Global defence aviation spending is heavily concentrated on traditional high-end platforms, even as cheaper autonomous systems and drones expand rapidly. A study by Boston Consulting Group and Vertical Research Partners shows that complex weapon systems will maintain over 80 per cent of the market through 2033.
The global defence aviation sector is undergoing a profound structural shift away from billion-dollar aircraft programmes toward technologies that are smaller, cheaper, and faster to produce. Yet, despite the surge in demand for autonomous systems, traditional combat aircraft and complex military hardware will remain the backbone of military spending for the next decade, according to a study by Boston Consulting Group (BCG) and Vertical Research Partners.
Procurement Spending Split Between Exquisite Systems and Affordable Mass
The report underscores a stark divide in procurement capital allocation between traditional high-end military hardware—often referred to as exquisite systems—and newer, expendable alternatives. Procurement revenue from traditional aviation systems stood at about $65 billion in the United States and Europe in 2025. By comparison, spending reached roughly $5 billion for affordable mass systems and just $55 million for expendable systems during the same period.
The newer segments are expanding at a much faster pace. While exquisite systems are projected to grow at an annual rate of 2 to 3 per cent through 2033, affordable mass systems are forecast to grow by 15 to 20 per cent annually. Expendable platforms are expected to record the fastest growth, ranging between 35 and 40 per cent per year. Even with this accelerated expansion, exquisite systems will still comprise more than 80 per cent of the market by 2033
because the newer categories are growing from a significantly smaller baseline, as established players continue to maintain their dominant market share.
Divergent Economics of Sustainment and Supply Chains
Beyond initial production costs, traditional combat aircraft generate vastly more sustainable profits over their operational lifespans than newer expendable platforms. High-end aircraft, such as the F/A-18E/F Super Hornet fighter, derive roughly half of their lifetime profits from decades of maintenance, spare parts, and upgrades. Conversely, expendable systems like the AeroVironment Switchblade 300 loitering munition generate most of their commercial value from initial production and sales.
This structural reality grants established defence companies greater resilience during periods of fluctuating military budgets, while firms focused strictly on high-volume, single-use sales remain more exposed to procurement shifts. Furthermore, legacy aviation programmes benefit from intricate, long-standing supply chains. Tier-1 suppliers of engines, sensors, and mission systems capture a considerable 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.”
Report authors, via Boston Consulting Group and Vertical Research Partners study
In contrast, companies developing affordable mass and expendable systems typically operate with shorter supply chains and rely heavily on intellectual property ownership. While this model allows newer entrants to capture a larger share of individual programmes, they often lack the industrial depth and certification experience required for large-scale government contracting.
Venture Capital Risk Shifts and Strategic Industry Pressures
Research and development risks are shifting increasingly toward newer market entrants. Unlike traditional defence programmes where governments frequently fund a substantial portion of development costs, companies building affordable mass and expendable platforms often finance their own R&D through private or venture capital. These firms assume much higher financial risks in pursuit of becoming sole-source suppliers.
Start-ups such as Helsing, Quantum Systems, and Anduril Industries have attracted billions in investment. However, established primes remain insulated by long-term government relationships and steep barriers to entry in complex weapons manufacturing. Diana Dimitrova, leader of BCG’s UK aerospace and defence practice, noted that both defence tech companies and established contractors will grow, but the majority of spending will remain with traditional players delivering major platforms and complex systems.
Dimitrova also emphasized that prime contractors must carefully evaluate their strategic positioning, questioning whether they should continue investing in stable, profitable exquisite programmes or seek exposure to higher-growth segments through acquisitions of successful start-ups. Meanwhile, Byron Callan, an analyst at Capital Alpha Partners, observed that although new systems like drones represent a significant factor in modern warfare, militaries do not see them fully displacing manned platforms, particularly in ground warfare.
European Rearmament Drivers and Future Market Projections
Regional procurement priorities are reshaping spending patterns, particularly in Europe, where governments have initiated an aggressive rearmament drive in response to regional security pressures. BCG forecasts that the European market for defence equipment will more than double, rising from about €150 billion in 2024 to €380 billion by 2035, assuming European nations achieve their target of spending 3.5 per cent of gross domestic product on defence. Within that expanding market, defence technology companies are expected to capture between €50 billion and €80 billion.
Total annual spending on larger military systems in the US, the European Union, and the UK is projected to grow from $65 billion up to $79 billion by 2033. Spending on smaller defence systems will climb to $17.5 billion over the same period. Industry stakeholders will display these competing priorities at the upcoming Farnborough Airshow, where defence start-ups and established prime contractors will showcase their latest capabilities amid a heightened focus on security.
