Next-Gen Aircraft Propulsion System Market

Market Definition

The market encompasses the development and production of advanced propulsion technologies for aircraft, focusing on efficiency and sustainability. It includes all-electric, hybrid-electric, hydrogen, and other innovative propulsion systems and serves commercial, military, and UAV applications.

The report offers a thorough assessment of the key factors driving market expansion, along with detailed regional analysis and the competitive landscape influencing industry dynamics.

Next-Gen Aircraft Propulsion System Market Overview

The global next-gen aircraft propulsion system market size was valued at USD 156.2 million in 2024 and is projected to grow from USD 181.9 million in 2025 to USD 617.6 million by 2032, exhibiting a CAGR of 19.07% during the forecast period.

The market is driven by technological advancements in propulsion systems, as manufacturers are integrating hybrid-electric and fuel-flexible technologies to improve fuel efficiency, reduce emissions, and enhance overall performance. Governments and industry players are collaborating to develop advanced propulsion systems for military aircraft, focusing on improved range, speed, and efficiency.

Major companies operating in the next-gen aircraft propulsion system industry are Rolls-Royce plc, CFM International, General Electric Company, Pratt & Whitney, GE AVIO S.r.l., MTU Aero Engines AG, Airbus, Honeywell International Inc., GKN Aerospace, Safran Group, Siemens, magniX, RTX, Leonardo S.p.A. and Kawasaki Heavy Industries, Ltd.

Private sector funding is playing a crucial role in accelerating the growth of the market by supporting extensive research and development initiatives focused on hybrid and electric propulsion technologies. These investments are enabling innovation, facilitating prototype development, and advancing the commercialization of sustainable propulsion systems across commercial and defense aviation sectors.

• In May 2025, Nabhdrishti Aerospace raised USD 3 million to support the development of indigenous micro gas turbine propulsion systems for UAVs, hybrid eVTOLs, and urban air mobility applications. The funding supports R&D efforts to advance compact, efficient turbine engines, aligning with growing demand for next-gen propulsion technologies that support electrification, sustainability, and versatility across emerging aviation platforms.

Key Highlights:

1. The next-gen aircraft propulsion system industry size was valued at USD 156.2 million in 2024.
2. The market is projected to grow at a CAGR of 19.07% from 2025 to 2032.
3. North America held a market share of 40.22% in 2024, with a valuation of USD 62.8 million.
4. The lasers segment garnered USD 46.9 million in revenue in 2024.
5. The hybrid-electric propulsion segment is expected to reach USD 161.0 million by 2032.
6. The unmanned aerial vehicles segment is anticipated to witness the fastest CAGR of 22.04% during the forecast period.
7. Europe is anticipated to grow at a CAGR of 20.58% over the forecast period.

Market Driver

Technological Advancements in Propulsion System

Technological advancements in propulsion systems are fueling the growth of next-gen aircraft propulsion system market by improving engine efficiency and reducing emissions. advancements in design, testing and the system integration are enabling cleaner and more powerful engines for aircraft. Improvements in energy storage and lightweight materials is supporting longer flight ranges and better performance.

These developments support the creation of next-generation propulsion systems by enabling cleaner, more efficient, and high-performance propulsion systems that meet stringent environmental standards.

• In January 2025, RTX and General Electric acquired a USD 3.50 billion contract to advance the US Air Force Next-Generation Adaptive Propulsion (NGAP) program. The deal involves supporting technology maturation and risk reduction through design, analysis, rig testing, prototype engine construction and testing, and system integration, focusing on developing cutting-edge engines for future sixth-generation fighter jets.

Market Challenge

High Development costs

High development costs are posing a significant challenge to the next-gen aircraft propulsion system market. Designing and testing advanced propulsion technologies require substantial investment in research, prototyping, and certification processes. The complexity of integrating new systems with existing aircraft platforms further increases expenses.

These high costs can slow down innovation and limit the ability of smaller companies to compete, potentially delaying the widespread adoption of next-generation propulsion technologies.

To address this, companies are forming strategic partnerships and collaborations to share expertise and research expenses. They are also investing in modular designs and advanced simulation tools to reduce physical prototyping and testing costs. Additionally, companies are focusing on phased development approaches, allowing incremental technology validation and risk reduction. 

Market Trend

Growing Adoption of Hybrid-Electric Propulsion

The growing adoption of hybrid-electric propulsion is transforming the next-gen aircraft propulsion system market by combining traditional engines with electric power systems to enhance performance and efficiency. This approach reduces fuel consumption and emissions maintaining reliability and range. Hybrid-electric systems offer a practical pathway toward fully electric aircraft by leveraging existing technology alongside new innovations.

As manufacturers increasingly explore these solutions, hybrid-electric propulsion is emerging as a key trend in the development of cleaner and more sustainable aviation technologies.

• In November 2024, a successful demonstration of a one-megawatt hybrid electric propulsion system was conducted by GE Aerospace under a USD 5.1 million research and development contract. The project, part of the Applied Research Collaborative Systematic Turboshaft Electrification Project (ARC-STEP), focused on evaluating and maturing MW-class electrified power plant technologies.

