As the year draws to a close, listen in as editors from across the Aviation Week Network reflect on 2023 and share what they think lies ahead in 2024. 

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Rush Transcript

Joe Anselmo:

Welcome to our final Check 6 podcast of 2023. I'm Joe Anselmo, Aviation Week's editorial director and editor-in-chief of Aviation Week and Space Technology magazine.

We're going to end this year on a fun note. We've brought in eight of our editors and asked each to tell their biggest surprise in 2023 and to give u a prediction for 2024. Joining us will be Jens Flottau to talk about commercial aviation, Lee Ann Shay to discuss MRO; Steve Trimble, defense; Garrett Reim, space; Graham Warwick, technology and AAM; Michael Bruno, aerospace business; Molly McMillin, business aviation; and Guy Norris, whatever he wants to talk about because we know it will be brilliant.

Jens, let's kick off with you on commercial aviation. What was your biggest surprise in 2023? And give us a prediction for 2024.

Jens Flottau:

I guess my biggest surprise came with my interview with Guillaume Faury in June for the Paris Air Show when Tony Osborne and I went into the interview and expecting—don't want to be impolite— the usual predictions and so on, but he actually came in and said, "We've started preparing our A320neo-family successor." And he went into quite significant depth talking about 20 to 25% less fuel burn. He was talking about the open rotor concept, which he liked extremely much, and basically told us if Pratt wanted to be on that program, they needed to catch up with GE and also do an open rotor. That was, in hindsight, very, very significant among others, because many people obviously expect Boeing to move first, but now it's clear that Airbus is over  Boeing on two projects in parallel. One is the hydrogen aircraft and one is this more conventional aircraft replacing the A320neo.

Yeah, my prediction for next year is for airlines and it's not a happy one. My prediction is they will end up where they were before the big, long upcycle and obviously after the Covid disaster. If you look back 10 years and after the global financial crisis, airlines entered unprecedented profitability, then they entered a period of unprecedented losses and now they're kind of where they were. I mean there's good demand for air travel, but there are very narrow margins and high costs. So, nothing changed over the longer period and I guess that's not very good news.

Joe Anselmo:

Thanks, Jens. Lee Ann Shay, MRO. Biggest surprise of 2023 and prediction for next year.

Lee Ann Shay:

Thanks, Joe. Biggest surprise was the AOG Technics scandal. Now, who would've thought that the volume of suspected unapproved parts by one supplier would affect big OEMs, GE, CFM and major airlines? This was one company that did a lot of damage, but I think it was a wake-up call to the industry. Even if they have SMS systems and tight vendor control, these things can still happen. So, is it going to lead to bigger use of blockchain or other technologies to really track parts? That will be seen. I know a lot of companies are actively looking into more digitalization for their parts tracking, so stay tuned on that one.

For a prediction, maintenance capacity is tight around the world, for commercial aviation, for business aviation, and the maintenance market is still really fragmented. So, I think it's going to be ripe for further investment, further consolidation. Just look at Lufthansa Technik. They were looking for an outside investor to infuse some capital. They put out that announcement in 2020 in the middle of the pandemic and they needed cash. Fast-forward to recently when Lufthansa said “no,” they are going to remain the sole owner of Lufthansa Technik, and they plan on expanding it, maybe even adding a new facility in Europe. So, I think that's going to be indicative of the big are going to get bigger.

Joe Anselmo:

Okay, let's move on to defense. Steve Trimble, the floor is yours.

Steve Trimble:

Yeah, thank you. My biggest surprise was the F-35 program and the extent that they've dug themselves into a hole this year. The context for that is, they've been doing fairly well, right? They managed this epic production ramp-up up until a couple of years ago. Then Covid pandemic hit and that disrupted the supply chain a bit, and we knew all about that, but they seemed to be managing it okay. Then there was this big cockpit electronic upgrade called Technology Refresh 3, which introduced this very powerful new integrated core processor, a couple of other components and the software to run  these new components. These are going to enable this next generation of electronic warfare and radar and all these other mission systems that they're upgrading through the Block 4 program.

