ABI Research forecasts that aerospace manufacturers will spend US$33.6 billion on digitalization in 2024, ballooning to US$53.8 billion by 2034. This increase in digital spending represents an enormous opportunity for technology suppliers to offer solutions that can increase production volume, reduce carbon emissions, provide operational visibility, and test new product designs. The Dassault Systèmes, PTCs, and Siemens of the world will be critical facilitators of digitalizing aerospace operations, enabling firms to optimize their entire value chain and meet surging demand.
Reducing production backlogs is the prevailing challenge for the Aerospace and Defense (A&D) industry. The demand for air travel remains undiminished with airlines looking to upgrade their fleets as part of increasing their share of passengers.
Meeting this production demand will require aerospace manufacturers to reconcile a mix of issues, including:- Improving processes to make incremental productivity gains (but not at the expense of quality or contravening regulations)
- Investing in digital technologies that can support ramping up production
- Aligning the processes and technologies with a workforce that can fully utilize the technologies and deliver the productivity gain
Digital twins, digital threads, Artificial Intelligence (AI), hydrogen-based jet technology, asset trackers, and other technologies will be crucial to meeting demand from the commercial airline, military/defense, and satellite sectors. This is especially true as governments worldwide continue to invest billions in these nationally valuable sectors, seen as a means to establish geopolitical prominence.
Key Takeaways:
- Demand for new airliners is high. As people continue to increase their travel, large backorder lists are compiling. Airbus and Boeing alone have an order backlog of over 15,000 aircraft in 2025. Other aerospace manufacturers are unsuited to fill the void.
- Aerospace manufacturers turn to technology. Without hiring a plethora of new workers, the aerospace industry is ramping up its digital transformation plans. Leading Aerospace & Defense (A&D) companies invest in technologies like digital twins, data analytics, and automation to increase production volumes.
- Technology vendors need to support quicker decision-making. The objective can be supported by better data management that can feed digital threads and digital twins. AI can automate the decision-making process so that engineers and technicians can focus on complex problems
- Airbus is the most digitally transformed aerospace manufacturer. Airbus was ranked first by ABI Research for advancing digital transformation. The company demonstrates the utilization of digital technologies to help solve the industry’s biggest production challenges. The company’s digital transformation strategy covers the entire suite of digital technologies, and it stands out, in particular, for the company’s use of digital twins and its overall data infrastructure.
- A need for organization-wide alignment with new technology. Successful digital transformation requires leadership across the organization to design, deliver, and scale the deployments of technologies that will have a meaningful impact on closing the production backlogs. A chief digital officer or a digital transformation officer must work with plant managers and cross-functional teams to implement digital technologies.
What Is Fueling Digital Transformation in the Aerospace Industry?
Aircraft manufacturers’ digitalization spending is driven by various factors, spanning the political, business, and social lenses. Foremost, safety is at the heart of every aspect of aerospace manufacturing, with recent Boeing mishaps generating greater emphasis on aircraft safety. At the same time, some regulations require manufacturers to use specific tools for certain tasks. For example, tools have to utilize/apply a particular torque. If you lose an electronic screwdriver that applies a bolt, you cannot pick up another one nearby. As a result, the manufacturer will suffer production delays.
Digital technologies are increasingly essential for the aerospace industry, enabling companies to monitor where tools are at all times. This requirement presents an opportunity for suppliers of asset trackers to work alongside connectivity providers to ensure aerospace manufacturers have full visibility into where their tools are located. In turn, these solutions prevent manufacturers from experiencing downtime.
Cybersecurity has an essential role to play in aerospace digitalization as well. As Nozomi Networks recently demonstrated, connected industrial tools such as torques are susceptible to cyberattacks. Hackers can manipulate tool configurations, place ransomware on a device, or even gain access to the wider network. If components are not assembled properly, this can lead to potential safety risks, financial losses, and reputational damage. For these reasons, cybersecurity vendors that provide visibility into Operational Technology (OT) assets are essential during the aerospace industry's digital transformation journey.
Another driver for digital transformation in aerospace is the increased demand for new products. Governments, especially in Asia-Pacific, will ramp up their investment in military/commercial aircraft, defense, and satellite constellations as countries aim to compete economically and politically. For instance, Air India invested roughly US$80 billion on 470 new aircraft from Airbus and Boeing in February 2023. Moreover, the Inflation Reduction Act (IRA) has encouraged U.S.-based aerospace companies to construct new facilities, increasing production volume in the country. Additionally, the International Civil Aviation Organization (ICAO) expects demand for air travel to increase by, on average, 4.3% annually for the next 20 years. This serves as an impetus for aircraft suppliers to adopt technologies that expand production capacity and achieve new efficiencies.
