Europe’s air forces also are looking to the homegrown ramjet-powered Meteor AAM for the Eurofighter Typhoon, JAS-39 Gripen, and Rafale, which are expected to hold about 35 percent of the global fighter market. However, the Eurofighter also was designed for easy integration of some U.S. ALMs.

As with aircraft, missiles often are classified by generation – currently, on the international market, third and fourth generation. In addition to technology advances, however, the greatest distinction between the two is cost, with most fourth-generation ALMs averaging $250,000 or more each – about three times the cost of third-generation missiles. That has led to an even greater split in the market and global air war capabilities, with more developed European and Asian air forces opting for fourth-generation, while most other budget- and aircraft-constrained militaries continue to buy third-generation, although even there, many still have not upgraded to the most advanced third-generation short-range AAMs.

While traditional aerial dog fights have become a rarity, so has the demand for long-range missiles, such as the U.S. Navy AIM-54 Phoenix (100+ nautical mile (nm) range) and Russian R-33 (160 to 228 kilometer/86 to 123 nm range). Both were expensive, required large aircraft to carry, and were intended primarily to shoot down enemy aircraft before they could launch stand-off cruise missiles – a mission no capable air force has encountered. The United States retired the Phoenix in 2004 – with the only current user being Iran, employing missiles more than 30 years old originally sold to the Shah – and has not replaced it. The Russian air force continues to arm its MiG-31 interceptors with the newer R-37 (80 to 215 nm range), but has found no export market for it.

Further affecting the ALM market is a significant decline in the production and sale of new fighter aircraft. In this decade, for example, Teal forecasts U.S. fighter/strike aircraft production at only 1,350 or so – about half the global total – putting the United States in position to dominate the ALM market.

Another change comes from technologies allowing existing aircraft to be retrofitted to carry the AMRAAM and similar weapons, offering a major capability upgrade at far less cost than new aircraft.

Today’s AAM market basically falls into two categories: short-range (Sidewinder, Magic, MICA ASRAAM, IRIS-T, R-73, etc.) and medium/long-range (AMRAAM, Meteor, R-37, R-27, R-31, R-77, etc.).

The Teal Group forecast for production through 2021 shows some growth, mostly in medium/long-range missiles, although the percentage split is expected to remain relatively flat – 58.8 percent/1,120 short-range to 41.2 percent/785 medium/long-range in 2012, changing to 55.9 percent/1,680 versus 44.1 percent/1,325 by 2021. That comparison changes dramatically, however, when looking at cost: $299.2 million in short-range, compared to $759.5 million in medium/long-range in 2012, growing to $414.4 million versus $1.774 billion in 2021.

Meanwhile, the virtual absence of air-to-air combat has been accompanied by an increased interest in – and, by U.S. and allied forces in Southwest Asia, employment of – air-to-ground missiles. However, guided bombs have been far more heavily used, becoming the focus of development in both the United States and Europe.

The U.S. contributions to precision-guided bombs include a range of laser-guided bombs (LGBs); the JDAM (Joint Direct Attack Munition), a GPS-based guidance kit attached to existing “dumb” bombs; and AGM-154 JSOW (Joint Standoff Weapon), a medium-range “glide” bomb using a closely integrated GPS/INS (Inertial Navigation System) for day/night and all-weather operations. European versions include the French GPS-guided AASM (Armement Air-Sol Modulaire – Air-to-Ground Modular Weapon) and British Enhanced Paveway, using GPS-Aided INS (GAINS) instead of the laser-guidance system on previous generations of Paveway-guided bombs (in the inventories of at least 32 nations).

The first real test of precision-guided AGMs by NATO came during the air campaign over Libya in 2011 – and demonstrated a serious capability gap in European air forces. NATO increasingly has restricted air strikes to precision-guided munitions (PGMs) to reduce collateral damage and civilian casualties. But the newest generation of European fighters have limited strike capability, especially laser-designation, and Europe’s air forces had far too few PGMs to meet the mission demands.

As a result, Europe’s primary air forces – especially Britain and France – are expected to increase both production and importation of precision ALMs, especially AGMs, to the extent increasingly tight defense budgets allow.

The Teal Group’s forecast for worldwide AGM production through 2021 shows guided bombs greatly overshadowing both tactical air-to-surface and stand-off missiles in 2012 (95 percent to 2.9 and 2.1 percent, respectively) through 2014, before the other two categories – especially AGMs – begin gaining, from a predicted 76.7 to 16.3 percent breakdown between guided bombs and AGMs in 2015 to 61.6 to 30.1 percent in 2019, then rebounding slightly to 62.6 percent bombs and 29.7 percent AGMs in 2021. For the entire decade, Teal Group’s prediction is 77.1 percent guided bombs (142,220 units), 17.1 percent tactical AGMs (31,465), and 5.8 percent stand-off (10,720), which include cruise missiles.