Impact of COVID-19 on The Global Software Defined Radio Market
The COVID-19 pandemic has forced the governments of several countries worldwide to declare either complete or partial lockdowns. The operations in many industries have been affected by these lockdowns, particularly those categorized as non-essential, including the aviation & defense industry.
The aviation industry has witnessed an unprecedented decline in the last two months due to the COVID-19 pandemic. The outbreak of the virus has significantly impacted the airline and airport operators. The spread of COVID-19 and the response by the aviation industry has resulted in an unparalleled decline in global air traffic. The average number of flights per day in March 2020 was 145,000, which is 17.61% lower than that of 176,000 in March 2019. Moreover, after several governments around the world announced restrictions on air travel, commercial air traffic registered a 41% decrease as compared to the 2019 levels in the last two weeks of March. Moreover, according to the International Civil Aviation Organization (ICAO) number of departures on 11th March 2020 was 22,568, which decreased by 8.45%, to 2,387 by 26th May 2020. Thus, due to this drastic decrease in air passenger traffic globally, the revenues of airport operators from airport charges such as the landing and parking charges that are paid by airlines and passenger service charges paid by passengers are expected to decrease by around 50% in 2020. This is also expected to decrease the demand for new software-defined radios for air traffic control and airport management during this year. Radio communication system plays an important role in ensuring the safety of civil aircraft in flight.
Likewise, in the defense industry, software-defined radios are used for tactical communications during the conflicts or military missions. Therefore, due to a drastic decrease in terrorist attacks and border disputes due to the COVID-19 pandemic, the demand for these radios is decreased globally.
Pre-COVID-19 Software Defined Radio Market
Before the COVID-19 pandemic, International Air Transport Association (IATA) estimated that global air travel is likely to double by 2036. The software defined radio market was set to witness significant growth due to factors such as increasing defense expenditure, development of new and existing airports, and focus on improving the military communication system. The US is expected to be the leading country in terms of air passenger traffic, growing at a rate of 6.34%, while in China, the air passenger traffic is expected to grow at a rate of 5.69% during the forecast period, 2019 to 2026. Moreover, air passenger traffic in countries such as India, China, Brazil, and Indonesia are expected to increase with the introduction of low-cost airlines and increasing per capita incomes. The increasing air passenger traffic is also expected to increase the demand for new aircraft globally, which is further increasing the need for airport capacity addition and creating a requirement for new systems. Due to this, the demand for software defines radios for air traffic control, and airport management is expected to increase significantly before the COVID-19 outbreak.
Likewise, due to the rising terrorist attacks, military forces of countries such as the US, China, India, Israel, and Iran are focusing on improving their communication systems for effective communication during military tactical operations. For instance, the US Department of Defense started the Joint Tactical Radio System (JTRS) program for the advancement of its SDR solutions and associated technology to provide a better communication system to the soldiers.
Therefore, before the COVID-19 pandemic, the global software-defined radio market was expected to reach USD 35,776.8 million by 2026 growing at a CAGR of 8.34% from 2019 to 2026.
Post-COVID-19 Impact on the Software Defined Radio Market
The post-COVID-19, Market Research Future estimated that the global software-defined radio market is likely to reach USD 30,480.6 million by 2026 at a CAGR of 5.89%. The current projections for 2026 are expected to be lower than pre-COVID-19 estimates. The pandemic has had a devastating negative impact on the aviation industry across the world. Post the impact of the pandemic, very few countries have allowed transportation by air. Most of the airline companies have grounded their fleets due to a significant reduction in air travel. Global organizations, including the International Air Transport Association (IATA), has estimated a decrease in international air passenger revenues by approximately 50%.
Moreover, due to a decrease in revenues, it is also expected that new and existing airport development projects will be kept on halt till mid-2021. Therefore, the demand for software-defined radio is also expected to decrease in the next few years. However, the growing demand for air cargo is resulting in airline operators converting their passenger aircraft into cargo aircraft to find new revenue sources and ensure company sustainability. This is expected to help airport operators generate revenue from air cargo activity.
In the defense industry, software-defined radios offer various features such as two-way communication and multifunctionality, where they enable various wireless devices to communicate with one another. These features enable army personnel to experience secure communication and data transfer during military missions or conflicts. However, due to the expected decrease in military expenditure due to a decrease in tax revenues and a decline in terrorist attacks, it is expected the demand for software-defined radios by the military forces will decrease to some extent post-outbreak.
COVID-19 Impact on the Software Defined Radio Market in Key Regions
North America: North America covers the US and Canada. The region is likely to be the largest market for software defined radio during the forecast period post-COVID-19. Large-scale investments by airport authorities for improving airport operations are expected to be halted during the pandemic. Moreover, the defense expenditure by the US government on the procurement of advanced equipment is expected to decrease in the next year. This will also affect the software defined radio market in North America.
Europe: Europe includes the UK, Germany, France, and Italy. In the region, the initiatives undertaken by the governments to modernize the European airspace and offer enhanced air traffic management to airport authorities and airline operators are expected to postpone during the pandemic. Furthermore, the region hosts many major companies, such as BAE Systems, Thales Group, Rohde & Schwarz, and Leonardo SpA, that offer software-defined radios are also expected to be affected by the cancellation of orders or delays in payments.
Asia-Pacific: Asia-Pacific covers China, India, Japan, Australia, Singapore, and Australia. The region is gaining prominence in the global aviation industry and is projected to become the world’s leading market for air travel. It is expected that due to the COVID-19 pandemic, the decreasing revenues from airport operations will result in decreasing investments in software-defined radios by airport authorities. Moreover, the expected decrease in military expenditures in countries such as India, Australia, and South Korea is expected to affect the software defined radio market in the Asia-Pacific.
Middle East & Africa: In the Middle East & Africa, the market for software-defined radios is primarily affected by the decreasing passenger traffic in countries such as Saudi Arabia and the UAE due to the COVID-19 pandemic. This will also be expected to decrease investments in advanced air traffic control systems, including software-defined radio in the next few years.
Latin America: In South America, the market growth is significantly affected by major countries, such as Brazil and Mexico, due to the decrease in defense expenditure of the Brazil and Mexico it is expected that the demand for software defined radio will decrease in the next few years.
The Road Ahead
Airport operators that have orders placed with software-defined radio companies have either been postponed or canceled due to the pandemic. Moreover, the development of the new and existing airports will be resumed after the pandemic but with a lower rate for some period. Furthermore, due to the expected decrease in defense expenditure, the demand for software defined radios will decrease to some extent. Thus, the software defined radio market is expected to recover after the pandemic ends and will be struggling with a lower growth rate.
Role of Market Research Future
As a market research and consulting company, Market Research Future has been continuously monitoring and tracking the COVID-19 pandemic and its impact on various markets within the aerospace & defense industry. All our research studies have been updated to accommodate the impact of COVID-19 in the respective market to provide our customers with comprehensive market data along with present and future trends with macro and micro-level impact factors.
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*Note: The above mentioned datapoints will be provided on best effort basis