Well, all that was supposed to be ready by July, and it wasn't. So, the Joint Program Office for the F-35 has declined to accept new deliveries of aircraft with the Technology Refresh 3 hardware since July. Right now the current schedule is that they're not going to get the software certified as airworthy until April or June. But then we just heard from the program manager last week that he really has no confidence, or less confidence than he used to, in the schedule, because the ground labs that he's using to test that software aren't producing reliable results. So, the software will go into the ground labs. They'll run the tests, it comes out fine and they put it on the jet, and the software crashes. The jet doesn't crash, I should say, but the software crashes. The software programs crash and the jet keeps flying, but it has to reboot the software, but that's not acceptable to release to the fleet. So, they've got to get that fixed.

According to the JPO director, it's just not clear when that's going to happen. Part of that is that they don't have a flying testbed, it seems, a system integration laboratory that flies, like what they used to have with the CATbird, what the F-22 had with the 757 and that seems to have hamstrung their ability to get reliable results out of the software lab.

So that's one. Oh, and also, even if they had managed that software program correctly and gotten it done on time or basically on time, what we found out also last week, is that they're way behind on the production ramp-up for the hardware for TR-3. So, even if they had the software ready, they wouldn't have been able to deliver the number of jets they were supposed to deliver this year. That problem continues into 2024, so that'll be a big issue.

As far as my prediction for 2024, there's a lot of things to look at, but the biggest program that's out there, that's going to get decided that we know of will be Next Generation Air Dominance from the Air Force. This is essentially the F-22 replacement. The RFP was released in May 2023. Usually for these things, contract award is about a year later, ideally, although they usually get delayed. Now, I am not going to predict the winner of that program, because I don't know the requirements. They're all classified. I don't know the designs, they're also secret, and I don't know the pricing strategies. We know so little about this program. Any prediction is a wild guess by anybody who doesn't have a security clearance. Don't believe them if they are predicting something too.

But I will predict or at least say that there's a very high risk that this contract award gets delayed by several months or perhaps even longer than that, due to the dynamics of the U.S. election process. Typically, if these kinds of high-profile and very large and expensive contract awards seep into the last three or four months of the election cycle, then the final decision gets delayed until after the election. Just with the things that have been happening this year with the continuing resolutions, with the leadership holds that are now mostly lifted for the uniformed service members, but are still in place for the civilian leaders of the Air Force, it just seems there's just a lot of disruption and churn which could affect their ability to get that contract awarded on time. They do need to get that awarded by May to avoid any interference with the election cycle dynamics.

Of course, if it does get wrapped into that, there's always a potential in any election for an administration change. Then that brings a whole new set of dynamics and uncertainty to how they're going to pursue that contract award if something like that were to happen. So, that's the one thing I look out for in that program next year and we'll see what else happens, but that's the big prediction I'll make.

Joe Anselmo:

Okay, thanks Steve. Moving on to space. We have our early riser, Garrett. Jens is in Germany. Garrett's nine time zones behind him in Seattle. Garrett, first of all, thanks for starting work early today, but over to you to talk about space.

Garrett Reim:

Thanks. Yeah, good morning. My big surprise this year was the Space Development Agency launching its Tranche 0 satellites on time as they said they would. It's typical that satellites space launches get delayed, especially true with government launches. But I broke a story in March when I was speaking to Frank Turner, the technical director of the SDA at the satellite conference, asking when this first batch of demonstration satellites would launch. He said, "Oh, two weeks." I don't know what's manifesting and things are going really fast, so we'll see what happens. I think a lot of people were skeptical that  they were really going to launch in two weeks, but they did. They ended up launching roughly two weeks later on April 2nd. That was two and a half years after contract award, which was a pretty rapid turnaround and sets them up for a good start for that larger program.

