A microcosm of the world's aerospace industries, the rotorcraft market faces a split future. The dominant military side, driven by rising defense budgets and a need for greater force mobility, is thriving. The civil side, affected by recession and growing cost sensitivity, remains stagnant. Undoubtedly, the next few years will be challenging.

STRONG MILITARY PROSPECTS

The military market, always the largest part of this industry, has made an impressive recovery. This segment has seen some truly dismal times since the Cold War ended. As late as 1991, annual military helicopter deliveries were well above $5 billion (in constant fiscal year 2002 dollars). The post-Cold War collapse of defense procurement caused this to slide to $4.9 billion by 1992, and in 1998 the military market fell to a record low $3.1 billion. Since then, it has made an impressive recovery, with military deliveries in 2002 worth $5.1 billion. There should be additional growth, with the market reaching $7 billion in 2006.

The drivers behind further growth are reasonably secure--forces need to recapitalize, and military mobility is essential. In the U.S., most of the near-term programs, such as Bell's AH-1Z and UH-1Y rebuilds for the U.S. Marines, Sikorsky's MH-60S and MH-60R rebuild for the Navy, Boeing's AH-64D Longbow and CH-47F Improved Cargo Helicopter (ICH) remanufactures are reasonably safe, after a few near-disasters. On the export market, the AH-64 has firmly established itself as the most important high-end attack helicopter.

Yet the U.S. rotorcraft market remains hobbled by two major program uncertainties, affecting the Marines and Army. The Marines need a medium-lift replacement for their workhorse transport fleet, now comprising aging CH-46s. The long-awaited Bell Boeing V-22 remains the selected choice, scheduled to enter service with the U.S. Marines as the MV-22A transport. Special Operations Command will begin fielding their CV-22B version in 2005. There will be numerous other military applications, possibly including carrier-based airborne early warning. Yet a series of crashes, coupled with doubts about the viability of tiltrotor technology and a high price tag, still cast uncertainty on the future of the project. And the recent conflict in Afghanistan would seem to decrease the need for this new technology. After all, we did a fine job in a relatively inaccessible theater with existing rotorcraft technology. Regardless, flight tests have resumed, and the V-22 remains a procurement budget line item.