Defence budget cuts to spur upgrades in airborne electronic warfare


Rising aerial threat perceptions are prompting defence forces across the world to bolster their air defence capabilities with airborne electronic warfare (EW) systems, according to a new report.

As budget constraints compel governments to defer major new procurement programmes, upgrades of existing EW systems will be the bigger revenue stream until 2018. Once budget constraints ease, the fresh procurements/fleet replacements will feature new combat air platforms with modern EW systems. EW suppliers that can offer reduced hardware size, extensive threat identity database, and wider coverage are best poised to succeed.

New analysis from Frost & Sullivan, Military Airborne Electronic Warfare (EW) Market in 14 Key Countries, finds that the US EW spending touched $1.03 billion in 2014 and estimates this to reach $1.09 billion in 2016 before declining to $950.6 million in 2019. The study assesses 14 key countries that are expected to be big spenders in the airborne EW domain. They are the United States, Australia, Indonesia, Israel, Poland, Saudi Arabia, the United Kingdom, Turkey, Brazil, Germany, Norway, Sweden, Denmark and Finland.

While prime contractors control the uptake of EW equipment in North America, consortiums influence the procurement of EW systems in Europe. North Atlantic Treaty Organization (NATO)-driven EW policies will have a huge bearing on EU forces’ decisions regarding equipment configuration and overall architecture.
“The NATO is driving EU nations to pool resources and increase their respective contributions to joint operations,” said Frost & Sullivan Defence Senior Research Analyst Arun Kumar Sampathkumar. “This will result in slow yet steady upgrade opportunities as forces make efforts to achieve the common architectures stipulated by the respective NATO doctrines.”

In the United States, the overall defence spending is levelling off but the country’s logistics and operations needs have escalated. Hence, once defence spending rises post budget cuts, these two sectors will be prioritized. This will cause EW to be ranked below basic operational needs.

Meanwhile, in Europe, there has been heightened interest in air missile defence systems due to Russia’s involvement in the conflicts in Eastern Ukraine and its military exercises along its western borders surrounding the High North/Baltic regions. The defenve spending in that region will cover air defenve missile systems and suitable upgrades of air defence systems, including EW devices.
“The addition of a new EW system translates to sizeable upgrade orders for the system integrators that provide the overarching EW architecture,” observed Sampathkumar. “Tier-II/III suppliers can promote their products’ eligibility for integration with the new procurement/upgrade programs by fostering close relations with the prime contractor and the EW systems integrator.”

An air defence system that has been gaining prominence in recent times is the remotely piloted aircraft (RPA). However, unlike its larger, manned counterparts, these are incompatible with EW systems. System suppliers are therefore working on developing RPA-compatible versions of EW systems to make the most of the demand for RPAs.

Overall, globally, EW upgrade programmes will involve more EW hardware sales than new procurement programmes over the next five years, Frost & Sullivan predict. As new procurement deliveries converge from 2017, the forward-fitted EW systems will rise in profile.

According to ASDReports, the global Electronic Warfare market is estimated to be $17.72 billion in 2014 and is expected to register a CAGR of 5.37% to reach $24.25 billion by 2020.

The wide ranges of threats like stealth aircrafts, GPS jamming, and RCIED that are currently present are driving factors for electronic warfare systems. Furthermore, there is a future threat of hypersonic platforms and cruise missiles. Since battle space is moving from the traditional battlefield to the urban environment, the challenge will be to ensure efficient management of the spectrum. The threat of all these entities forces nations to acquire or develop a suitable electronic warfare system.

Though the U.S. and the U.K. have been the biggest markets for electronic warfare systems, the recent economic scenario has seen defence budget cuts in these markets. Emerging economies like Brazil and India look more attractive. Key markets including Republic of Korea, Australia, and Canada can drive the growth of this market.

Various factors such as changes in the battle space, increasing exploitation of electromagnetic spectrum, and integration of EW systems with other war-fighting equipment are driving the Electronic Warfare market, globally. Rise in the asymmetric warfare and counter insurgencies are propelling the growth of EW market. Economic concerns in the emerging market and the defence budget cuts are the major factors restraining the growth of EW market over the forecast period.

Raytheon (U.S.), Alliant Techsystems, Inc. (U.S.), BAE Systems (U.K.), Rockwell Collins (U.S.), IAI Elta (Israel), and L-3 communications (U.S.) are the key players in the EW market, globally and account for more than 40% of the total market share. General Dynamics Corporation (U.S.), SAAB (Sweden), Thales (France), and Teledyne Defense Ltd. (U.K.) are other prominent players in the EW market.