These are demonstration satellites, communication and missile tracking satellites, the early pieces to prove out its larger military constellation called the Proliferated Warfighter Space Architecture. So, it’s quite an accomplishment to get that done, and especially that sprint in the last two weeks. My prediction for 2024 is that the Elon Musk-Jeff Bezos rivalry will heat up. We just saw last month that Bezos is moving to Miami. That'll put him closer to Cape Canaveral and help him keep a closer eye on some of the preparations for launching New Glenn. They say they want to launch New Glenn in August. Whether that happens or not is to be determined, but New Glenn, of course, is a heavy launch rival to Starship, which will be launching multiple times next year, SpaceX Starship.

Also, Kuiper is the Amazon broadband communications constellation, is getting going. That could be a serious rival to Starlink. Amazon has talked about the antennas for that, the user antennas, the terminals on the ground, costing them less than 500 bucks a piece, which really opens up the broader consumer market where Starlink is playing, and really no other satellite internet company is operating in that space. Their terminals cost much more. Then, just recently Amazon announced that it had transferred data across its two prototype Kuiper satellites using laser communications. We haven't seen a lot of news or disclosures on SpaceX as part with Starlink. We really don't know the status of the Starlink laser communication system, so I expect you'll see those two billionaires going head-to-head.

Joe Anselmo:

Okay, thanks Garrett. On to the dean of this group, Graham Warwick. Graham, you've been covering this industry since Jimmy Carter was president. You've seen a lot of New Years come and go. What do you have for us?

Graham Warwick:

I actually met Jimmy Carter on a Delta Air flight when I lived in Atlanta. Okay, so I was thinking about this over the weekend, and I thought I would talk about what I think have been some pretty significant quite fast technical advances in hydrogen fuel cell and battery technology. Again, this is basically just taking automotive technology and applying aerospace engineering to it. We've seen the results this year, we've seen first flights of big hydrogen fuel cell-powered airplanes. We've seen some pretty significant improvements in the basic technology through the year. Similarly with batteries, there's been a lot of talk of advanced batteries for decades and they never seem to get anywhere. Then, in this past year, we've seen some advanced battery chemistries get to the point of commercialization, with aviation now being the early target market where you can get the industrial payer premium and you can get these things into production, and then you can chase the electric vehicle market in the long term.

But in the end, I decided I've been doing this for 45 years, nothing surprises me, and I basically decided it's fun. All these technical breakthroughs are fun, but in the end it gets down to the grind of certification. We've seen that this year as well. These companies that began as startups and made some real sort of news, built some hype, have now got their noses firmly to the grindstone as they try to get it to certification. It's just a grim grind, and it just drags the pace of everything down. We do it to make things safe, but it means everything slows down.

My prediction for 2024 is that it is not going to go the way people want it. There'll be folks that don't stay on their certification tracks and don't meet their deadlines. There are probably some of the folks inadvanced air mobility that will have some serious funding issues during 2024.

The whole industry that kind of started off trying to disrupt aviation, and ultimately will when they get these vehicles in it, isn't really disrupting how we do aviation. When you get to certification, there is no alternative but to do the work. That's kind of what we saw start in 2023 and will definitely be the flavor of the day as we go into '24. There is no way around it. We've got to do the work if we're going to get these things into service. I just don't think it's going to happen at the pace that these companies set out trying to achieve.

Joe Anselmo:

Okay, thanks Graham. Moving on to Michael Bruno, our executive editor for business, who probably has the most horizontal job at Aviation Week, covering lots and lots of facets of this industry. Michael, actually, I just realized next year will be your 20th anniversary with Aviation Week. So, you've been doing this a while too, just like the rest of us. What was your biggest surprise in 2023?

