Aerospace Sector: Meaning, Subsectors, History

The aerospace sector, one of the largest and most powerful industries in the United States, supplies five markets: military aircraft, missiles, space, commercial airliners, and general aviation. The U.S. aerospace sector is considered the largest in the world and is the main supplier of both military and civil aerospace hardware to the rest of the world.

Because of the great emphasis on research and development (R&D), about 25% of those who work in aerospace are engineers, scientists, and technicians. Aviation is one of the fastest-growing industries in the United States, and it has increased yearly at the rate of at least 14%.

Key Takeaways

• The aerospace sector is one of the largest sectors in the United States, providing products and services to the military aircraft, missile, space, commercial airline, and general aviation markets.
• The history of the aerospace sector in the United States dates back to 1903 when Wilbur and Orville Wright built and flew the first successful powered airplane.
• The aerospace sector has many subsectors, including unmanned aircraft systems (UAS), commercial space, airport infrastructure, and aviation security.

The Aerospace Industry

The aerospace industry’s product line is broad because its primary products, flight vehicles, require up to millions of individual parts. In addition, many support systems are needed to operate and maintain the vehicles. In terms of sales, military aircraft have the largest market share, followed by space systems, civil aircraft, and missiles.

According to a study by the U.S. Department of Commerce, aerospace exports, directly and indirectly, support more jobs than the export of any other commodity. In 2018, the U.S. aerospace industry contributed $151 billion in export sales to the U.S. economy.

Note

In 2023, Boeing was the world’s largest aerospace company. Boeing earned over $76 billion in revenue.

Aerospace Industry Subsectors

The aerospace industry includes many subsectors that contribute to the industry’s growth. For example, companies in the commercial space subsector design, manufacture, and launch advanced rockets and spacecraft. These companies are expected to see revenue growth as interest and spending increases in everything from space tourism, space exploration, improved satellite communications, and laboratories in space. SpaceX, Boeing, and Virgin Galactic are a few of the companies competing in the commercial space subsector.

Another aerospace industry subsector is unmanned aircraft systems (UAS), commonly referred to as drones. A UAS does not have a pilot on board but is instead piloted autonomously or remotely. While drones are primarily used for military, research, and recreational uses, the main growth segment for UAS might come from drone delivery systems implemented by retail giants such as Amazon and Walmart.

Airport infrastructure and aviation security is another aerospace subsector that continues to grow both in the United States and globally. Companies in this subsector focus on protecting the airline industry from terrorism threats, along with the identification and containment of cybersecurity threats.

Alternative aviation fuel is an aerospace industry subsector that researches and develops alternatives fuels. Companies in this subsector look to develop alternatives that are environmentally sustainable and protect the airline industry from the price volatility of traditional jet fuel.

History of the United States Aerospace Industry

The aerospace sector’s origin in the United States dates back to Dec. 1903, when Wilbur and Orville Wright demonstrated an airplane capable of powered, sustained flight. In 1908, the Wrights secured a contract from the U.S. Army to make a single aircraft, and also licensed their patents to allow the Astra Company to manufacture aircraft in France. Glenn Curtiss of New York began selling his own aircraft in 1909, prompting many American aircraft hobbyists to turn entrepreneurial.

In 1958, the National Aeronautics and Space Administration (NASA) succeeded the National Advisory Committee for Aeronautics and initiated the Mercury manned space program. In 1959, the U.S. Aircraft Industries Association, which was formed in 1919 to promote American civil aviation, changed its name to the Aerospace Industries Association (AIA). U.S. aerospace industry interests are represented through the AIA, an aerospace-industry-funded organization that provides a forum for technical and policy issues, and whose membership consists of the major companies in the field.

Future of the Aerospace Industry

According to 2024 study by Deloitte, the aerospace and defense industry is poised for significant transformation in 2025, focusing on the operationalization of advanced technologies to enhance efficiency and address persistent challenges. Companies are expected to integrate digital solutions and artificial intelligence (AI) to improve supply chain visibility and workforce development. The Department of Defense requested a budget of nearly $850 billion for fiscal year 2025.

Workforce challenges remain a critical concern, with the industry experiencing a personnel turnover of about 13% in 2023. It’s important to call out that this was significantly higher than the national average of 3.8%. An aging workforce exacerbates this issue, as 25% of employees have over 20 years of experience and are at or beyond retirement age.

What Is the Aerospace Sector?

The aerospace sector encompasses industries involved in the design, production, and maintenance of aircraft, spacecraft, and related systems. It includes commercial aviation, military aircraft, and space exploration. Companies like Boeing, Airbus, and Lockheed Martin are key players in this industry.

What Are the Key Divisions in the Aerospace Sector?

The aerospace sector is generally divided into three segments: commercial aviation, defense and military aviation, and space exploration. Each segment focuses on specific markets and technologies, such as passenger planes for commercial use, fighter jets for defense, and spacecraft for space missions.

Who Are the Major Players in the Aerospace Sector?

The leading companies in the aerospace sector include Boeing, Airbus, Lockheed Martin, Northrop Grumman, and SpaceX.

What Is the Role of Government in the Aerospace Sector?

Governments play a crucial role in funding, regulation, and policy-making. For instance, NASA and the European Space Agency (ESA) invest heavily in space exploration, while military budgets support defense aviation programs.

The Bottom Line

The aerospace sector involves the design, production, and maintenance of aircraft, spacecraft, and related systems, with key divisions in commercial aviation, defense, and space exploration. It is a multi-billion-dollar industry driven by air travel demand, defense spending, and technological advancements, led by major players like Boeing, Airbus, and SpaceX.