE BUSINESS
Oil prices and the global economy will dictate prospects for carriers
In 2003 it was SARS and the Iraq War that hobbled the airline industry. In 2004 it was the soaring price of fuel. So what is in store for 2005? For some analysts, it is the possibility that oil will remain in the $40 a barrel range, which would see the industry again make a loss in 2005. Couple this with the first signs of a global economic slowdown and the warning bells will begin to sound.
Last year, the high price of fuel prevented the industry making its first profit since the 2001 crisis, says International Air Transport Association (IATA) director general Giovanni Bisignani. Earlier in 2004, IATA was forecasting an industry profit based on oil prices of $30 a barrel.
With oil at $33 a barrel the industry breaks even, says IATA, with every $1 rise adding $1 billion to the industry's fuel bill. "The oil price has the greatest short-term effect on an airline's performance - it feeds straight through to the bottom line," says Chris Tarry of aviation consultancy CTAIRA. As a result, IATA believes year-end net losses will total $4.8 billion, pushing cumulative industry losses since 2001 above $35 billion.
The 2005 result will again depend on the price of oil. The best analyst guesses for the average price of crude in 2005 range from $34 to over $40 a barrel. IATA is basing its assumptions on $34. At this level, the industry will return to the black with a net profit of $1.2 billion. This represents a margin of less than 1% and assumes carriers will continue to cut non-fuel costs.
The price of oil has swamped any other financial improvements the industry made in 2004, IATA notes. "Excluding the rise in the fuel bill, the industry has actually achieved a 'normal' cyclical recovery in profitability," says chief economist Brian Pearce. At several European majors, as well as a broad cross-section of Asia-Pacific carriers, the price of oil has hurt, but tactics such as hedging and fuel surcharges have enabled them to stay in the black.
The good news in 2004 was a strong rebound in traffic, which has not been damaged by the rise in oil prices. The International Civil Aviation Organisation estimates world airline passenger traffic grew 5.4% in 2004 and will rise at a similar rate in 2005. IATA predicts international traffic will grow by a healthy 5.9% in 2005.
Traffic volumes
But for airlines in increasingly deregulated markets, strong traffic volumes do not always mean strong revenues, says Pearce. In Europe and North America, yields have been under severe downward pressure for the past 10 years, falling by about one-third over that period. For the last three years, yield pressure has been particularly acute in the business-class cabin.
The fortunes of airlines in the largest markets will vary sharply in 2005. North American carriers will continue the struggle to bring labour costs down. There is even the prospect of strikes at some carriers as unions baulk at cuts. Analysts expect more losses by US majors in 2005, with the most optimistic forecasting only break-even for 2006. The difficult domestic market is leading most US majors to ramp up international flying.
In Europe, most carriers are expected to boost profitability in 2005, says Chris Avery, an analyst with JP Morgan. But the improvement could come more from cost-cutting than rising revenues. CTAIRA's Tarry says that is a problem. "You cannot grow profits always into the future by cutting costs - you need revenue growth. The question is, what drives the business forward?" A recovery in business-class traffic could, but is not considered likely. The European carriers with strategies for revenue growth are almost entirely in the low-fares world, says Tarry.
For most Asia-Pacific carriers, a strong rebound in traffic after SARS boosted revenues and profits in 2004, with more of the same forecast for 2005. The main problems are a possible slowing of economic growth, additional capacity from carriers outside the region keen to tap its higher growth rates and the arrival of low-cost carriers. Freight markets will be particularly robust in Asia, with China leading the way.
Fuel aside, the main unknown for the industry is the uncertain economic background. Most are expecting a slowdown, but it will not be a recession, says IATA's Pearce, who predicts economic growth of 3.5-4%. The industry would take such growth, coupled with oil prices of $35 a barrel, right now if it could. But nothing is ever straightforward in the airline business.
Airframers
MAX KINGSLEY-JONES / COMMERCIAL AVIATION EDITOR
The big two, Airbus and Boeing, expect deliveries to continue last year's upward trend
A year ago, battered by the aftermath of 11 September, Iraq and SARS, commercial aircraft manufacturers were warning that unless orders recovered in 2004, output would remain flat in 2005. By mid-year, their tune was changing and, as 2004 ended, combined Airbus and Boeing orders were heading towards the 700 mark - about one-third higher than a year earlier.
The big two airliner manufacturers delivered around 600 aircraft in 2004 - the second year in succession that their combined output has been at this level. But the upper hand has switched from the USA to Europe over that period. In 2004 Airbus almost matched its previous output record of 325 aircraft in 2001, and will set a new high in 2005 with 350-360 deliveries forecast. Boeing, meanwhile, saw its shipments end their steep dive from the 2001 level of 527 aircraft to stabilise around 285, marginally up on last year, with about 320 deliveries forecast for 2005.
With Airbus driving the output growth, 2005 should see the two rivals' combined deliveries increase by more than 10% to about 680 units, while orders are generally expected to be flat. It looks like being a busy year for Toulouse, with roll-out of the A380 planned for later this month and first flight of the ultra-large airliner scheduled for March. At the same time, Airbus has been pitched reluctantly into yet another head-to-head battle with Boeing following its decision to offer the A350 - an A330-based rival to the all-new 7E7. Airline commitments are coming in and a formal launch is expected early in the new year.
Boeing has tough decisions of its own to take in early 2005 as it faces pressure on several fronts to make programme launch decisions. Potential buyers of the stretched 7E7-9 are pushing the company to commit to an early go-ahead and service entry no later than 2010, two years earlier than currently planned and just two years behind the baseline 7E7-8. Arrival of the A350 puts further pressure on the US manufacturer to move forward with the variant.
Meanwhile, several key 747 operators have warned Boeing it needs to decide sooner rather than later whether it will stay in the large aircraft game in the long term. The company concedes it will probably have to respond quickly to customer pressure and make some sort of commitment to the proposed 450-seat 747 Advanced or risk losing even more ground to the A380, orders for which are approaching the 150 mark.
