Rising geopolitical tensions from ongoing conflicts, increased aggression by nuclear superpowers, and volatile global trade relations — all particularly affecting Europe — are fueling growth in the global military fleet. The European members of the North Atlantic Treaty Organization have pledged to significantly increase defense spending in response to the escalating war in Ukraine and other instances of Russian intervention, with a majority of new funding earmarked for hardware and technology purchases.
In our new report, the “Global Military Aircraft Fleet and Sustainment Outlook 2026-2036,” we predict a 13.4% expansion in the fleet over the next decade, increasing to 50,700 aircraft at the beginning of 2036 from 44,700 at the beginning of this year. Besides jet fighters and other aircraft, a chunk of the increased defense spending will fund a rapid expansion of higher-cost uncrewed aerial systems, especially drones used for combat.
Europe rearmament drives growth in the global aircraft fleet
European rearmament efforts alone will drive more than $110 billion of aircraft deliveries between 2025 and 2032. In June, NATO's European members agreed to raise their direct defense contributions to about 3.5% of each nation's gross domestic product. When combined with infrastructure and military aid spending, this could lead to a potential doubling of defense expenditures over the next five years.
Europe’s defense budget is set to expand at a 7.8% compound annual growth rate over the decade. In contrast, the United States has delayed aircraft procurement in favor of near-term research and development (R&D) on next-generation models and advanced capabilities. This translates to a slower CAGR for the US military fleet, now projected to grow at 0.4% CAGR through 2036.
MRO and sustainment continue to grow at a faster pace
Increased spending on maintenance, repair and overhaul (MRO) and other sustainment activities is also pushing up defense expenditures. According to our forecast, MRO demand will grow over the next 10 years — at an average 1% annual growth rate — principally driven by engine maintenance, and components such as mission systems (complex avionics). That’s 10 times faster than the CAGR for the preceding decade.
The engine segment will lead growth in the coming decade — especially engines supporting the F‑35/F135 fleets — as the emphasis of operations and procurement shifts from helicopter to fighter aircraft. We expect that all three segments of depot maintenance, including engine, airframe, and components, will grow. Airframe MRO will see the slowest growth as we anticipate fewer airframe maintenance visits because newer aircraft models often require less frequent heavy airframe work
Field maintenance, representing the largest segment of MRO, will see strong growth as more complex aircraft require more labor-intense maintenance, such as stealth coatings and software updates. Rounding out sustainment costs, inventory management and services will also see growth driven by shifts to front-line and unmanned aircraft system (UAS) aircraft.
Regional sustainment demand is expected to vary as complex new aircraft platforms replace aging ones. For instance, in the US, MRO costs may stabilize in the near term as older fleets leave service and some operation and sustainment costs are averted. However, US costs will continue to rise late in the decade as replacement aircraft with more complex and costly designs enter service in large numbers
European demand, by contrast, is reaching a new high as utilization and readiness have grown since 2022 and the start of the Ukraine war. The highest growth in MRO spend is in the Middle East where Türkiye and Saudi Arabia are growing both front-line and support fleets, taking on large and complex types that outweigh savings from retirements.
The rise of combat UAS and new fighter aircrafts
Many countries are investing in next-generation fighter aircraft designs, which will involve heavy spending on design and testing through 2035. While several will go into production before the end of the decade, there is not expected to be much production or fielded aircraft through the forecast period.
One technology driving growth in the market right now is collaborative combat aircraft — drones used for combat — that will begin to represent a significant portion of the combat aircraft inventory by the late 2020s. We are projecting a CAGR of about 10% for Group 4 and 5 UAS (those with maximum takeoff weight of over 600 kilograms/1300 pounds).
Rotorcraft fleets are shifting as survivability concerns drive design changes
Conflicts including the Ukraine war and the US invasion of Iraq in 2003 have shown the vulnerability of helicopters in combat. As a result, some militaries, such as the US Army and Marines, are reducing their rotorcraft fleets. But services in other parts of the world, particularly the Middle East, are slowly increasing their fleets.
Meanwhile, some are financing R&D to produce faster helicopters and developing uncrewed and vertical takeoff and landing models to improve their survival. But the faster helicopters in particular may be limited by how expensive they look to be.
The bottom line: The military sector is going through rapid changes driven by new technologies, such as UAS, low-earth orbit satellites, and advanced air mobility, as well as emerging players, such as Turkiye, Brazil, China, and South Korea. Because of these trends, current market leaders will be confronted with a host of new challenges in the next decade.
