Industry Minister Blair McDougall said on Friday that governments had traditionally shared the risks associated with developing aircraft engines. His comments followed an agreement between Rolls-Royce and the government on a proposed £2.5 billion research and technology programme spanning 10 years.
The initiative is intended to develop propulsion technology for the next generation of single-aisle passenger aircraft, potentially restoring Rolls-Royce to the largest segment of commercial aviation. The company has not competed directly in that market since selling its interest in International Aero Engines to Pratt & Whitney in 2012.
McDougall’s defence of public participation comes as Rolls-Royce forecasts underlying operating profit of up to £4.9 billion this year. Its improved financial performance has raised questions about the need for taxpayer assistance to support a commercial expansion by a profitable listed company.
The minister maintained that the costs and long development periods involved in aerospace programmes warranted cooperation between industry and government. Such projects require substantial investment before manufacturers can establish whether their technology will secure aircraft contracts and generate commercial returns.
The government’s agreement, announced on Wednesday, establishes a framework rather than an unconditional funding commitment. No new grants have yet been awarded under it, and future support remains subject to negotiations, legal requirements, affordability assessments, value-for-money tests and government approvals.
The precise division of expenditure between the public sector and Rolls-Royce has not been finalised. The company says it expects to invest significantly more than the government across its narrowbody ambitions, which extend beyond the jointly proposed research programme.
Rolls-Royce chief executive Tufan Erginbilgic has identified the single-aisle market as a major growth opportunity. He previously indicated that other countries were interested in hosting investment, although the company’s preference was to pursue the development in Britain.
The sector is dominated by CFM International, the partnership between GE Aerospace and France’s Safran, and Pratt & Whitney. Their engines power the aircraft families that account for much of the world’s short-haul flying, including the Airbus A320 and Boeing 737.
Breaking into that established market would require Rolls-Royce to secure a place on a future aircraft programme. Airbus and Boeing are expected to make decisions about engines for their next generation of narrowbody aircraft over the coming years, making the timing of technology development important.
Rolls-Royce plans to draw on its UltraFan technology, including advanced materials and engine architecture designed to improve efficiency. The proposed programme includes an engine demonstrator and research relevant to both civil aviation and defence applications.
The manufacturer says future narrowbody aircraft could enter airline service in the middle or latter part of the 2030s. Any production investment would depend on aircraft manufacturers selecting its technology, and Rolls-Royce intends to pursue a market return with an industrial partner.
The initial stages of the programme are expected to support 3,300 jobs at Rolls-Royce and its suppliers by the end of 2029. The government and company envisage more employment over subsequent decades if the technology wins commercial orders and manufacturing expands in Britain.
Prime Minister Andy Burnham has presented the agreement as part of the government’s effort to strengthen domestic manufacturing. Business Secretary Jonathan Reynolds has also emphasised the potential for engineering, research and factory employment outside London and south-east England.
The government’s projections nevertheless depend on successful development, certification and adoption of new engines. Neither the anticipated long-term employment gains nor the broader economic benefits are guaranteed by the framework agreement itself.
Rolls-Royce estimates that a successful British engine position in the next generation of single-aisle aircraft could contribute £120 billion to the economy over the programme’s lifetime. That figure is a company projection, not an independently established return on the proposed public expenditure.
The Aerospace Technology Institute estimates that single-aisle aircraft could represent approximately $164 billion of a $278 billion annual global civil aerospace market by 2050. The government sees opportunities for domestic suppliers in advanced manufacturing, electronics, composite materials and turbine components.
Rolls-Royce says its existing British operations encompass 37 sites and 23,000 direct employees. Its plans include identifying domestic locations for future engine assembly and testing facilities should its narrowbody technology secure a place on a new aircraft platform.
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