Longest range
For now, Boeing's hopes are pinned on new variants of the 777 big twin. Set to enter flight test in February, the 17,000km-capable 777-200LR will take back the status of the world's longest-range airliner from the A340-500, but has yet to achieve the sales success of its European rival. The start of flight testing, and availability of the freighter version now being offered to airlines, should boost orders.
Regional-aircraft manufacturers may have escaped the worst of the post-9/11 downturn, but now look set for some short-term pain. If 2004 was difficult, 2005 looks even more challenging as demand for 50-seat regional jets drops off, forcing production rate cuts. More than 330 regional jets were delivered in 2004 - split 57%/43% between Bombardier and Embraer - slightly more than in the previous year. But regional-jet output is set to fall by 10% in 2005 to 280 aircraft - the lowest total since the late 1990s. The decline is being driven by Bombardier - which is cutting production by one-third - as Embraer keeps commercial production flat at the 145-aircraft mark for 2005.
Demand is shifting towards the larger models in 70-plus seat bracket, but many believe the trend away from pilot scope clauses will unleash demand at the top end of this sector and drive up sales of 90- to 110-seaters. As a result, as early as February, Bombardier faces one of the most important decisions of its life - whether to proceed with its CSeries family of 110- to 130-seater airliners - and risk competing with Airbus and Boeing at the bottom end of their market.
Embraer is already firmly established in the growing large regional-jet sector with the 70-seat 170 entering service in 2004, deliveries of the 80-seat 175 to begin in July to Air Canada, to be followed towards the end of the year by the first 100-seat 190 for US low-cost carrier JetBlue Airways. Flight-testing is under way of the 110-seat Embraer 195, which is due to enter service in early 2006.
Defence – USA
STEPHEN TRIMBLE / US EAST COAST EDITOR
The USA's operational commitments could put some acquisition plans at risk
As the US armed forces struggleto balance the financing of extensive operational commitments against funding the procurement of new weapon systems, a cruel irony awaits several of the USA's highest-profile defence programmes.
Despite having passed a series of make-or-break milestones over the past two years, several major aircraft programmes are at risk from steep budget cuts because of the operational burden and revised strategic thinking about how future wars will be fought. Among them are the US Air Force's Lockheed Martin/Boeing F/A-22 Raptor stealth fighter, the US Marine Corps' Bell BoeingV-22 Osprey tiltrotor transport and the tri-service Lockheed Martin F-35 Joint Strike Fighter. This uncertainty comes at a time when Europe's major military aircraft projects have achieved hard-won stability.
The US programmes under threat are expected to be rattled first by the cost of operations in Iraq and Afghanistan, then by the 2005 Quadrennial Defense Review (QDR). The QDR is a strategy document delivered every four years to the US Congress outlining the Department of Defense's assessment of potential threats and the capabilities needed to confront them. Past reviews have resulted in substantial programme cuts. Not surprisingly, the 2005 QDR is expected to emphasise the need for weapons tailored to fight a war against terrorists and insurgents, and shift away from equipment needed to engage large standing armies.
Until the December crash at Nellis AFB, Nevada, the F/A-22 was looking more secure than for years. The programme had put to rest concerns about avionics anomalies and verified the stealth fighter's capabilities through a first round of operational tests. But because of its cost, and Cold War origins, the F/A-22 is expected to be a target of budget planners preparing the Bush Administration's fiscal year 2006 spending request, scheduled for release next month.
Cuts may also extend to the V-22, which is due to enter a crucial operational evaluation phase late this month after a four-year effort to rebuild the tiltrotor's reputation after two fatal crashes halted an initial operational test phase in 2000. Because of cost and the Pentagon's near-term focus on Iraq, the transformational V-22 has to pass its evaluation with flying colours if it is to enter sustainable full-rate production in FY06.
The JSF faces a similar challenge, despite surviving a projected three-year delay costing an estimated $5 billion to solve a weight-growth problem. Now there is renewed talk that the USAF will move to scale back sharply its plans to buy more than 1,750 conventional take-off and landing F-35As, replacing some with the F-35B short take-off and vertical landing variant (STOVL), but eliminating hundreds more.
Urban warfare in Iraq has challenged the USAF's ability to take part in a battle where individuals are targets. But the service is responding with investments in close air-support, including the F-35B and upgrades to the Fairchild A-10 Thunderbolt as well as greater emphasis on smaller and more precise munitions and reconnaissance assets. Balancing this short-term focus on counterinsurgency warfare with traditional strategic roles will be a critical question.
Any disruption of the JSF programme, meanwhile, will help its European rivals, the Dassault Rafale and Eurofighter Typhoon, which benefited from the signing in late 2004 of follow-on contracts securing production into the next decade as well as funding enhancements to their capability. They will pounce on any further delays to the JSF, and for Lockheed Martin the uncertainty will be unwelcome as it tries to negotiate long-term production and sustainment agreements with international partners.
While Europe makes slow progress towards unifying its fragmented defence market, the USA is struggling with the fall-out from the USAF's botched attempt to lease 100 Boeing 767 tankers. All the skeletons are not yet out of the closet, and US lawmakers and federal investigators will continue to probe the relationship between Boeing and the USAF leadership for other potential acts of wrongdoing.
Meanwhile, the DoD plans to open the tanker programme to competition, giving EADS and Airbus their strongest chance yet to break into the US defence market. European-made aircraft designs could be on order by the US Army, US Navy and USAF by the end of the year - a prospect sure to trigger a response by a traditionally protectionist industry and sympathetic politicians.
Defence – RoW
CRAIG HOYLE / DEFENCE EDITOR
A number of key decisions are due as armed forces look to boost capabilities
With the Dassault Rafale and Eurofighter Typhoon multirole fighter programmes both ending 2004 on a high by securing follow-on contracts extending domestic production into the next decade, their focus shifts to exports.
