Berlin Takeaways: Defense Dominates, Commercial Questions Linger

Global Aviation Round-Up from Aircraft Value Intelligence (AVN)

Editor’s Note: The following article is adapted from conversations between John Persinos and the analysts at aerospace consultancy AeroDynamic Advisory, including AeroDynamic’s Managing Director Richard Aboulafia, Senior Advisor Klaus Mueller, and Associate Kevin Klempner.

This year’s ILA Berlin Air Show, held June 10-14, was, as expected, dominated by military hardware, defense contractors, and geopolitical headlines. Yet beneath the martial atmosphere, two important commercial aerospace storylines emerged, each with potentially far-reaching consequences.

Overall, the show drew approximately 110,000 attendees, up from 95,000 in 2024, with 765 exhibitors representing 37 countries, underscoring the event’s growing international reach and influence.

On the defense side, one word echoed throughout the exhibition halls: sovereignty. Russia’s continued threat to Europe and NATO provided the obvious backdrop. But increasingly, European policymakers are also grappling with a second concern: the possibility that the United States, under the second Trump administration, may prove to be a less dependable security partner.

Following President Trump’s bellicose rhetoric regarding Greenland and Canada, along with growing unease over the possibility of U.S. intelligence restrictions, surveillance cutoffs, and even speculation about “kill switches” embedded in American-made weapons systems, European governments have accelerated efforts to build more self-reliant defense capabilities.

That shift was impossible to miss at ILA. Booth after booth championed “European solutions,” “strategic autonomy,” and “sovereignty.” The emphasis was particularly strong in areas such as surveillance, satellite communications, reconnaissance, networking, and other space-based capabilities, where Europe is determined to reduce dependence on outside partners.

Ironically, the show’s biggest military development underscored just how difficult European defense cooperation can be.

The fighter component of the long-troubled Franco-German Future Combat Air System (FCAS/SCAF) program was effectively declared dead after years of increasingly public disagreements between Paris and Berlin. Unsurprisingly, conversations throughout the show quickly turned to what might replace it and whether France and Germany could chart separate paths.

A Smaller Commercial Footprint

Commercial aerospace, by comparison, maintained a far lower profile. Beyond Airbus’s familiar lineup of airliners and Deutsche Aircraft’s proposed D328eco regional turboprop, there were relatively few commercial announcements to capture attention.

Engine manufacturers were well represented, but next-generation propulsion technologies were largely absent, save for Rolls-Royce’s imposing UltraFan concept model, which served as a reminder that the future is still very much under construction.

Still, several important commercial themes were unfolding behind the scenes. Perhaps the most significant involves Airbus’s Next Generation Single Aisle (NGSA) program, the eventual successor to the A320 family and arguably the most consequential commercial aircraft program now on the horizon.

With hundreds of billions of dollars in future revenue and tens of thousands of jobs ultimately at stake, where Airbus chooses to base the program carries enormous industrial and political significance.

Historically, Airbus development has revolved around Toulouse, while final assembly of the A320 family has been shared across several sites. In recent years, however, Hamburg has steadily gained prominence as production of the increasingly popular A321 has expanded.

Against that backdrop, German Chancellor Friedrich Merz used the air show to publicly urge Airbus to locate the NGSA’s development and design leadership in Hamburg rather than Toulouse.

The request was hardly symbolic. For years, many in Germany have argued that France has enjoyed a disproportionate share of Airbus’s strategic prestige despite the company’s multinational structure. Given Hamburg’s growing production role and Germany’s expanding industrial footprint, Berlin believes it now has a compelling case. Whether Paris agrees is another matter entirely.

The issue has all the ingredients of a classic Airbus balancing act, where engineering decisions and national politics often travel in the same aircraft.

Defense Spending’s Unintended Consequences

Another recurring theme emerged in conversations with suppliers and contractors throughout the show: commercial aerospace risks being squeezed by the explosive growth in defense spending.

European military budgets are climbing rapidly, with Germany increasing defense expenditures by roughly 24% last year alone. Export demand has strengthened as well.

The challenge is straightforward. Aerospace manufacturing depends on a finite pool of engineers, machinists, technicians, production capacity, and specialized suppliers. As defense programs absorb more of those resources, commercial manufacturers inevitably face higher labor costs, tighter supply chains, and increased execution risk.

Given that elevated defense spending is likely to persist for years, those pressures are unlikely to ease anytime soon.

The situation may be even more consequential for systems suppliers, many of whom drive the industry’s most important technological innovations. These companies typically divide their business between civil and military programs.

Faced with booming defense demand, higher engineering costs, and government contracts that often offer more predictable margins, how much incentive remains to prioritize commercial development? That question lingered throughout ILA, even if it wasn’t printed on any of the banners.

The unanswered question is whether Europe’s defense renaissance will ultimately come at the expense of its commercial aerospace leadership. Success in one sector, after all, does not automatically guarantee success in the other.

John Persinos is the editor-in-chief of Aircraft Value Intelligence.

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