The strong defense presence at international air shows means their significance in terms of military strategy and diplomacy is always at least as great as the potential for commercial advancement. The extreme tensions across the Middle East unleashed by Hamas’s October 7 attack on Israel makes it more true of almost any Dubai Air Show since the 2001 event held just weeks after the 9/11 terror attacks on the U.S.
The circumstances underscore the prominence of the U.S. industry’s presence at the 2023 Dubai show, where some 180 American companies exhibit on-site, alongside other major national industry groups such as GIFAS from France and the UK’s ADS. In an interview ahead of the event, Eric Fanning, president and CEO of the U.S. Aerospace Industries Association, acknowledged the importance of a strong presence to signal abiding support for key allies like the UAE at a time of grave instability.
“The lesson of what’s happening right now is that we can plan for scenarios and focus on certain parts of the world, but at the same time our adversaries get a vote on where we need to dedicate our attention,” Fanning told AIN in a pre-show interview. "I’m not aware of the world previously having so many issues that we need to pay attention to: Russia invading Ukraine; our efforts to have the strongest deterrents possible [given the] Chinese scenario; and the Hamas invasion of Israel.”
While soaring demand for military hardware and services at times of tension might, superficially, appear good for business, it doesn't come without its challenges, and for U.S. companies they include ongoing domestic political paralysis. For AIA members, their ability to respond to shifting military imperatives is founded in dealings with their undisputed key customer, the U.S. government. Fractious relations in Congress and with the executive branch continue to complicate that relationship.
Inconsistent shifts over recent years in Pentagon spending, combined with ongoing post-Covid supply chain difficulties, have made it hard for the U.S. military to sustain a surge in output. AIA remains concerned about the prospect of another federal government shutdown if the current stop-gap budget agreement isn’t extended or replaced when it expires on November 17.
“It is important for the U.S. government to always remember that they have stewardship of this industrial base,” Fanning commented. “The signals that they send shape that industrial base. It has taken years to get it to where it is now, which is a very efficient base built for a different type of conflict with a different type of duration. So to have all these conflicts spike simultaneously has put a spotlight on the fact that the U.S. hasn’t consistently invested in the base to ensure there is capacity when it is called on.”
At the same time, AIA is concerned that inflationary pressures could worsen the pressure on the defense supply chain. “The industry can be more agile on inflation on the commercial side than on the defense side,” Fanning commented. “Some [companies] may go out of the defense business saying that the government hasn’t fully accounted for the impact of inflation so we can’t afford to do these contracts.”
Decarbonization Can Be a Competitive Edge
No less challenging is the existential threat to air transportation posed by the climate change crisis and the legal-binding global agreements to achieve net zero carbon no later than 2050. But here too lies opportunity for American aerospace companies and their competitors around the world.
AIA expects its member companies’ redoubled efforts to decarbonize aviation through new propulsion technologies, composite materials, components, and fuels will be much in evidence at the Dubai Airshow. The trade association sees the effort as an opportunity to gain a competitive edge as the global industry scrambles to deliver first incremental, and then transformative, paths for airlines to turn their fleets "green."
In its view, that challenge also demands consistent, strategic backing from governments, balancing the supply of carrots to incentivize the industry to do the right thing for the planet, with sticks to cajole companies into compliance. “If you just use the stick you will stifle innovation,” Fanning warned.
That said, Biden Administration initiatives in decarbonization do seem to have provided a stimulus to industry, although AIA and its members still see scope for more targeted support. “For example, we’ve been advocating to get back to the old research and development investment schedules where every dollar you put in can get a tax credit so that it can be amortized in that year; right now it’s amortized over five years,” said Fanning, who contrasted current U.S. tax policies with that of China where the government essentially allows two dollars in tax credit for every dollar invested and this applies in the current tax year.
The strong defense presence at international air shows means their significance in terms of military strategy and diplomacy is always at least as great as the potential for commercial advancement. The extreme tensions across the Middle East unleashed by Hamas’s October 7 attack on Israel makes it more true of almost any Dubai Airshow since the 2001 event held just weeks after the 9/11 terror attacks on the U.S.
The circumstances underscored the prominence of the U.S. industry’s presence at the 2023 Dubai show, where some 180 American companies signed up to exhibit on-site, alongside other major national industry groups such as GIFAS from France and the UK’s ADS. Eric Fanning, president and CEO of the U.S.-based Aerospace Industries Association, acknowledged the importance of a strong presence to signal abiding support for key allies like the UAE at a time of grave instability.
“The lesson of what’s happening right now is that we can plan for scenarios and focus on certain parts of the world, but at the same time our adversaries get a vote on where we need to dedicate our attention,” Fanning told AIN ahead of the show. "I’m not aware of the world previously having so many issues that we need to pay attention to: Russia invading Ukraine; our efforts to have the strongest deterrents possible [given the] Chinese scenario; and the Hamas invasion of Israel.”
While soaring demand for military hardware and services at times of tension might, superficially, appear good for business, it doesn't come without its challenges, and for U.S. companies they include ongoing domestic political paralysis. For AIA members, their ability to respond to shifting military imperatives is founded in dealings with their undisputed key customer, the U.S. government. Fractious relations in Congress and with the executive branch continue to complicate that relationship.
Inconsistent shifts over recent years in Pentagon spending, combined with ongoing post-Covid supply chain difficulties, have made it hard for the U.S. military to sustain a surge in output. Also bringing uncertainty had been stop-gap budget funding.
“It is important for the U.S. government to always remember that they have stewardship of this industrial base,” Fanning commented. “The signals that they send shape that industrial base. It has taken years to get it to where it is now, which is a very efficient base built for a different type of conflict with a different type of duration. So to have all these conflicts spike simultaneously has put a spotlight on the fact that the U.S. hasn’t consistently invested in the base to ensure there is capacity when it is called on.”
At the same time, AIA is concerned that inflationary pressures could worsen the pressure on the supply chain. “The industry can be more agile on inflation on the commercial side than on the defense side,” Fanning commented. “Some [companies] may go out of the defense business saying that the government hasn’t fully accounted for the impact of inflation so we can’t afford to do these contracts.”
Decarbonization Can Be a Competitive Edge
No less challenging is the existential threat to civil aviation posed by the climate change crisis and the binding global agreements to achieve net zero carbon no later than 2050. But here too lies opportunity for American aerospace companies and their competitors around the world.
AIA expects its member companies to redouble efforts to decarbonize aviation through new propulsion technologies, composite materials, components, and fuels. The trade association sees the effort as an opportunity to gain a competitive edge as the global industry scrambles to deliver first incremental, and then transformative, paths for airlines to turn their fleets "green."
In its view, that challenge also demands consistent, strategic backing from governments, balancing the supply of carrots to incentivize the industry to do the right thing for the planet, with sticks to cajole companies into compliance. “If you just use the stick you will stifle innovation,” Fanning warned.
That said, Biden Administration initiatives in decarbonization do seem to have provided a stimulus to industry, although AIA and its members still see scope for more targeted support. “For example, we’ve been advocating to get back to the old research and development investment schedules where every dollar you put in can get a tax credit so that it can be amortized in that year; right now it’s amortized over five years,” said Fanning.