The first battle of 2005 is in Singapore, where the Rafale and Typhoon face Boeing's F-15 Eagle, which defeated both to win South Korea's 2002 fighter contest. The aircraft could also do battle in Greece and India, and both Dassault and Eurofighter will step up efforts to lure international partners away from Lockheed Martin's F-35 Joint Strike Fighter (JSF).
The two-seat F-15T being offered to Singapore is similar to South Korea's F-15K, the first of which will fly in March. The initial 40 aircraft will extend F-15 deliveries to 2008, and a potential follow-on order for another 40 could take production into the next decade. Lockheed's F-16 is proving a similarly long-lived competitor, with production for Poland, Oman and the United Arab Emirates set to extend deliveries to 2009. This still leaves a substantial gap before JSF deliveries begin - in 2014 at the earliest - and a significant number of undecided customers over which to battle.
New fighters remain a priority for armed forces around the globe. The air forces of the Czech Republic and Hungary - both former Warsaw Pact nations - will begin modernisation in 2005 with the arrival of their first Saab/BAE Systems Gripen multirole fighters. In the Middle East, delivery of the UAE's first advanced F-16 Block 60s is imminent, and Oman will begin receiving its Block 50+ F-16s this year.
In Latin America, Brazil may finally make a selection in its long-stalled F-X BR fighter competition, which pits the Gripen and F-16 against the Dassault Mirage 20000 and the Sukhoi Su-35. The contest has turned highly political, with Russia trying to swing the decision in the Su-35's favour by promising regional jet sales for Brazilian manufacturer Embraer.
The South African air force must wait until 2008 for the first of its Gripens, but deliveries of BAE Hawk lead-in fighter trainers will begin in mid-2005. The Hawk is set to remain in production into the next decade after India's 2004 decision to buy 66 for delivery between 2007 and 2010. This keeps the UK-built aircraft in the running for the 12-nation Advanced European Jet Pilot Training/Eurotraining scheme, which faces critical decisions in 2005.
Other candidates are EADS's still-unbuilt Mako and the M346 jet trainer now being flight-tested by Aermacchi. Despite the rivalry of BAE, EADS and Italy's Finmeccanica, European collaboration on defence programmes looks set to grow through initiatives such as the Dassault-led Neuron unmanned combat air vehicle demonstrator. Neither Germany nor the UK has yet joined the French-led Neuron project, but Italy, Greece, Spain, Sweden and Switzerland have. France is also seeking European partners for its EuroMale medium-altitude long-endurance unmanned air vehicle programme, which already involves Dassault, EADS and Thales.
The UK is expected to sign a contract with Thales for the Watchkeeper UAV capability this year as it finalises several long-delayed procurements, including the Future Strategic Tanker Aircraft with EADS and Future Aircraft Carrier with BAE and Thales. The UK is also expected to initiate acquisition of new battlefield helicopters worth £3 billion ($5.75 billion) - a key contest for Anglo-Italian AgustaWestland and Eurocopter-led NH Industries.
In Asia, tensions with China and North Korea require countries such as South Korea and Taiwan to enhance their armed forces with new equipment such as attack helicopters. Korea is also expected to select an airborne early warning and control aircraft. Japan is poised to offer selected military products on the international market after a key law was changed late last year.
Business aviation
KATE SARSFIELD/BUSINESS & GA EDITOR
The stage is set for another good year of rising orders for manufacturers
Last year appears to have been a turning point for the business aviation industry, with manufacturers reporting dramatically improved order intakes as the recovery gathers pace. The stage is set for another good year. Business aviation forecasts by manufacturers Honeywell and Rolls-Royce say business-jet deliveries will climb steadily in 2005 supported by new orders, backlogs and expansion in fractional ownership in North America and Europe.
The General Aviation Manufacturers Association says industry-wide deliveries of turbine-powered aircraft in the first nine months of 2004 increased 13% over the previous year to 586 aircraft. For business aircraft manufacturers, the turnaround was helped by the worldwide economicrecovery and the entry into service ofseveral new aircraft with big order backlogs. These include Bombardier's Learjet 40light jet and super mid-size Challenger 300, and Cessna's Citation CJ3 lightjet, superlight XLS and mid-size Sovereign.US Congress's decision to extend bonus depreciation for new aircraft for 12 months from its 31 December deadline boosted manufacturers.
The new year promises to be busy, opening with the return to flight of the first serious entry in the nascent very light jet market, the Eclipse 500. This will be followed by the roll-out of Gulfstream's Israel Aircraft Industries-built G150 mid-size jet and Dassault's ultra-long-range Falcon 7X - both aimed at highly competitive sectors. Later in the year, Diamond Aircraft plans to fly its single-engined D-JET, while Cessna will debut its contender in the very light jet segment, the Citation Mustang.
Perhaps the biggest event of the year will be the first delivery of Raytheon Aircraft's Hawker Horizon super mid-size jet. Raytheon hopes the Horizon's better-than-anticipated performance will help offset the three-year delay in bringing an aircraft into this hotly contested sector. But it will deliver only three this year, anxious to avoid teething troubles.
Gulfstream will complete the revamp of its large-cabin range this year when the G350 and G450 enter service. Bombardier, meanwhile, will tackle the G450, and Dassault's Falcon 900EX, head-on when it begins delivering the super-large Global 500 this year. The Canadian manufacturer will also fly the Global XRS, which is replacing the ultra-long-range Global Express with deliveries beginning next year.
Cessna will begin deliveries of its updated Citation CJ1+ light jet this year, and plans certification of the upgraded CJ2+ by year end as it continues to refresh its business jet line-up. Embaer, meanwhile, is aiming for a March decision on its first purpose-designed business jet, with a light jet the leading candidate. The aircraft could be the launch application for the General Electric/Honda HF118 engine.
