Michael Lisman
Co-Chief Operating Officer at TransDigm Group
Good morning. I'll start with our typical review of results by key market category. For the remainder of the call, I'll provide commentary on a pro forma basis compared to the prior year period in 2023, that is assuming we own the same mix of businesses in both periods. The market discussion includes the recent acquisitions of SEI Industries, the CPI Electron Device Business and Raptor Scientific in both periods. In the commercial market, which typically makes up close to 65% of our revenue, we will split our discussion into OEM and aftermarket.
Our total commercial OEM revenue increased approximately 13% in Q4 and 20% for full fiscal year 2024 compared with the prior year periods. Sequentially, total commercial OEM revenues contracted by 4% in Q4. Bookings in the quarter were solid and without too much negative impact from the Boeing strike as this hit only the last 17 days of the quarter. We are happy to see that Boeing and the IAM have reached an agreement, but the OEM supplier landscape is now once again in a difficult position. Prior to the strike, the challenges seen across the aerospace OEM supply sector these last few years were continuing to ease, but that recovery remains somewhat fragile. The near eight-week production line shutdown will likely exacerbate the situation. Time will tell how this plays out.
Specific to TransDigm, since we ship to both Boeing as well as sub-tiers on the affected platforms, the impact across our businesses is uneven and varied. The commercial OEM guidance we're giving today contains what we believe is an appropriate level of risk around the MAX, 767 and 777 production build rates for the 2025 fiscal year. As most of you know, we are quite diversified across all commercial and defense platforms, with the majority of our revenue and even more so EBITDA derived from the aftermarket. Accurately predicting OEM build rates for 2025 as we sit here today is a difficult task. Now that an agreement has been reached, we expect the ramp up back to the previously targeted monthly production rates to be significantly delayed. On the backside of prior strikes, most recently 2008, production rates have taken close to one year to recover to the prestrike monthly rates. This means a lower OEM production environment in our fiscal 2025 than we expected one quarter ago on our last earnings call.
To prepare for this, during recent weeks, we proactively initiated cost reduction initiatives across our operating units to rightsize our structure for this lower 2025 OEM production environment. These cost reduction initiatives span furloughs, headcount reductions, time line accelerations of productivity projects and a range of other actions aimed at reducing expenses.
Now moving on to our commercial aftermarket business discussion. Total commercial aftermarket revenue increased by approximately 8% in Q4 and 12% for full fiscal year 2024 compared with the prior year periods. Sequentially, total commercial aftermarket revenues were roughly flat in Q4. With regards to our commercial aftermarket rate of growth, the 8% year-over-year increase we saw this quarter was a bit lighter than we previously expected. As we've said many times before, commercial aftermarket can be lumpy, so we always focus on 12-month trends, not quarterly trends.
Our commercial aftermarket is made up of four submarkets, passenger, interior, freight and business jet. This quarter, growth seen across the four submarkets was still varied, but not quite as disconnected as in the first three quarters of this year. All four submarkets increased versus Q4 of last year. Business jet was a bit stronger and freight weaker than the total commercial aftermarket 8% growth rate. In the fourth quarter, the passenger submarket performed in line with the overall commercial aftermarket rate of growth. Q4 point of sales data from our distribution partners increased well into the double-digits, approaching 20% versus Q4 of last year.
For the full year, our passenger submarket remained the strongest of the group and was up nicely, exceeding our original expectations. In particular, within our passenger segment, operating units with higher engine content posted very solid growth in excess of those with non-engine content and again above our expectations for the year. Staying on the full year theme, freight, biz jet and interior, all underperformed versus our original expectations. Finally, bookings nicely exceeded sales for the full year. These factors give us confidence we will achieve the commercial aftermarket growth rate guidance, which Kevin provided for fiscal '25.
With regard to how commercial aftermarket revenue is likely to progress throughout fiscal 2025, two quick notes. First, Q1 is expected to be the lowest quarter of the year on a sales dollar basis, owing to the 10% fewer working days. And second, Q1 of fiscal '25 will also likely be the lowest quarter on a percentage growth basis, owing to some recent softness on bookings and timing that dictates what falls into the quarter from a shipment standpoint.
Now, turning to broader market dynamics and referencing the most recent IATA traffic data for September. Global revenue passenger miles have continued to surpass pre-pandemic levels since February 2024. September 2024 air traffic was about 4% above pre-pandemic. IATA currently expects traffic to reach 104% of 2019 levels in 2024 and surpass prior year traffic by 12%. Domestic travel continues to surpass pre-pandemic levels. In the most recently reported traffic data for September, local domestic air traffic was up 9% compared 2019. Domestic air travel growth has been driven significantly by outsized growth in China, where air travel was up 16% in September compared to pre-pandemic.
Shifting over to the US, domestic air travel for September was up 8% versus 2019 levels. International traffic has generally hovered slightly above or below pre-pandemic levels for the past few months, but is up nicely from where it was one year ago. In the most recently reported data for September, international is about 2% above pre-pandemic levels and this has improved from being 93% of 2019 levels one year ago.
In summary, for the commercial aftermarket as we head into 2025, things continue to shape up nicely. As we stated on prior earnings calls, now the passenger traffic has returned to pre-pandemic levels and, with it, our volume, which is now running slightly ahead of 2019 levels, the commercial aftermarket rate of growth would moderate a bit, and you see this in our guidance for 2025.
With regard to the submarkets in 2025, we expect continued growth in our passenger and interior submarkets driven by the positive trends in passenger traffic, aided slightly by older aircraft continuing to fly for longer. Business Jet is likely to continue to bounce around, but should return to growth over the full year. Freight will start to lap easier comps in our fiscal '25, so we expect stronger performance there and a return to positive growth trends. As you know, on a quarterly basis, commercial aftermarket can be lumpy, so we are sure that the path to the growth expectations I mentioned will be uneven over the course of the coming year.
Now shifting to our defense market, which traditionally is at or below 35% of our total revenue. The defense market revenue, which includes both OEM and aftermarket revenues, grew by approximately 16% Q4 and 19% for the full fiscal year 2024 compared with the prior year periods. Q4 defense revenue growth was well distributed across our businesses and customer base. Additionally, we saw similar rates of growth in both the OEM and aftermarket components of our total defense market, with OEM running slightly ahead of aftermarket. Defense bookings for the full year significantly surpassed the prior year and support the 2025 guidance for high single-digit revenue growth.
Additionally, we saw growth in US government defense spend outlays during Q4. As you know, defense sales and bookings can be lumpy, and forecasting them with precision on a quarterly basis is difficult. They can get bigger or smaller in size and pull left or push right on timing. So, similar to my commercial aftermarket commentary, the defense growth rates could also be uneven over the individual quarters of 2025.
Lastly, I'd like to finish by recognizing the strong efforts and accomplishments of our 51 operating unit teams during fiscal 2024. It was a good year and we're pleased with the operating performance they delivered for our shareholders. As we enter into our new fiscal year, our management teams remain committed to our consistent operating strategy, servicing strong demand for our products. And should our 2025 growth expectations prove too conservative with demand for our products coming in stronger than we've outlined here today, the operating unit teams will be ready to step up and meet the higher demand.
With that, I would like to turn it over to our CFO, Sarah Wynne.
