North American Aviation, Aerospace and Defense is flourishing in 2025. US businesses are leveraging new technologies, innovative tactics and strong partnerships to address the sector’s most discussed challenges.  

However, cost and resource pressures have seen critical risks neglected for too long. Without facing several uncomfortable truths, the industry’s security, financial stability and growth opportunities hang in the balance.

 

Unprecedented Growth in the US Aviation, Aerospace and Defense Market

●      The United States Aviation market is projected to grow from $86.7 billion in 2025 to around $105 billion by 2030, at a compound annual growth rate (CAGR) of 3.9%.

●      Commercial passenger traffic is expected to grow by 4.7% annually, with Revenue Passenger Kilometers (RPKs) rising by 25.6% from 2025 to 2030.

●      The US Aerospace and Defense market is valued at $525.16 billion in 2025, and is projected to reach $694.86 billion by 2030, with a CAGR of around 5.8%.

●      The North American Defense sector is anticipated to reach $447.31 billion by 2033, growing steadily at a CAGR of about 4.01% from 2025 to 2033, driven by active military contracts and modernization investment.

●      The Unmanned Aerial Systems (UAV) sector is expanding fast, with registered commercial UAVs expected to grow from 338,614 in 2025 to 858,000 by 2026, due to large-scale adoption by both Government and commercial customers.

 

 

 

The Unspoken Challenges Facing US Aviation, Aerospace & Defense Leaders

Cyber Security Blind Spots Due to Complex Infrastructure & Supply Chain Fragility

The North American Aviation, Aerospace and Defense sector faces some of the world’s highest frequencies of cyber security threats: 

●      Reported cyber security incidents have soared by 300% from 2018 to 2024, with the average breach costing $5.46 million.

●      Aviation saw 27 major attacks between January 2024 and April 2025, mostly driven by state actors and advanced ransomware groups, with Aviation ransomware attacks alone increasing by 600% year-on-year.

●      72% of recent incidents in global Aerospace and Defense were caused by cyber espionage, compared to 17% caused by cyber crime.

 

Underreported Cyber Security Risks in Operational Technology and Base Infrastructure

The sector is consistently targeted by sophisticated, state-sponsored espionage and ransomware activities.

Once-isolated military bases and operations are now closely interconnected within civilian infrastructure, and foreign adversaries are increasingly embedded in critical North American infrastructure. Disruptive attacks that cut off power and essential services for both the industry and the general public are growing in likelihood, severity and difficulty to anticipate.

Complex fragmented systems naturally widen the threat of exposure. Many post-pandemic recovery strategies have still yet to incorporate crisis continuity plans into risk frameworks, particularly concerning the remote monitoring of and threat detection in critical systems and technologies.The rapid expansion and frequent lack of robust oversight of unmanned aerial systems and Electric Vertical Take-Off and Landing (eVTOL) aircraft pose fundamental operational and security risks. 

 

 

Lack of Collaboration Fueling Threat Intelligence Gaps

Most attacks on the operational technology that controls critical infrastructure are never disclosed or even recognized. Lack of incident sharing and reporting is keeping vulnerabilities hidden and creating a false sense of security. Upon incident recognition and response, threat intelligence and security practices are improving only locally, with intelligence not shared and actioned nationally. 

Although the average US Aerospace business works with over 200 Tier 1 suppliers and can call upon 12,000 other suppliers in its network, many sub-tier suppliers are dependent on contracts with one or two dominant Tier 1 suppliers; if just one major supplier changes requirements, quality and therefore safety and security are threatened. A highly complex supply chain under severe pressure to cut costs and delivery times presents challenges for resilience and compliance with security frameworks.

 

Weapons System Vulnerabilities

As the industry grapples with cyber threats, actual weapons systems suffer from a lack of attention. Following deployment, weapons platforms are all too often neglected for years without re-evaluation.  

Investment and innovation in operational cybersecurity lags behind that allocated to nuclear weapons, aircraft and submarine production. Limited budgets and long acquisition cycles are enforcing the continued use of obsolete platforms and equipment even when modern alternatives are readily available.

 Multiple recent ethical hacker tests have uncovered critical vulnerabilities that official checking measures do not detect. Major security gaps exist in applications, networks and systems that have already passed through compliance. Standard scans appear to miss zero-day vulnerabilities in software and issues in more complex systems, therefore underestimating risk.

 

James Taiclet, CEO of Lockheed Martin:

“21st century security is about delivering more advanced capabilities with greater speed, resiliency and interoperability for integrated deterrence, and to ensure the success of our forces if deterrence fails. We strongly advocate three key priorities to help the industry achieve this goal:

●      Applying the concept of anti-fragility to rapidly ramp up production of key systems in an ever-evolving global security landscape

●      Aggressively accelerating digital technologies through a standards-based, modular open architecture approach that allows the United States, international allies, Defense suppliers and start-ups alike to work from the same framework with greater interoperability across armed services

●      Increasing collaboration with allies and partners by establishing key production and sustainment facilities in trusted allied nations.”