Turboprop singles
Despite the emergence of very light jets, the turboprop single is seeing a renaissance, and the next 12 months will see the availability of several such aircraft - Extra Aircraft's EA-500, Grob Aerospace's G160TP Ranger, the Ibis Aerospace Ae270, VulcanAir's 600W Mission and, early next year, Quest Aircraft's Kodiak. EADS Socata may finally secure the go-ahead for an upgrade to its high-performance TBM700. Operators and manufacturers hope 2005 will at last bring approval of commercial single-engine instrument flight rules operations in Europe.
This year will also be critical for the nascent supersonic business-jet market. Aerion and Supersonic Aerospace International, which unveiled rival designs at 2004's National Business Aviation Association show, begin the search for heavyweight industrial partners, while established US and European manufacturers seek government R&D support for design work.
General Aviation
Growing demand for glass cockpits will continue to stimulate product upgrades
General aviation continues to wrestle with numerous challenges that are impacting on sales, notably the low take-up of flying training, but manufacturers' increased focus on product upgrades and improved reliability is helping to reverse antipathy and stimulate interest.
In a watershed for light aircraft manufacturing, 2004 saw accelerated demand for glass cockpits, notably Garmin International's game-changing G1000 integrated flightdeck, which was first approved in May in the Diamond DA42 Twin Star and soon after in the DA40 Diamond Star. The system has since been certificated on the Mooney Bravo GX and Ovation2 GX high-performance piston singles, and as an option on Cessna's 182 Skylane and 206 Stationair families.
The manufacturer is set to hand over the first G1000-equipped 172 Skyhawk in the coming months. Raytheon will follow with the handover of the first Beechcraft Bonanzas and piston-twin Barons fitted with the G1000 as standard.
All these manufacturers are following the lead of Cirrus Design, which introduced glass cockpits as standard twoyears ago across its piston-single range. Cirrus expected to take over as market leader in four-seat piston shipments in the second half of 2004, with its total deliveries for the year around 550 aircraft - just short of Cessna's expected total of around 600 four- and six-seat piston singles. Deliveries are expected to push 600 this year, says Cirrus, falling short of Cessna's predicted total of "well above" 600 piston singles for 2005.
New Piper Aircraft has struggled to take advantage of an improved general-aviation market, but is now under new ownership and will offer Avidyne's FlightMax Entegra integrated flightdeck as an option on its PA-28 entry-level pistons - the Warrior III, Archer III and Arrow. Also with new backers, and a 2004-certificated two-seater, Liberty Aircraft expects its sales to take off. But Adam Aircraft continues to struggle to win approval for its A500 centreline-thrust piston twin.
It is hoped last July's release of the US light-sport aircraft and sport pilot rule will boost the GA industry . The new category of small, simple, low-performance aircraft, coupled with simplified and basic licence requirements, this is intended to revitalise recreational flying and create a new sector of the manufacturing industry, with many new models expected.
Helicopter sales up
The civil helicopter market is showing signs of recovery. Honeywell projects sales of 2,350 aircraft from 2004 to 2008, up almost 7% from the 1999-2003 period. Much demand is expected from the homeland security, law enforcement and surveillance markets, particularly in the USA where European manufacturers are moving. Last year Eurocopter established a AS350 assembly facility in Columbus, Mississippi; AgustaWestland moved its A119 assembly to Philadelphia, Pennsylvania; and Bell/Agusta Aerospace unveiled plans to begin assembling the AB139 medium twin in Amarillo, Texas.
The BA609 civil tiltrotor programme is expected to pick up momentum this year, with flight testing to resume in the USA and Italy. But certification is not planned until 2007. Bell, meanwhile, has challenged Eurocopter's domination of the civil helicopter market with retrofittable product enhancements and launch of a single-pilot instrument flight-rules version of the Model 427 light twin. Eurocopter is responding by stepping up co-operation with China and Russia to fill gaps in its product line.
Spaceflight
ROB COPPINGER / TECHNICAL REPORTER
Despite NASA's problems, there are signs the space race is hotting up again
NASA begins the year with a lame-duck administrator and some tough budget challenges. Despite being fully funded for 2005, it is being squeezed by the escalating cost of returning the Space Shuttle to flight, the pressure to mount a Hubble Space Telescope repair mission and the need to get its ambitious exploration initiative off the ground.
Europe and Russia, meanwhile, are having to make the most of inadequate funding, which is preventing space becoming a growth industry. But there are some potential bright spots, including progress with the European Galileo navigation satellite system and the pending return to flight of Europe's Ariane 5 ECA heavylift launcher.
If the Shuttle's return to flight (RTF) in May/June with the launch of Discovery on mission STS-114 is delayed, its central role in completing the International Space Station - and its future - will be jeopardised.
Already the agency is looking at cutting to just 10 the launches remaining before the Shuttle is retired in 2010. With 25 flights required to complete ISS assembly, only 10 launches would end the Shuttle's primary role in station assembly. It would also mean a substantial reorganisation of crew and supply flights and heavier reliance on NASA's international partners.
NASA has struck a deal with the Russian space agency to extend Soyuz crew and Progress supply flights into 2006. Moscow has also offered Proton boosters for ISS assembly, but it may not be the only provider of supply flights. The European Space Agency's Automated Transfer Vehicle (ATV), to be launched by year-end, could take over from Russian Progress flights.
Availability of the ATV depends on the successful return to flight of the uprated Ariane 5 ECA. Designed to carry a 10t payload to geostationary transfer orbit (GTO), the ECA is an evolved version of the 6.5t-payload Ariane. Already delayed since June last year, if the ECA launch does not go ahead in February its unlikely ESA's ATV schedule will stay on track.
Delta IV Heavy launch
The close of 2004 saw a key event for the US space industry - the first launch of Boeing's 20t-to-GTO Delta IV Heavy. As the highest-payload expendable launch vehicle available, the Delta IV Heavy is eyed as a possible supplier of ISS components for on-orbit assembly. Boeing believes its booster can be evolved into a 40t- or 60t-plus heavylift vehicle.