Michael Bruno:

Thanks, Joe. My biggest surprise in 2023 had to do with the defense and space sector as a business marketplace. If you rewind the tape a while, and I know we're all tired of talking about the COVID-19 pandemic but I think it's worth remembering that during the pandemic, the defense and space side, particularly defense contractors, received an awful lot of government support. It was bipartisan, for sure, so let's get that out of the way. But there was a real concern that the defense industrial base was going to crater, maybe alongside the commercial aerospace side. And so there was a lot of money pumped into the defense industrial base. For the most part, they actually initially looked like they were coming out of the pandemic as a more solid, more reliable, more stable business than the commercial aerospace side.

You fast-forward to 2023 and it's rather remarkable, you look at the quarterly business results, we haven't quite gotten to the end of the year for 2023, so we don't know the full year results, but we have a really good idea, looking at the first nine months, and it's just not been going very well for defense and space companies. For public companiesif you look at the stock results to date, if you're a defense and space legacy provider, as a whole that basket of stocks is up only 3% on the year. The S&P benchmark itself was  up 23%. Then the commercial aerospace market, all the companies that aren't really defense primes or necessarily sending satellites into space, those companies were all up 33%.

Now, it's just one way to look at the health of these companies, and for sure the stock market is a forward-looking entity. They're always looking for the next big opportunity and growth, but it's just remarkable to look back and say, "Why aren't defense and space companies doing better?" The money coming out of Washington and other governments is at record highs and expected to keep growing. There have  been many billions of dollars pumped into the space sector to make it a viable marketplace. There are a lot of good questions about why isn't it doing better? We're starting to hear some of the answers, and some of it revolves around the usual suspects you might expect: the cost of labor, cost of raw materials, inflation costs, cost of capital. It just costs more money to get money. As we all know, defense and space require a lot of money to begin with.

But there's a more nefarious problem that is probably going to get unearthed as time goes on, and that is just program execution and program management. Steve Trimble talked about this with the F-35 a little bit. This is a program that's been around a couple of decades. You'd think they'd be at practically full-rate production by now and raking in the dollars, but they're not. For the second year in a row they're having to lower their forecast. So, some issues are going to continue to haunt defense and space as a marketplace.

Looking to 2024, my prediction now goes to the other side of the industry. I want to talk about commercial aerospace for a moment. We came out of the pandemic and commercial aerospace was hurting, and it was a bit surprising over the past couple of years that there wasn't more acrimony and there wasn't more finger-pointing as the commercial aerospace side tried to get its act together and recover from what was essentially a two-year drop in making aircraft and doing most of its legacy work.

I think there was a spirit, for the most part, that everybody was suffering, "We're all in this together and we're a team and you can't produce an aircraft if you don't have all the parts. So, we got to get everybody on the team going again." There was a bit of comradery there. And esprit de corps. Well, looking into 2024, that esprit de corps seems to be breaking up and falling away, and it could do so rapidly. We're starting to hear of more disagreements within the supply chain between OEMs and Tier ones, and Tier ones and Tier twos. You see these little examples pop up. Just in recent months you had General Dynamics complain about Honeywell. Boeing practically celebrated when Spirit AeroSystems changed its CEO.

On the defense side you've got a growing legal fight between Lockheed Martin and Howmet Aerospace over titanium, and that's going to come back and probably affect the rest of the marketplace too. So, looking into 2024, it's going to be a year of airing grievances, I think. It'll probably get a little worse before it gets better, but I wouldn't exactly say it's going to derail the supply chain, but it's going to sure sound like the family's having some disputes.

Joe Anselmo:

Okay, thanks Michael. On to Wichita and our veteran business aviation correspondent, Molly McMillin. Molly, I do have to let our listeners know that you were honored by NBAA this year with their top journalism award, the second year you've won that. Congratulations.. What was your biggest surprise this year?

Molly McMillin:

Thanks, Joe. I think one big surprise was the announcement that NetJets with its  record-setting fleet agreement with Textron Aviation for options for up to 1500 Cessna Citation Ascend, Latitude and Longitude twinjets over the next 15 years. So, that shows a lot of long-term confidence in the market, and certainly a record.

