Future of air warfare is changing; smaller, cheaper weapons are reshaping defence aviation, says study

The global defence aviation sector is witnessing a shift away from billion-dollar aircraft programmes towards technologies that are smaller, cheaper and faster to produce, although traditional fighter jets and other high-end platforms are expected to remain the backbone of military spending for years to come, according to a study by Boston Consulting Group (BCG) and Vertical Research Partners.

According to the study, this reflects the growing emphasis on affordable mass and expendable systems alongside conventional combat aircraft.

However, legacy defence manufacturers are expected to continue dominating the market. According to the report, procurement revenue from traditional "exquisite" aviation systems stood at about $65 billion in the US and Europe in 2025, compared with around $5 billion for affordable mass systems and just $55 million for expendable systems.

The newer segments are expected to expand much faster, the study notes. While exquisite systems are projected to grow at an annual rate of 2-3 per cent through 2033, affordable mass systems are forecast to grow by 15-20 per cent, with expendable platforms expected to record the fastest growth at 35-40 per cent annually. However, the study points out that "exquisite systems will still comprise more than 80 per cent of the market by 2033" because the newer categories are growing from a much smaller base.

The report also finds that traditional combat aircraft continue to generate far more sustainable profits than newer expendable platforms. Citing the examples of F/A-18E/F Super Hornet fighter and the AeroVironment Switchblade 300 loitering munition, the study says high-end aircraft derive roughly half of their lifetime profits from decades of maintenance, spare parts and upgrades, while expendable systems generate most of their value from initial production and sales.

According to the study, the durability of sustainment revenues gives established defence companies greater resilience during periods of fluctuating defence spending, whereas firms focused primarily on high-volume sales remain more exposed to shifts in military procurement.

The report also highlights that legacy aviation programmes benefit from long and complex supply chains. Tier-1 suppliers of engines, sensors and mission systems can capture a significant share of programme profits. “What legacy primes retain, however, is decades of supply chain qualification, production experience, and familiarity with the compliance and certification requirements that government contracts demand,” it notes.

By contrast, companies developing affordable mass and expendable systems typically operate with shorter supply chains and rely heavily on intellectual property ownership. While this allows them to capture a larger share of individual programmes, they often lack the industrial depth and certification experience needed for larger defence contracts.

The study further notes that research and development risks are increasingly shifting towards newer entrants. Unlike traditional defence programmes, where governments often fund much of the development, companies building affordable mass and expendable platforms frequently finance their own R&D through venture or private capital, assuming much higher financial risks in return for the possibility of becoming sole-source suppliers.

Concluding the report, the authors say "the battlefield solution will require both "traditional high-end platforms and affordable autonomous systems. They add that "winners will understand where long-duration aviation economics still dominate, where faster-cycle autonomy economics are emerging, and where profitable growth will ultimately accrue between the two."