The Project Constellation space exploration initiative was the subject of an international, intergovernmental conference in late 2004 with 25 nations attending, including China. This month will see the first space exploration conference. What everyone is waiting for are the specifications for NASA's crew exploration vehicle (CEV), which will carry humans into low Earth orbit from 2014 and later take them to and from the Moon. It will be an Apollo-like four-crew spacecraft, and its development could be modelled on the Joint Strike Fighter international co-operation effort.
Talks on international participation in human and robotic space exploration will take place as ESA's Huygens probe, carried to Saturn on NASA's Cassini spacecraft, is scheduled to land on the ringed planet's moon Titan on 14 January. A successful landing will boost ESA's Aurora preparatory European space exploration programme - the timetable for missions to Mars, which could be agreed by year-end.
Any decision to curtail Shuttle flights will bring the future of the ESA's Columbus laboratory module, into focus. Ready for a launch, Columbus - and Japan's laboratory module, Kibo - can only be delivered to the ISS by the Shuttle.
China will take another step towards its own space station this year, hoping to launch its second manned capsule. India has also voiced ambitions for a manned space capability.
Shows
MURDO MORRISON / EDITOR
The A380's public debut at Paris will be the highlight of a busy year of events
This year's Paris air show will be all about one aircraft. The A380 is due to make its public debut at Le Bourget in June and, even though Airbus will be in the middle of a breakneck flight-test programme to meet delivery deadlines next year, the lure of snatching the headlines at the world's biggest aviation gathering will ensure the manufacturer pulls out all the stops to have the superjumbo on display.
The A380's presence at Paris (13-19 June) will be treated like a state occasion, with presidents, prime ministers and captains of industry jostling for front-row seats. Unlike the rival Farnborough show, Paris receives the unstinting support of the state's political and media establishment, who view the event as a major flag-waving exercise for France Inc.
Outside its home country, however, Le Bourget is widely regarded as a necessary evil, with traffic jams, surly staff and sprawling exhibit areas contributing to visitors' misery. France's falling out with the USA over support for the Gulf War damaged the show's transatlantic standing two years ago. Several top executives as well as senior Pentagon officials voted with their feet and cancelled or curtailed their trips.
But Paris remains too big to ignore. The debates over Farnborough's future - which emerged just before that show last July - and that of the small Berlin ILA event in May, only helped to reinforce Le Bourget's status as the pre-eminent global air show. As well as the A380, Paris will also see the debut of Dassault's long-range Falcon 7X, which will compete at the top end of the business-jet market with Bombardier's Global Express and Gulfstream's G550. Although the aircraft is pitched primarily at US customers, Dassault will be keen to emphasise its French credentials by unveiling the 7X at its home show.
The other big multi-sector air show in 2005 will be Dubai (20-24 November). After a wobble in 2001, when it took place just weeks after 11 September, causing many nervous exhibitors to pull out, Dubai came back strongly in 2003. The booming emirate - rapidly becoming one of the world's top tourist and business destinations - provides a fitting backdrop to a show that continues to grow in importance. This year a third, 10,000m2 hall is being added to the site and innovations include an unmanned air vehicle display area and conference, organised by Flight International with the Association for Unmanned Vehicle Systems International. Similar UAV conferences are planned for Australia and DSEI in London (see below).
Asia-Pacific hosts a number of important regional shows. This year, it is the turn of Avalon, near Melbourne, Australia (15-20 March) ; TATE in Taipei, Taiwan (19-23 August) ; China's Beijing Airshow (21-24 September) ; and Malaysia's LIMA (6-11 December). Avalon is invariably the focus for a number of closely fought Australian defence competitions. This year is likely to see manufacturers push for Canberra's tactical UAV contest.
Important customer
Elsewhere, India has ambitions to grow in the global aerospace market, especially in space technology. The long-awaited liberalisation of its airline sector is making it an important customer for airliner manufacturers. Aero India 2005 in Bangalore (9-13 February) will be an opportunity for Indian industry to showcase its wares and for overseas manufacturers to seek low-cost suppliers and tap an emerging market.
Russia's aerospace industry has made some progress in breaking free from its Soviet-era straitjacket in the past 15 years with producers signing some significant partnership deals with Western manufacturers. But Russia still lacks a breakthrough product or technology that will make an impact in export markets. Despite this, the biennial MAKS show in Moscow (16-21 August) is still vital for those keen to examine Russia's potential.
In South America, Brazil is by far the most important market by virtue of its military spending, its large helicopter and business jet sectors, and because it is home to Embraer. Two major shows take place there early in the year. The second of these, Rio de Janeiro's Latin America Aero & Defence (26-29 April), is a new event, the organisers (Flight International sister company Reed Exhibitions) adding a commercial aviation element to the former Latin America Defentech show in the hope it will edge out the rival FIDAE show, held in Santiago, Chile, in alternate years, as the continent's premium aerospace event.
Neighbouring Sao Paulo plays host to the third annual Latin America Business Aviation Conference and Exhibition (31 March-2 April), one of three regional spin-offs from the long-established US National Business Aviation Association (NBAA) event, the others being the already popular European version, EBACE, in Geneva, Switzerland (18-20 May), and Asia's ABACE (9-11 August), being held in Shanghai, China. NBAA moves back to New Orleans in 2005 (15-17 November) after a four-year absence. Business aviation's recovery should guarantee a busy three days.
Among defence events, London's tri-service DSEI (13-16 September) is the most prominent. What happens inside the exhibition halls will again be matched for media coverage by the lively anti-war protests outside the security barriers. In the general aviation sector, the annual US Helicopter Association International Heli-Expo in Anaheim (6-8 February) will this year be joined by the UK's Helitech at Duxford (27-29 September). Europe's main GA show, Aero Friedrichshafen, takes place in Germany on 21-24 April, giving the region's band of small aircraft manufacturers, such as Diamond, Extra and Grob, a chance to showcase their products.
see assistance being offered to poorer countries and arm-twisting applied to richer ones, as Europe tries to stop unsafe aircraft entering its airspace.
