This article appeared in our Defence Forecast 2025 guide, which highlights the hot topics impacting Canada's aerospace and defence industries. Read the full Forecast and download our guide here.

There is little doubt that artificial intelligence will continue to revolutionize industries worldwide. Canada’s defence and aerospace sectors are no exception, particularly in view of the current geopolitical environment.

In the months and years ahead, we can expect to see significant strides in the adoption of AI in these sectors. From air traffic management, predictive maintenance, intelligence, surveillance and reconnaissance, AI will play an integral role in future innovations and, thus, future spending.

Like with all new technological innovations, there are many considerations beyond the purely technical that must be considered when integrating AI. From ethical and policy issues, to privacy, regulatory compliance and intellectual property considerations, using and integrating AI will require planning and a detailed understanding of risks.

To successfully navigate these issues, Canada’s defence and aerospace sectors will need clear and focused strategic advice.

How Canada is integrating AI in defence and aerospace

In 2024, Canada’s Department of National Defence (“DND”) and the Canadian Armed Forces (“CAF”) developed an AI strategy explaining how AI has the potential to disrupt and transform both the conduct of military operations and the management of corporate functions.[1] AI initiatives to date within DND/CAF are fragmented and lack a consistent roadmap, which DND’s AI strategy is meant to address.

In fleshing out its AI strategy, we can expect to see DND/CAF continue adopting and leveraging AI to enhance many aspects of their operations. In other words, AI is likely to find its way into a wide array of areas in the defence sector. Like many of Canada’s allies, the use of AI in intelligence, surveillance and reconnaissance (“ISR”) analysis and cyber security threat detection and analysis, are some immediate areas where the use of AI can be adopted and expanded.

The aerospace industry in Canada is also experiencing a massive shift with the integration of AI in many areas of technology. Two key examples include:

  • AI being used to enhance aircraft maintenance with predictive maintenance by using historical and failure data (for example from sensors) to predict the future health of equipment and optimize maintenance scheduling.
  • AI being used in air traffic management and in-flight operations, for example in the use of tools to analyze and improve flight schedules.[2]

While we are still in the early days of AI adoption, Canada’s defence and aerospace sectors have clearly shown their interest in using this technology now, and presumably going forward.

Opportunities and risks in AI deployment

Going forward, we can expect further development and integration of AI in the defence and aerospace sectors. On the horizon are a vast number of projects where AI can play a significant role. From the development of AI powered autonomous systems (e.g. drones), to the development of even more sophisticated AI-powered analysis tools to assist in human decision making, AI will no doubt be an important technological component of future research and development.

AI adoption in general, and in particular in the defence and aerospace sectors, is not without challenges. Issues such as data privacy, ethical considerations (e.g. the need for a human in-the-loop decision making), regulatory compliance and intellectual property considerations must be addressed to ensure the responsible and effective use, adoption and integration of AI technologies.

Data is perhaps the most important component of AI integration. The ability to customize or refine commercial or open-source general purpose AI models requires high amounts of high-quality data. Integrating AI for specific applications will require a detailed review of data use. For example, determining data ownership, data residency (where, geographically, data is stored) and safeguarding valuable data will be key to protecting investments in AI technologies.

Preparing for what’s next

Canada has sophisticated and well-established defence and aerospace industries with significant R&D capabilities.[3] These industries are well positioned to leverage the expected growth in the use of AI. There is massive spending in the forecast over the next few years in the defence and aerospace sectors,[4] and no doubt a large portion of this spending will be on AI-related initiatives.

AI offers tremendous opportunities for Canada’s defence and aerospace sectors, but also introduces complex legal, ethical and operational risks. As adoption accelerates, businesses and government alike will need to understand the broader AI landscape—both in Canada and globally—and seek strategic guidance to ensure responsible, secure and effective implementation.

As AI technologies continue to evolve, their role in shaping the future of the defence and aerospace industries will undoubtedly become even more critical.