Next-Gen Aircraft Propulsion System Market Report Snapshot

Segmentation	Details
By Component	Lasers, Modulators, Detectors, Multiplexers/Demultiplexers, Optical Amplifiers
By Propulsion Type	Hybrid-Electric Propulsion, Fully Electric Propulsion, Hydrogen Fuel Cell Propulsion, Turbine-Based Propulsion
By Application	Commercial Aviation, Urban Air Mobility (eVTOL), Military Aviation, Unmanned Aerial Vehicles
By Region	North America: U.S., Canada, Mexico
	Europe: France, UK, Spain, Germany, Italy, Russia, Rest of Europe
	Asia-Pacific: China, Japan, India, Australia, ASEAN, South Korea, Rest of Asia-Pacific
	Middle East & Africa: Turkey, U.A.E., Saudi Arabia, South Africa, Rest of Middle East & Africa
	South America: Brazil, Argentina, Rest of South America

Market Segmentation:

• By Component (Lasers, Modulators, Detectors, Multiplexers/Demultiplexers, and Optical Amplifiers): The lasers segment earned USD 46.9 million in 2024 due to increased demand for high-precision sensing and communication technologies.
• By Propulsion Type (Hybrid-Electric Propulsion, Fully Electric Propulsion, Hydrogen Fuel Cell Propulsion, and Turbine-Based Propulsion): The hybrid-electric propulsion segment held 46.40% of the market in 2024, due to its balanced approach toward efficiency and extended range capabilities.
• By Application (Commercial Aviation, Urban Air Mobility (eVTOL), Military Aviation, and Unmanned Aerial Vehicles): The commercial aviation segment is projected to reach USD 254.5 million by 2032, owing to rising demand for sustainable and fuel-efficient aircraft technologies.

Next-Gen Aircraft Propulsion System Market Regional Analysis

Based on region, the market has been classified into North America, Europe, Asia Pacific, Middle East & Africa, and South America.

North America next-gen aircraft propulsion system market accounted for a share of 40.22% in 2024, with a valuation of USD 62.8 million. This dominance is driven by strong investments in advanced  hybrid-electric and adaptive engine systems technologies by the key players in asia pacific market.

The market in North America is witnessing extensive prototype development and system integration aimed at enhancing efficiency, performance, and mission adaptability across various aircraft platforms. Strategic collaborations between key industry players are accelerating innovation in engine architectures, digital integration, and fuel-efficient solutions, are contributing to the North America market expansion.

• In December 2024, Honeywell signed a strategic agreement with Bombardier to provide advanced technology for current and future aircraft, including next-generation avionics, propulsion, and satellite communications. The collaboration focuses on enhancing power, reliability, and maintainability through the development of Honeywell’s next-gen HTF7K engine. Valued at USD 17 billion, the partnership aims to deliver high-value upgrades for existing aircraft and lay the foundation for future innovations, supporting automation, aviation advancement, and energy transition.

The next-gen aircraft propulsion system industry in Europe is set to grow at a robust CAGR of 20.58% over the forecast period. This growth is fueled by increasing collaboration among leading manufacturers focused on developing advanced engines for future military platforms.

The market also benefits from the Europe's initiatives such as goal of achieving defense autonomy and technological leadership in military rotorcraft propulsion  to support for creating high-performance propulsion systems with better range, speed, and maneuverability. This growing focus on innovation and strategic partnerships is accelerating the adoption of next-generation propulsion systems.

• In June 2024, Safran Helicopter Engines (France) and MTU Aero Engines (Germany) established EURA, a joint venture to develop next-generation propulsion systems for European military helicopters. The joint venture also plans to explore hybrid-electric propulsion and advanced materials, aligning with Europe’s goal of achieving defense autonomy and technological leadership in military rotorcraft propulsion.

Regulatory Frameworks

• In the U.S., the Federal Aviation Administration (FAA) regulates the aircraft propulsion system market. They oversee the design, manufacturing, maintenance, and operation of aircraft propulsion systems.
• In the UK, the Civil Aviation Authority (CAA) regulates aircraft propulsion systems. The CAA Oversee the cirtifications and approval of electric propulsion systems.
• In China, the Civil Aviation Administration of China (CAAC) regulate the aircraft propulsion system. CAAC oversees airworthiness certification for aviation fuel and chemicals, ensuring they meet safety standards.

Competitive Landscape

Market players in the next-gen propulsion systems market are expanding ts operation  and forming strategic partnerships. They are establishing local subsidiaries to better serve regional markets and strengthen customer relationships.

Additionally, they are aligning their offerings with future satellite deployment needs, ensuring long-term partnership with commerial space industry. These efforts are boosting market visibility and reinforcing their role in next-gen propulsion development.

• In April 2025, Bellatrix Aerospace expanded into the U.S. by establishing a new subsidiary to serve the growing American commercial space industry. Bellatrix signed a Memorandum of Understanding with a major U.S. satellite manufacturer, securing its position as a preferred propulsion supplier for upcoming satellite missions.

List of Key Companies in Next-Gen Aircraft Propulsion System Market:

• Rolls-Royce plc
• CFM International.
• General Electric Company
• Pratt & Whitney
• GE AVIO S.r.l.
• MTU Aero Engines AG
• Airbus
• Honeywell International Inc.
• GKN Aerospace
• Safran Group
• Siemens
• magniX
• RTX
• Leonardo S.p.A.
• Kawasaki Heavy Industries, Ltd.

Recent Developments (Partnerships/New Product Launch)

• In March 2025, GE Aerospace advanced hybrid-electric propulsion through demonstrator programs and partnerships showcased at the Verticon Conference. These include Sikorsky HEX VTOL, Army ARC-STEP, and the Electrified Powertrain Flight Demonstration with NASA and Boeing. These initiatives integrate electric systems with turboshaft, turboprop, and turbofan engines to boost fuel efficiency, performance, and adaptability.
• In March 2025, Mach Industries launched Mach Propulsion, a new division focused on developing and producing high-performance propulsion systems for defense applications. The company is building an advanced jet engine facility with a planned capacity of 12,000 engines annually to support UAVs and next-gen propulsion technologies. This vertically integrated plant will accelerate design, prototyping, testing, and mass manufacturing, boosting innovation in advanced propulsion solutions.