Security measures, meanwhile, are increasingly annoying passengers and civil libertarians, and their cost is upsetting the airlines in countries where the carriers have to pick up the bill. All these factors will get worse in 2005 - particularly the annoyance factor in the USA, where the Department of Homeland Security and the Transportation Security Agency show little signs of curbing their enthusiasm for devising new security measures without being held accountable for their effectiveness.
Bigger concerns
One of the bigger concerns facing US airlines is who will pay for the man-portable missile countermeasures systems being developed by the DHS. Both the BAE Systems and Northrop Grumman systems will enter flight testing this year, aiming for certification by early 2006. Then it will be up to Congress to decide who will pick up a pricetag approaching $1 million per system and carry the operating cost of around one-tenth of a cent per available seat mile.
The campaign by airline and airport associations outside the USA to persuade authorities that the state should pay for security will heat up this year, but the signs are the status quo will prevail. The airports and airlines say a state's protection of its citizens should not stop at the passenger drop-off point. This sounds reasonable, but the authorities are ignoring them.
Safety & Security
DAVID LEARMOUNT / OPERATIONS & SAFETY EDITOR
Aviation's safety record continues to improve, and Europe is heading for rules harmonisation
Based on recent statistics, there will be few airline accidents this year, but the unexpected can happen and forecasting aviation safety remains a challenge.
Commercial air transport safety continues to improve, and the fatal accident rate has reduced by a factor of six since the late 1970s - from three per million departures to about 0.5 per million last year.
Despite predictions since the early 1990s that accident rates would hit a "glass floor" because of the law of diminishing returns, this has not happened. The improving trend, both in rates and in absolute numbers of fatal accidents and fatalities, has continued into the 21st century. However, it would take only one fatal accident involving a widebody airliner to turn the statistics on their head.
The accidents that do happen are far less likely to involve Western European, North American, Middle Eastern or Australasian airlines than those from elsewhere, and are more likely to involve commuter aircraft than mainline flights. Africa remains the least safe of the continents, but South Africa and Ethiopia have good records for mainline carriers and most regionals.
Corporate aviation safety came under scrutiny late in 2004 after a spate of business-aircraft accidents, but the sector has a consistently good record, which it expects to maintain. It will be helped by the accelerating uptake of safety enhancements such as enhanced vision systems to improve situational awareness in low visibility and runway awareness systems to help prevent incursions.
Harmonisation directive
Aircraft safety regulations will be the focus of a new European Commission directive on harmonisation this year. All national civil aviation authorities will have to hammer out the detail, with the EC's airworthiness body, the European Aviation Safety Agency (EASA), taking responsibility for drafting of the final rules.
EASA will also extend its remit this year, asking the EC (and national governments) to give it power over flight crew licensing, en route to total assumption of all national CAA roles, scheduled currently for 2007. Roberto Salvarani, recently appointed head of the EC's air transport safety and environment unit, says the Commission will "continue to work on the application of rules of third-country aircraft". This should see assistance being offered to poorer countries and arm-twisting applied to richer ones, as Europe tries to stop unsafe aircraft entering its airspace.
Security measures, meanwhile, are increasingly annoying passengers and civil libertarians, and their cost is upsetting the airlines in countries where the carriers have to pick up the bill. All these factors will get worse in 2005 - particularly the annoyance factor in the USA, where the Department of Homeland Security and the Transportation Security Agency show little signs of curbing their enthusiasm for devising new security measures without being held accountable for their effectiveness.
Bigger concerns
One of the bigger concerns facing US airlines is who will pay for the man-portable missile countermeasures systems being developed by the DHS. Both the BAE Systems and Northrop Grumman systems will enter flight testing this year, aiming for certification by early 2006. Then it will be up to Congress to decide who will pick up a pricetag approaching $1 million per system and carry the operating cost of around one-tenth of a cent per available seat mile.
The campaign by airline and airport associations outside the USA to persuade authorities that the state should pay for security will heat up this year, but the signs are the status quo will prevail. The airports and airlines say a state's protection of its citizens should not stop at the passenger drop-off point. This sounds reasonable, but the authorities are ignoring them.
being a politically approved concept into actual preparations for making it happen. Industry consultation - via the International Air Transport Association (IATA), Airports Council International (ACI) and Civil Air Navigation Services Organisation (CANSO) - is part of the SES creation process and becomes active this month.
It may not sound revolutionary, but industry consultation is vital in a process that will involve as a crucial part of the SES the separation of air traffic management (ATM) provision from ATM regulation. This approach has already led in several European countries - Germany, UK and soon France - to corporatisation or partial privatisation of ATM providers.
Europe does not have a monopoly on this model - Canada and New Zealand went there first. But for many European countries the challenge to the mindset that ATM is a state-provided, state-regulated utility staffed by civil servants will come as a culture shock, even though they have all voted for it.
Also beginning to be challenged is the fact that Eurocontrol currently sits on the fence between regulation and provision, with a foot in both camps. CANSO claims this is unacceptable under the new formula, and says Eurocontrol should gradually withdraw from ATM provision, for example its upper area control centre at Maastricht, its operation of the Central Flow Management Unit, and even its role as the clearing house for user charges.
Eurocontrol will retain its task of being the source of technical and operational expertise for the actual regulator, the European Commission; its ATM oversight role on behalf of the Commission; and its essential function of being the forum where all the issues leading to the SES are thrashed out.
Meanwhile, the lack of harmonisation between European and US plans for ATM modernisation is distressing to both sides. But there are signs that where politicians and authorities have failed to find any useful convergence in methods and technology, industry may provide an answer.
COTS solutions
Europe is moving toward commercial off-the-shelf (COTS) solutions for ATM equipment as government agencies move out of the ATM funding business and into pure regulation. The FAA appears tempted to do the same, leaving industry real opportunities to develop and offer interoperable COTS solutions.