 

Kathy J. Warden, CEO & President of Northrop Grumman:

“American Aerospace is a significant target for adversaries, nation states and criminal behavior. Space is getting more crowded: the first and foremost issue is safety. Assets in space were thought to be some of the most protected and resilient; that’s no longer the case. We can’t take distance as a method of security and resiliency, so other ways have to be developed. Cyber security is a constant boardroom topic and a critical area for focused investment.

“It’s not a single threat, and that’s the largest threat in and of itself. As a nation and with our allies we must spread the resources of our intelligence and military apparatus across a wide spectrum of threats, at speed, to stay ahead.”

 

Supply Chain Complexity & Lack of Transparency Causing Security & Quality Issues

The increasingly present threat of cyber attacks on key infrastructure is exacerbated by a growing influx of unauthorized aircraft and vehicle parts. Despite efforts to strengthen environmental standards, electronic waste continues to slip into the grey market, providing counterfeiters with a steady supply of discarded chips, boards and components. 

Counterfeit manufacturing is becoming more sophisticated, rendering some fake components almost indistinguishable from legitimate parts. Quality issues are remaining undetected and unaddressed until critical incidents occur. Although often produced using the same intellectual property as compliant manufacturers, the absence of assessment against the industry’s rigorous safety standards, combined with lack of traceability in manufacturing and storage, means counterfeit parts present a major risk to both civilian and military safety.

 

 

The Federal Aviation Administration (FAA) estimates that 520,000 counterfeit or unapproved parts are installed on North American aircraft annually, representing 1 in 50 of all components. Counterfeit manufacturing is prospering, with several established Aviation leaders falling victim to non-compliant suppliers last year:

●      A 2024 FAA investigation revealed that some Boeing and Airbus aircraft contained titanium parts supplied with fraudulent documentation that raised doubts about their origin.

●      US carriers operating Boeing 737 and Airbus A320 family jets were forced to remove more than 100 planes from service after discovering counterfeit CFM engine components with forged documentation. Some used parts were wrongfully claimed to be new.

●      Aviation Business News has regularly reported on the high volume of fraudulent paperwork for engine and electronic components installed on US commercial and military aircraft in the past year.

 

Robert Isom, CEO of American Airlines:

“It’s never been harder to operate an airline. Supply chain difficulties around aircraft and engine manufacturing represent the industry’s biggest risk. Post-Covid, we’re dependent on a supply chain that hasn’t come back to where it was in 2019.”

 

Danny Brooks, Founder and CEO of VHR:

“The United States is rising to multiple supply chain challenges simultaneously - aggressive competition, severe budget constraints and rapidly evolving emerging technologies - but supplier collaboration is vital to a long-term solution. New approaches to system vulnerabilities, the formation of better authentication standards and greater parts sourcing traceability are only possible with transparent partnerships. The American Department of Defense, commercial technology providers and the industry itself can work together to lead innovation and interoperability advances.”

 

Impending Crisis Awaiting Innovation Opportunities Due to Insufficient Investment

Lack of Investment in Research Limiting Manufacturing Innovation

Defense leaders are scaling up procurement programs for AI-enabled assets and autonomous platforms, and the US Government is allocating investment in digital and sustainable Aerospace technologies. However, recent headlines on leading innovation neglect to mention the chronic underfunding of basic Aerospace research and the decline in US Aerospace innovation output. Post-pandemic recovery focus, regulatory hurdles and the historic underinvestment of emerging technologies have limited the progress of industry R&D. 

The American Institute of Aeronautics and Astronautics has expressed ongoing concerns around stagnation in research investments relative to rising international competition. In comparison to other global leaders like China and the UK, United States Aerospace R&D intensity has either stagnated or declined. Whereas America has historically led in innovation investment, other nations are rapidly closing the gap with sustained growth in Government and corporate R&D spending.

 Whilst federal funding for R&D is generally growing, potential upcoming budget cuts could damage long-term R&D, which is already challenged by a complex funding environment, threatening US leadership in Aerospace and Aviation technology.

 

 

Dave Calhoun, CEO, Boeing:

“There is no delicate way to talk about this. Documentation now takes longer. If I thought there was an engine out there that would give me 15% fuel-burn improvement, or an engine that was going to get certified with an open architecture in the next 8-10 years, that’s what I would be working on. I don’t believe that’s going to happen. We need to build the foundations first.”

 

Ageing Fleets Creating Costly Delays and Impacting Resources for Innovation

Lack of investment in fleet upgrades is already harming current ability to meet demand and threatening future expansion opportunities. Whilst average global fleet age has risen from 13.6 years during 1990-2024 to around 14.8 years in 2025, the United States is operating with even older fleets. The average age of a North American commercial airline fleet is around 15 years, with some legacy fleets still in operation at over 30 years old. 

