Aerospace and Defense Market Report 2026

The aerospace and defense market size has grown strongly in recent years. It will grow from $846.94 billion in 2025 to $899.65 billion in 2026 at a compound annual growth rate (CAGR) of 6.2%. The growth in the historic period can be attributed to technological advancements in aircraft design and materials, growth in commercial aviation fleets, rising military modernization programs, increased geopolitical tensions boosting defense spending, expansion of satellite and space exploration initiatives.

The aerospace and defense market size is expected to see strong growth in the next few years. It will grow to $1.18 trillion in 2030 at a compound annual growth rate (CAGR) of 7.1%. The growth in the forecast period can be attributed to rising demand for next-generation military platforms, increasing investments in space commercialization, adoption of autonomous and unmanned aerial systems, growing focus on cybersecurity for defense systems, shift toward sustainable aviation technologies. Major trends in the forecast period include growing demand for next-generation military aircraft modernization, rising adoption of composite materials in aircraft manufacturing, increasing investments in advanced missile defense systems, expansion of commercial space exploration programs, greater integration of multifunctional weapon and command systems.

Increasing defense spending is expected to drive the growth of the aerospace and defense market going forward. Defense spending refers to the financial resources allocated by a state to raising and maintaining an armed force or supporting other activities essential for defense purposes. Defense spending provides funding for the aerospace and defense industry, which includes the design, manufacturing, and maintenance of military equipment. The budget allocated to the aerospace and defense industries forms part of the overall defense budget, which supports a wide range of national defense activities. For instance, in April 2023, according to the Stockholm International Peace Research Institute, a Sweden-based independent resource on global security, world military expenditure reached $2.71 trillion in 2024, an increase of 9.4 percent in real terms from 2023 and the steepest year-on-year rise since the end of the Cold War. Therefore, increasing defense spending is contributing to the growth of the aerospace and defense market.

Major companies in the aerospace and defense industry are adopting a strategic partnership approach to collaborate on various aspects of aerospace and defense. Strategic partnerships involve organizations such as government agencies, private companies, and research institutions leveraging one another’s strengths and resources to achieve shared goals and mutual benefits. In April 2024, Rashtriya Raksha University (RRU), an Indian institution focused on security studies and training for police, paramilitary, and defense personnel, signed a memorandum of understanding (MoU) with Starburst Aerospace to promote innovation in aerospace, defense, and homeland security. This agreement highlights the evolving strategic partnership between India and France in these sectors. The collaboration includes RRU, Starburst, and the Security and Scientific Technical Research Association (SASTRA), a non-profit organization established by RRU, with the objective of advancing innovation in the aerospace, defense, and homeland security industries. Starburst Aerospace is a France-based aerospace accelerator that supports innovative startups in the aerospace and defense sectors.

In November 2024, AeroVironment Inc., a U.S.-based provider of unmanned aircraft systems and precision strike technologies, acquired BlueHalo LLC for $4.1 billion. This acquisition aims to strengthen AeroVironment’s market position by integrating BlueHalo’s advanced capabilities in uncrewed systems, counter-uncrewed aircraft systems (C-UAS), space systems, and cyber technologies. The transaction is intended to accelerate innovation, expand operational scale, and diversify the company’s portfolio to better support defense and national security customers. BlueHalo LLC is a U.S.-based defense technology company specializing in advanced systems for air, land, sea, space, and cyber domains.

Major companies operating in the aerospace and defense market are Airbus Group SE, Lockheed Martin Corporation, Raytheon Technologies Corporation, The Boeing Company, Northrop Grumman Corp, General Dynamics, General Electric Company, Bae Systems plc, Safran SA, Thales, Hindustan Aeronautics Ltd, Team Indus, Rolls Royce India, Bharat Electronics Limited (BEL), Drone Aerospace Systems Pvt Ltd, Indian Rotorcraft, Mahindra Aerospace, Raj Hamsa Ultralights, Commercial Aircraft Corporation of China Ltd. (COMAC), Shanghai aircraft manufacturing factory, Aviation Industry Corporation of China, Superior Aviation Beijing Co., Honeywell International Inc., Bombardier Inc., Embraer, Cessna, Almaz-Antey, United Aircraft Corporation, Tactical Missiles Corporation, Uralvagonzavod, Textron Inc., Pilatus Aircraft Ltd, Leonardo SpA, Dassault Aviation SA, Piper Aircraft Inc, Honda Aircraft Company, Precision Castparts Corp, Spirit AeroSystems Inc, TransDigm Group Incorporated, Advanced Composites Solutions, AEL Sistemas, Airship do BrasilOneWeb, Telespazio, ARSAT, Cirrus Aircraft Corp., Israel Aerospace Industries, Iran Aircraft Manufacturing Industries, Saudi Arabian Military Industries (SAMI), Advanced Electronics Company, Abu Dhabi Ship Building (ADSB), DragonFly Aerospace, Armscor, Atlas Aircraft Corporation.

North America was the largest region in aerospace & defense market in 2025. North America is expected to be the fastest-growing region in the forecast period. The regions covered in the aerospace and defense market report are Asia-Pacific, South East Asia, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.

Note that the outlook for this market is being affected by rapid changes in trade relations and tariffs globally. The report will be updated prior to delivery to reflect the latest status, including revised forecasts and quantified impact analysis. The report’s Recommendations and Conclusions sections will be updated to give strategies for entities dealing with the fast-moving international environment.

Tariffs are increasing production costs across aircraft components, weapon systems, and avionics, disrupting global supply chains and slowing procurement cycles in key aerospace and defense markets. Segments such as commercial aviation, military aircraft, and missile systems are most affected, especially in regions dependent on imported alloys, electronics, and propulsion components. While these tariffs strain manufacturers in North America, Europe, and Asia-Pacific, they also encourage local manufacturing, technology localization, and strategic sourcing, creating long-term opportunities for domestic suppliers.

The aerospace and defense market research report is one of a series of new reports that provides aerospace and defense market statistics, including aerospace and defense industry global market size, regional shares, competitors with an aerospace and defense market share, detailed aerospace and defense market segments, market trends and opportunities, and any further data you may need to thrive in the aerospace and defense industry. This aerospace and defense market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenarios of the industry.

Aerospace involves the design and manufacturing of aircraft, rockets, missiles, and spacecraft, including those intended for space exploration. Defense equipment, on the other hand, refers to weapons, arms, and equipment used for military purposes.

The primary types within the aerospace and defense sector include aerospace and defense. The aerospace industry comprises companies engaged in developing prototypes, as well as the manufacturing or assembling of complete aircraft and aircraft parts for commercial purposes. Aircraft within this industry can be operated in both autonomous and manual modes. Various components of the aerospace and defense sector include weapon systems, fire control systems, command and control systems, and other related elements.

The countries covered in the aerospace and defense market report are China, India, Japan, Australia, Indonesia, South Korea, Bangladesh, Thailand, Vietnam, Malaysia, Singapore, Philippines, Hong Kong, Taiwan, New Zealand, UK, Germany, France, Italy, Spain, Austria, Belgium, Denmark, Finland, Ireland, Netherlands, Norway, Portugal, Sweden, Switzerland, Russia, Czech Republic, Poland, Romania, Ukraine, USA, Canada, Mexico, Brazil, Chile, Argentina, Colombia, Peru, Saudi Arabia, Israel, Iran, Turkey, UAE, Egypt, Nigeria, South Africa.

The aerospace and defense market consists of sales of aircraft, aircraft components, weapons, artillery tanks, and radar equipment for aerospace and defense purposes. Values in this market are ‘factory gate’ values, that is the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors, and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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