Global revenue in the aircraft relay and contactor market has declined by more than 20 percent as a result of the ongoing Covid-19 pandemic. The market decline is expected to stabilize in 2021, followed by impressive growth in 2022, thanks to several factors, including an increase in air passenger traffic and a gradual rise in monthly aircraft production rate.
Last year was difficult for all countries and economies around the world. Industries such as tourism, hospitality, manufacturing, etc. were severely affected, and among the ones taking severe blows is the airline/aviation industry. The Covid-19 pandemic has led to the grounding of the majority of airlines’ fleets across the world, which has severe repercussions on the global aircraft industry, subsequently, causing disruption in the entire supply chain.
In the aircraft industry, electrical systems are considered the most essential and integral part of an aircraft as these systems ensure smooth power supply to the necessary aircraft systems. These electrical systems are capable of power generation, distribution, conversion, and energy storage.
The power distribution systems consist of relays and contactors. Generally, contactors are part of the primary power distribution system, while relays are part of the secondary power distribution system. Relays and contactors are electromagnetic switches and protect the electrical systems from arc faults and overloads. They are used to operate contact terminals and transmit power from one electrical device to another.
There is an increased interest in smart relays and contactors incorporating electronic intelligence and sensing capabilities which help prevent arc default and system failures. As compared to the capabilities of traditional relays, smart relays stand distinguished because of their capacity to store and process the measured data. Since these are programmable devices, the monitoring and controlling of some smart relays( like the Zelio Logic by Schneider Electric) can even be done remotely through mobile phones easily.
Market developments
The demand for aircraft production drives growth in the aircraft relay and contactor market. Factors such as aircraft fleet size and adoption of relays and contactors greatly influence the demand.
Like the supply chain in other industries, it has been affected negatively due to the Covid-19 pandemic, resulting in the termination of projects, halted manufacturing, limited production capacity due to safe-distancing measures, and reduced travel due to government-enforced lockdowns, eventually leading to a decrease in demand for aircraft. This impacts the entire aviation industry supply chain, consisting of raw material suppliers, relay and contactor manufacturers, distributors/part brokers, tier players, aircraft OEMs, MRO companies, and aircraft leasing companies.
But there is a bright spot in the market. There is an inclination towards more electric aircraft thanks to several factors – improved safety, weight reduction, smaller volume, and reduction in fuel consumption and emissions. Furthermore, the advancements in the design of relays and contactors to fulfill the size, weight, and power (SWaP) requirements along with enhancements in sensing and monitoring capabilities to improve efficiency have elevated the demand for electrical components including relays and contactors.
(Image: StratView)
The market is fairly consolidated with the top five players accounting for 65.5 percent share of the total market in 2020 with Safran S.A at the helm. The other key players are Esterline Technologies Corporation, Collins Aerospace, Amtek Inc., FIRST SwitchTech, Teledyne Technologies, and TE Connectivity.
The market has witnessed a gradual consolidation over the past few years with acquisitions by some of the major players to strengthen their portfolio and expand their geographical reach.
- In 2014, Safran S.A, the market leader, acquired the aerospace power distribution system and cockpit division of Eaton Corporation.
- In 2018, Zodiac Aerospace was acquired by Safran S.A.
- In 2019, Kissling, the German high-power and high-voltage relay supplier was acquired by TE Connectivity, which is a leading connectivity and sensor solution provider.
North America and Europe together generated more than 75 percent of the demand in 2020. The U.S. is the largest market due to the presence of various aircraft OEMs such as Airbus, Boeing, Lockheed Martin, Cessna, and Gulfstream, followed by France and China. France is the largest market in Europe with the presence of Airbus assembly plants and Safran S.A, the market leader. China offers impressive growth potential with the opening of both Boeing and Airbus’ assembly plants.
Covid-19 to drag sales below 2014 mark
The aerospace industry was already ailing with the grounding of the Boeing B737 MAX when the Covid-19 pandemic broke out. According to Stratview Research, the aircraft relay and contactor market witnessed a decline of >20 percent in 2020 taking the annual sales below 2014 levels. It is estimated that the demand for relays and contactors will remain stagnant in 2021, followed by impressive growth in 2022 until the year 2026, driving the market to reach $481.3 million in 2026.
The recovery in the aircraft relay and contactor market is expected to experience ‘tick-shape’ growth unlike the V-shape recovery during the SARS pandemic of 2003 and the Great Recession of 2008-2009. The average recovery cycle of this industry is three to five years.
Currently, the market is expected to recover with an increase in air passenger traffic, the relaunch of Boeing’s best-selling B737 MAX, and gradual rise in monthly production rates of key aircraft programs. Other factors that might drive the growth of aircraft relays and contactors are demand for more electric aircraft, SWaP reductions in aircraft, and increasing demand for smart contactors and protection from overloads.
In the long-term, healthy growth opportunities are estimated for the aircraft relay and contactor market. During the forecast period of 2021 to 2026, contactors are projected to remain the larger segment of the market given the emphasis on electronic intelligence to detect system faults.
The impact of the Covid-19 pandemic is extrapolated to be different in different regions, hence, the recovery cycle is estimated to vary with the regions. For example, North America may log a six-year recovery cycle, whereas Asia-Pacific may require a four-year recovery period to reach pre-pandemic sales. The impact of the pandemic is anticipated to be low in the Asia-Pacific region compared to other parts of the world, therefore, this region is estimated to exhibit the highest long-term growth in the post-pandemic market.
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