Recent supply chain issues and production delays have slowed new aircraft deliveries, forcing airlines to rely on older aircraft models and increasing maintenance demand. Fleet aging is driven by delays in new aircraft deliveries, supply chain bottlenecks, and extensions of service life to compensate for delivery shortfalls. To return the average fleet age to pre-pandemic levels by 2033, the industry would need up to 10% more narrow-body aircraft and up to 40% more wide-body aircraft deliveries than forecasted.

 

Airbus CEO Christian Scherer:

“We are missing engines - we have nearly 40 gliders parked at our sites. Supply chain disruptions have caused Airbus to fall short of its annual delivery target of 820 aircraft in 2025, with deliveries down 5% year-to-date compared to last year. Without these engineless aircraft, our deliveries would be slightly higher than currently forecast.

“There is a gradual increase in the output of engines. The situation represents a gradual increase: we’re a little behind the curve at the moment, but we are cautiously hopeful that it can be done. A lot of things have improved in the supply chain, but ongoing work is needed to resolve engine and cabin equipment bottlenecks to meet our delivery goals.”

 

Chronic Skills Shortages Worsened by Industry Talent Drain

Supply chain disruptions are further complicating workforce planning and operational efficiencies at a time of scarce resources. Despite greater investment in recruitment strategy and workforce readiness programs, skills shortages are already impacting manufacturing, maintenance and innovation across the sector:

●      67% of Aerospace and Defence leaders report attracting and retaining qualified talent as a primary business challenge.

●      The industry’s employee turnover rate of 13% is more than three times higher than the North American average of 3.8%.

●      The Aerospace Industries Association Spring 2024 workforce study revealed that 25% of the sector’s workforce is at or near retirement age.

●      38% of US pilots are over 50 years old, meaning commercial Aviation will see large retirement volumes in the next decade.

●      16,000 North American semiconductor engineers at Master’s and PhD level are leaving the US every year.

●      McKinsey reports that the talent drain is costing the average medium-sized Aerospace and Defense business $300–$330 million every year.

 

Eric Fanning, President and CEO, AIAA:

“The American Aerospace and Defense industry continues to lead in innovation thanks to the power and ingenuity of our workforce – but talent challenges are growing more complex. Companies are looking for specific skill sets: often the pool of applicants is very limited. There are not enough people studying engineering to fill the jobs of the future.

“To remain a global leader, we must take bold, strategic action to attract, retain and empower the next generation of talent. That means investing not only in people, but in the technologies and partnerships that will secure our industry’s resilience and competitiveness for decades to come.”

 

The US military is facing particular difficulties in attracting younger talent. Fewer than 1 in 4 young American adults are currently physically and mentally qualified to join the military, and around 20-25% of new soldiers are leaving within the first two years. Although pandemic-related education disruption has impacted academic readiness, cultural shifts are a large contributor to the shrinking pool of Gen Z talent. 87% of 16-21-year-olds are either unlikely or definitely not considering military service, due to lower patriotism, preferences for more rapid career progression and lack of awareness of the variety of career paths available.

North American Defense shortages are especially acute in technical skills, with the sector facing high demand and low supply for intelligence analysts, cyber security specialists and engineers across specialisms.

 

Specific Skills Gaps in US Aviation, Aerospace & Defence

●      Commercial Aerospace will require an additional 123,000 technicians across fields to meet demand by 2045.

●      The United States is projected to lack 25,000 aircraft technicians by 2028.

●      The sector will need 130,000 new pilots by 2040 to replace retiring pilots and deliver on rising customer appetite for air travel.

●      North America already requires 3,800 new Aerospace engineers across mechanical and materials engineering, with the gap predicted to worsen due to the ageing workforce and subsequent retirements.

●      The US semiconductor workforce is expected to grow by 33% by 2030, with 58% of all jobs, representing 67,000 workers, at risk of going unfilled.

●      Only 23 out of 313 FAA facilities meet their target staffing levels for air traffic controllers, with 4 in 10 ATCs working six days a week for 10 hours each day to cover staffing gaps. The FAA plans to hire 8,900 new controllers by 2028 but faces major difficulties with high attrition dates due to time-intensive training and certification.

 

The Solution to the Sector’s Toughest Challenges - Finding the Right Partners to Shape the Future Workforce

 

Danny Brooks, Founder and CEO of VHR:

“The fastest-growing Aviation, Aerospace and Defence businesses in North America are fundamentally changing their approach to building their workforces. Sector leaders are investing in apprenticeship programs and practical-based training to attract new talent and rapidly develop technical skills.

“Leveraging emerging technologies is minimizing productivity impact in the immediate term, but partnerships are vital to help the industry source fresh talent to fill widening labour gaps. Specialist partners with in-depth industry knowledge are best placed not only to recruit into technical and executive teams, but to serve as expert advisers for future workforce planning and business expansion.”

 

VHR partners airlines, MROs and OEMs worldwide to find and create high quality Aviation, Aerospace and Defense talent. Discover how we’re helping North American industry leaders overcome the sector’s greatest challenges.