Europe has also announced it is officially dumping the "not invented here" purchasing philosophy in those ATM areas where it has operated. It will be interesting to see if the USA is ready to do the same as it begins to flesh out plans for its next-generation air transport system.
In the arena of international air-transport relations, the EC will continue pushing for an Open Skies deal with the USA, followed by less comprehensive deals with Russia, China and others. Talks were bedevilled by unexpected technical detail - working out how European Caribbean dependencies affect the deal - by the time the twin elections froze talks last June.
Negotiations have resumed on a technical level, to be joined by high-level discussions in Washington in February. The EC expects pressure from airlines to relent on its demands for foreign ownership and cabotage rights in a bid to secure a deal with the USA, but horse-trading is expected.
Environment
JUSTIN WASTNAGE / SENIOR REPORTER
Legislation is starting to take effect, but should not halt aviation expansion this year
After a bumper year for air transport legislation, the new European Commission has few formal proposals before it for 2005. But new transport commissioner Jacques Barrot has already indicated an intent to place air transport at the top of his targets for reform.
Environmental issues will be high on the agenda, says new head of unit for air transport safety and environment Roberto Salvarani. The focus will be on two areas - noise and emissions. The European directive on aircraft noise became law in September last year, but the EC says it is not sure about compliance, so monitoring will be a key task.
As a first step, the Commission has decided to take Austria, Finland, Italy, Germany and Luxembourg to the European Court of Justice for "non-communication" of the measures designed to phase out the noisiest aircraft at EU airports, and says others will follow. Based on data gathered this year, the Commission may propose amendments to the directive, although Salvarani says this is not likely until 2006 at the earliest.
The International Civil Aviation Organisation says: "Future growth in civil aviation will take place against a background of increasing public concern over the environment, particularly with regard to aircraft noise and emissions." While this is true in the medium and long term, environmental regulations are unlikely to hit aviation expansion directly this year. The urgency of government action will depend on the degree of public concern and will vary from country to country.
In Western Europe, air transport will grow according to market demand, for this year at least, but growth will take place within an existing, increasingly hard-pressed airport infrastructure. In the USA, the government does not intend to restrain aviation growth on environmental grounds - at least not this year - but faces capacity constraints at some of its busiest airports.
The future form that environmental restraints on aviation in Europe will take in is likely to become clear this year because the UK has said it will use its 2005 presidency of both the European Council and the powerful G8 economic group of countries to advance the environmental cause. This could take the form of taxes on aviation fuel, a "polluter pays" formula, emissions trading, or all three.
Aircraft emissions are already covered by European legislation, but the EC will launch a study into possible charging mechanisms. Indications point away from a straightforward tax on carbon monoxide discharge, towards including aircraft in the EU emissions trading scheme that started on January 1, but which exempts aviation.
Infrastructure
DAVID LEARMOUNT / OPERATIONS & SAFETY EDITOR
The Single European Sky will move a step closer to becoming a reality
Developments in the process of creating the Single European Sky (SES) will be significant this year, if not highly visible. And what will happen will have significance well beyond European airspace.
During 2005 the SES will move from being a politically approved concept into actual preparations for making it happen. Industry consultation - via the International Air Transport Association (IATA), Airports Council International (ACI) and Civil Air Navigation Services Organisation (CANSO) - is part of the SES creation process and becomes active this month.
It may not sound revolutionary, but industry consultation is vital in a process that will involve as a crucial part of the SES the separation of air traffic management (ATM) provision from ATM regulation. This approach has already led in several European countries - Germany, UK and soon France - to corporatisation or partial privatisation of ATM providers.
Europe does not have a monopoly on this model - Canada and New Zealand went there first. But for many European countries the challenge to the mindset that ATM is a state-provided, state-regulated utility staffed by civil servants will come as a culture shock, even though they have all voted for it.
Also beginning to be challenged is the fact that Eurocontrol currently sits on the fence between regulation and provision, with a foot in both camps. CANSO claims this is unacceptable under the new formula, and says Eurocontrol should gradually withdraw from ATM provision, for example its upper area control centre at Maastricht, its operation of the Central Flow Management Unit, and even its role as the clearing house for user charges.
Eurocontrol will retain its task of being the source of technical and operational expertise for the actual regulator, the European Commission; its ATM oversight role on behalf of the Commission; and its essential function of being the forum where all the issues leading to the SES are thrashed out.
Meanwhile, the lack of harmonisation between European and US plans for ATM modernisation is distressing to both sides. But there are signs that where politicians and authorities have failed to find any useful convergence in methods and technology, industry may provide an answer.
COTS solutions
Europe is moving toward commercial off-the-shelf (COTS) solutions for ATM equipment as government agencies move out of the ATM funding business and into pure regulation. The FAA appears tempted to do the same, leaving industry real opportunities to develop and offer interoperable COTS solutions.
Europe has also announced it is officially dumping the "not invented here" purchasing philosophy in those ATM areas where it has operated. It will be interesting to see if the USA is ready to do the same as it begins to flesh out plans for its next-generation air transport system.
In the arena of international air-transport relations, the EC will continue pushing for an Open Skies deal with the USA, followed by less comprehensive deals with Russia, China and others. Talks were bedevilled by unexpected technical detail - working out how European Caribbean dependencies affect the deal - by the time the twin elections froze talks last June.
Negotiations have resumed on a technical level, to be joined by high-level discussions in Washington in February. The EC expects pressure from airlines to relent on its demands for foreign ownership and cabotage rights in a bid to secure a deal with the USA, but horse-trading is expected.
Employment
Recruitment is on the up - but finding staff with the required skills may be a problem
CHARLES WILLIAMS / EMPLOYMENT CORRESPONDENT
Twelve months ago, it looked like the aerospace industry - in Europe and North America at any rate - was undergoing a classic jobless recovery. Flight International's Aerospace Trends Survey and other polls were showing that orders and optimism were on the rise as the industry bounced back from the post-9/11 slump in orders. However, the outlook in terms of recruitment was very different. Companies seemed to be absorbing increased customer demand through outsourcing lower-value jobs and introducing leaner work practices.
