Austerity Measures Threaten to Clip Wings of Dutch Air Market

Since the early 1990’s, the Netherlands Defence Force (RNlDF) has been undergoing restructuring and fleet rationalisation, which has made the Dutch defence market more difficult to break into. As the market evolves, participants will need to be flexible and adapt to changing end-user demands. 


New analysis from Frost & Sullivan, “The Netherlands Air Market – Revenue Opportunities and Stakeholder Mapping”, finds a total market size of nearly $5.82 billion for air programmes over the forecast period of 2011-2020. Diverse opportunities will arise across all platform segments, although more so in the long-term. The research covers manned and unmanned platforms (including support-in-service (SIS), upgrades, and new procurements), and C4ISTAR and training and simulation (T&S). 

“While Netherlands’ current engagement in Afghanistan might be coming to an end, Frost and Sullivan understands that the country will continue to participate in both future missions (including anti-piracy) to protect its national and international interests, thus keeping the door open for new products and services,” notes Frost & Sullivan Consultant Aman Pannu. “Opportunities within the Dutch defence market will not be limited solely to end-user requisition; instead it will be an interesting market that offers growth potential for innovative products, solutions and business models.” 


Opportunities within the Netherlands air market are driven by both upgrades (for existing platforms) and new procurements (manned and unmanned platforms). Replacement of F-16s is expected to drive demand in the second half of the decade, with diverse opportunities for the industry, including support-in-service (SIS) activities. Unmanned Aerial Systems (UAS) are integral to the 2011 defence review, and they will establish concrete opportunities across this market.


“Cuts in the defence budget and its aftermath are expected to continue in to the later years of this decade; however, projects critical to the sustainment of air superiority of the RNlDF are expected to materialise, albeit a bit delayed and / or reduced in size,” adds Pannu. “Opportunities across UAS are primarily in the second half of the forecast period, extending into the next decade.” 

The Dutch economy is slowly getting back on track, although a complete recovery is not expected in the short-term. The lack of funds will be a major restraint during the forecast period. Defence companies must ensure low-cost offerings, since absolute cost of equipment will emerge as one of the prime decision-making factors. 


“The increasing benefits of commercial-off-the-shelf (COTS) products will tempt the Government to reduce initial funding to develop a product prototype,” cautions Pannu. “In the future, companies will have to self-finance prototype development. This factor could have an impact on companies with tight cash flows.” 


The RNIDF has repeatedly been subject to restructuring and force rationalisation. However, the challenging economic times have made this initiative more pressing. There is now an increased push to optimise operational capability with a reduced fleet size. F&S research indicates that defence end-users are moving towards reducing the platform types and numbers, while still aiming at quick response times and enhanced interoperability. 


“The real question now, therefore, is not ‘JSF or XYZ platform’, but ‘how many aircraft are needed’ to meet the operational commitments for Netherlands to sustain itself at national and international level?” concludes Pannu. “At present, the number stands at 50 (down from the original 85). The industry needs to align itself to address these challenges by exploring opportunities across the entire value chain.” 

“The Netherlands Air Market – Revenue Opportunities and Stakeholder Mapping” is part of the Aerospace Growth Partnership Service programme, which also includes research in the following markets: World Commercial Avionics Markets and ROSM – Global Commercial Aircraft Programs – Revenue Opportunities and Stakeholder Mapping. All research included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.