Reengineering Aerospace: Market Outlook on Digital Transformation in 2025

Overview:

• The aerospace industry is undergoing a significant digital transformation driven by technologies like digital twins, AI, Industry 4.0, and model-based systems engineering (MBSE).
• These tools enable faster design cycles, better integration across systems, and real-time operational insights that reduce lifecycle costs and improve reliability.
• Aerospace firms are leveraging digital technologies not only in R&D and design but also in manufacturing, certification, maintenance, and fleet optimization.

Market Size & Growth 

• The aerospace digital twin market was valued at US $2.1B in 2024, projected to reach US $50.7B by 2034, growing at a CAGR of ~37.5%. 
• The broader Industry 4.0 market in aerospace and defense was US $4.1B in 2024, expected to reach US $11B by 2034, with a CAGR of 10.7%.
• Aerospace engineering services outsourcing is forecasted to grow from US $93.1B (2024) to US $234.1B by 2029, with a CAGR of ~20%. 

Key Growth Drivers

• Increasing demand for faster and more cost-efficient aircraft development, with digital twins reducing prototyping and simulation cycles.
• Rising pressure to decarbonize aviation, driving the adoption of simulation tools that model electric, hybrid, and hydrogen propulsion systems.
• Regulatory momentum toward data-driven certification and predictive maintenance, requiring more integrated engineering systems.

M&A Overview

• TXT Group (parent of PACE Aerospace & IT) has acquired niche software and simulation companies to expand its toolset across lifecycle engineering.
• Major aerospace OEMs and tier-1 suppliers are consolidating digital thread capabilities through partnerships and acquisitions, targeting faster integration of simulation, AI, and analytics tools. 
• Vendors in the aerospace digital engineering space are aligning with Clean Aviation and European R&D partnerships to access funding and cooperative innovation. 

AI’s Role

• AI adoption in aerospace and defense has reached 81%, especially in predictive maintenance, generative design, and data-driven simulations.
• AI is increasingly used to accelerate modeling and scenario testing in digital twin systems, especially for novel aircraft configurations. 
• Generative AI tools are being embedded into design platforms, helping reduce manual modeling time and supporting adaptive certification approaches. 

Competitive Landscape

• Key players include PACE Aerospace & IT (TXT Group), Airbus, Siemens, and Dassault Systèmes, all pushing integrated simulation platforms with open APIs.
• US and European OEMs are leading in digital twin implementation, while smaller aerospace firms are increasingly accessing modular toolkits.
• Competitive advantage is shifting toward companies that can offer end-to-end lifecycle support across design, certification, and operations. 

‍Sources: Market.us,InsightAce Analytics, The Business Research Company