Another surprise might've been how well the manufacturers’ order books held up in 2023, and so did values. The big business aviation manufacturers are holding order books that are stretching 18 to 24 months and beyond, depending on the model. So, I think those were good things in the year, and surprising.

Some predictions, something to watch in 2024 will be whether the orders weaken. This year may finally answer the question, the stickiness question on those who entered the industry during the pandemic, whether they will remain long-term. Some of them will. Supply chain issues, as Michael Bruno pointed out, will continue to be an issue as Textron CEO Scott Donnelly said on a third-quarter call, that you need every single part, you can't be missing one part to deliver an airplane. So, that will still be an issuethis coming year.

FAA reauthorization will also be important, as Graham points out, that the FAA needs to be in full force to be able to certify what they need to get done. The big key will be sustainability and the industry sustainability image. In 2023 NBAA and some others got together to change a long-term advocacy campaign from, "No plane, no gain," to, "Climbing fast with sustainability at its center." So, I think we're going to hear a lot about sustainability in 2024.

Joe Anselmo:

Okay, thank you Molly. Guy Norris, those were seven hard acts to follow, but I know you're up to the task. What was your biggest surprise in 2023?

Guy Norris:

Well, I think so far the biggest surprise is I've got to the end of the session here and nobody's actually said what I was thinking, might be the biggest thing. But I was sort of holding my breath there, because this is all unscripted as everybody who was our listeners might have guessed by now. So, none of us agreed beforehand, as far as I know, to avoid stepping on anybody else.

Anyway, the thing that really kind of surprised me was the decision of the Air Force to get together with this California startup JetZero, and give the go-ahead to a blended-wing body after all these decades. The thing about that, obviously, is we've been writing about this for as long as the concept's been out there, but the fact is, somebody's going to finally be giving it a go. I can't wait to see the thing be put together, but it's got obviously advantage potential for the commercial and the military side. So anyway, I thought that was a great positive for the year. I love the fact that's going to happen.

Sort of a corollary to that, is the adoption for the Pratt and Whitney geared turbofan, bless it. It's having its troubles as we all know, but it's very interesting to me that it's been selected for both this BWB concept demonstrator and of course the NASA Boeing X-66A. It's kind of strange, isn't it, that the engine that's been having the most problems is the one to adopt for the future for these demonstrators. So, I think those are kind of interesting developments this year.

Looking ahead, again, my thoughts very much toward the world of propulsion, and I think that one thing that might be happening, is Rolls has been in the world of hurt as we know. It is undergoing  a strategic realignment. I thinkin 2024  one of the things that might emerge out is this new partnership on a new family of UltraFans to take on the might of CFM with the RISE program. Who's going to be involved? That's a good question. You've got to really dig around to find it.

But this brings me to my second point on propulsion, which I also see is under great change at the moment. The old world that we've been used to for the past 70 years of jets is maybe under some sort of change. We've seen that with the emergence of Boom's supersonic engine team that's coming out of nowhere. Are we seeing the same sort of things? Are we going to see Tier One players taking a more active role in these programs? So anew UltraFan team could involve people that have never been right up there before. Anyway, those are my thoughts for '24.

Joe Anselmo:

Well, that's a nice bang to round us out with, and we'll see how that all plays out. But I wanted to thank all eight of you. As Guy said, this was completely unscripted. None of us knew what anyone was going to say, sort of on purpose, to make it more dynamic and some really insightful stuff.

Every one of you is hardworking, dedicated, and smart, and it is really a privilege to work with all of you, and looking forward to many more dynamic Check 6 podcasts in 2024.

But for now, that is a wrap for 2023 Check 6 podcasts. Thanks to our podcast producer in London, Guy Ferneyhough, and a special thanks to our listeners for making Check 6 a successful podcast.