As 2004 went on, however, the picture began to change, with a faster than expected recovery catching the industry by surprise and leaving some companies scrambling to take on sufficient staff to meet production schedules. By the time of our third quarterly Aerospace Trends Survey in October, a significant balance of Top 100 aerospace companies were planning to increase their workforce over the next 12 months.
Boeing - which axed tens of thousands of jobs in the wake of 9/11 - is among companies that ended up rewriting their recruitment plans during 2004.
"We wildly exceeded our expectations in terms of sheer volumes of people employed last year," says director of global staffing Rich Hartnett. "The plan was 5,000 new hires, but we are going to hit 8,000." Where the primes lead, the suppliers must follow - and sometimes anticipate. "We did recruit last year," says Ken Fulton, head of career development, engineering, at engine maker Rolls-Royce. "Our business was impacted in overall terms by 9/11, but the recovery has come more quickly than we expected."
The result for some was a hiring scamble. "We got caught short about two-thirds of the way through the year," says Christopher Whiteside, managing director of UK-based component supplier A J Walter Aviation. "We had to take on 20% more staff due to taking on additional contracts. For the last three years we have had a strategy of natural wastage, not replacing people who have left."
The turn-around in recruitment is borne out by wider figures. Aerospace employment in the USA, for example, is steadily increasing since bottoming out in 2004, according to the Aerospace Industries Association (AIA). Total employment in the industry, having reached an all-time low on 572,000 last February, was expected to have recovered to above 590,000 by year-end. "It's a reflection of a turnaround in the two large markets," says AIA head of research David Napier. "Military sales have been increasing for a couple of years, but the breaking news is that commercial orders and sales have stopped sliding and started to grow."
The spate of hiring last year, however, means some companies are planning a less aggressive approach to recruitment in 2005. Airbus, for example, plans to grow its workforce by about half the rate of last year, when it hired around 3,000 people in Europe, two thirds of them manufacturing positions and a significant proportion of them in the UK. The remaining 1,000 were engineers linked to the A380 and A400M programmes.
"We will continue to grow in some technical areas which are directly product-orientated in 2005, such as manufacturing, where we definitely need an increase, but we will be very careful," says Karin Tegtmeier, Airbus senior manager, marketing and recruitment.
"We have to take into account that we have added 10,000 staff in the last four years, but the number of deliveries has stayed the same," she says. "Our main growth has now been achieved and we cannot continue to expand in all areas." Boeing's Hartnett, meanwhile, expects the company to recruit about the same as in 2004 - 8,000-9,000 employees - as its programmes progress.
For industry, the growing issue is where new workers will be found and what skills they will need. Development of strong project management skills is seen as crucial.
"There is a concern over the quantity and quality of programme and project management resources," says Jussi It„vuori, head of human resources at EADS. "We must develop the next generation of project managers, who are able to take care of even more complex programmes."
Airbus's Tegtmeier agrees: "Project management is a quality we need more and more in addition to a very solid technical education. Engineers now need basic business knowledge - they need to be able to think and work in terms of profitability, not just technical details."
Project management has become part of many companies' internal training schemes. EADS opened a Corporate Business Academy in Bordeaux in November. "This increased our investment in executive development," says It„vuori. "We particularly address international issues in our management training and how to manage cross-continental and cross-cultural diversity within virtual teams."
BAE Systems, meanwhile, runs project management development programmes in conjunction with the UK's Warwick University. "There is a massive drive on project management throughout BAE Systems as a whole," says Louise Wallwork, human resources director for shared services. "There are plenty of areas where we will engage people who don't have a technical or engineering background to move into the project management arena."
Business skills are increasingly important. "Engineers are working on and leading major projects for us," says R-R's Fulton. "They need to deliver on time, to spec and to cost and the skills it takes to do that are very important. We don't deal with this as a separate set of skills; it is just one of those things that they need to be familiar with."
Recruitment is also become more international. Airbus's Top Flight entry programme recruits individuals with a few years of professional experience, including one year of overseas work. "We would like to get some good Masters-level graduates from China, India and Japan into the company," says Tegtmeier. "We want to hire the future leaders of our activities in these countries as we expand there."
Companies are having to get to grips with attracting people with technical skills not specific to aerospace, or even manufacturing. Boeing's Future Combat Systems programme for the US Army, for example, requires skills such as multimedia, modelling and computer graphics, which Boeing has not traditionally competed for.
"We need to compete for these people with companies from outside our industry," says Hartnett. "We have been very aggressive with internet recruiting, for example."
Apart from recognising what new skills need to be added to a company's arsenal, human resources departments are facing shortages in some traditional aerospace engineering areas. Among them, BAE Systems is looking for systems and software engineers and Boeing is finding it a struggle to recruit experienced stress and structural engineers.
"We are getting more or less what we need in terms of numbers from the education system, but the problem can be in the quality," says EADS's It„vuori. "We are going to have a tougher labour market in the next five to 10 years."
However, recruiting the right staff is not the only challenge. Companies cannot take their eye of the fact that they need to hold onto skilled personnel too. "We need to address the issue of retaining capability," says BAE's Wallwork. "Keeping people employed in between programmes and improving our deployment planning is crucial. Some of these people might be put to work on research and development projects, for example."
Looking to the future, It„vuori believes that, from the employer's perspective at least, the job market, if handled correctly, will remain relatively stable. "As an employer, the aerospace industry is very stable compared to other industries that are more volatile," he says. "It's one of the safest industries to work in and it's a growth industry."
But while the top engineering candidates are unlikely to be out of work anytime soon, It„vuori warns that more traditional manufacturing staff in Europe may be at risk. "Looking at the labour costs and working hours in Europe compared with eastern Europe and the USA, there is a competitiveness issue," he says. "If Europe is not competitive, there will not be a place for it."
Source: Flight International