Predictive maintenance is another reason for digitalizing the aerospace industry. If equipment/machinery becomes unusable on the assembly line, manufacturers will experience downtime and unhappy customers. Therefore, data analytics is seen as a necessary technology investment. Instead of scheduling maintenance at a regular cadence, they now realize that with technology, they can conduct maintenance when needed. Data analytics is also tightly integrated with digital twins, which are used to enhance aircraft performance and sustainability. Digital twins enable manufacturers to modify their production processes virtually, maximizing optimization.
In order to scale the production of planes, missiles, satellite equipment, and other aerospace products, manufacturers must adopt digital technologies that provide visibility into operations/supply chains. In other words, they must build a digital thread across their supply chain and manufacturing operations. Building a digital thread removes data silos and enables companies to improve collaboration across departments. Parts traceability is a notable concern, as missing critical parts/components will halt production. For example, Gulfstream failed to deliver two G280 jets in 1Q 2023 due to a shortage of Honeywell’s turbofans. Being able to forecast these shortages beforehand could have impelled Gulfstream to identify an alternative supplier and prevent the delivery delay.
How Aerospace Manufacturers Are Leveraging Digitalization
Some of the more prominent manufacturers embodying digital transformation in the aerospace industry are outlined below:
Airbus
According to ABI Research’s latest benchmarking index, Airbus is the most digitally transformed aerospace company. The French manufacturer is pursuing record aircraft production targets for 2025 while managing a decade-long backlog. The use of digital technologies is an essential aspect to expanding production volume
Through initiatives like the Digital Design, Manufacturing & Services (DDMS) program and its Skywise platform, Airbus integrates real-time production, maintenance, and quality data across over 12,000 aircraft. This enables predictive insights and faster root-cause analysis.
Airbus leverages digital twins, AI-driven tools, and Gen AI knowledge systems to optimize asset performance, workstation efficiency, and compliance. Concurrently, continuous improvement programs bolster quality control.
Despite these digitalization advances, Airbus continues to face challenges around workforce skills and talent shortages needed to sustain growth and digital adoption. This highlights a significant skills gap in the aerospace industry, and the wider manufacturing space in general.
Boeing
Lockheed Martin
As a testament to its commitment to digital transformation, Lockheed Martin has participated in a US$12.5 investment round for Fortify, a startup developing a smart manufacturing platform.
Rolls-Royce
Rolls-Royce deploys sensors on airplane engines to collect 5 million measurements daily, which are used for algorithms and digital twins. This use case empowers engineers to take a proactive approach toward maintenance, as opposed to waiting for an issue to materialize and then addressing it. AI is a core focus of Rolls-Royce, with the company constructing an ethical framework for AI as early as 2020. With the AI framework, algorithms are continuously being monitored to generate dependable results.
Working closely with Microsoft, Rolls-Royce is leveraging low-code techniques to develop its own AI tools. These tools will help the London-based manufacturer boost productivity, assist with Research and Development (R&D) projects, and foster organization-wide data sharing.
Lastly, like Airbus, Rolls-Royce has shown interest in hydrogen-based aircraft. The company is developing a combustion system based on hydrogen that can travel longer distances than electric battery-powered aircraft.
Learn More
The technology applications and tools above have the potential to improve the operations at A&D manufacturers, but will lack impact if they are deployed in a piecemeal manner. To avoid this and to work toward reducing production backlogs, A&D manufacturers must have a strategy to achieve the objective, programs to support it, and leadership to devise and deliver it.
The digital transformation of the aerospace industry is one of many key focuses of ABI Research’s Industrial & Manufacturing Markets Research Service. As manufacturers continuously adopt new technologies, our analysts will identify the most significant opportunities, use cases, and market sizings for these solutions in aerospace and other industries.
For further research findings on the aerospace industry's digital transformation, refer to the following reports;
- Digital Transformation and the Aerospace Industry
- Digital Transformation Benchmarking Index for Large Aerospace and Defense Manufacturers
- Technologies to Support Aerospace Manufacturers in Ramping up Production
- Technologies to Support Aerospace Manufacturers in Ramping up Production
- Technologies to Support Aerospace Manufacturers in Ramping up Production