What a difference a year makes. Last year during the Paris Air Show, the aviation industry was on a high: the world economy was booming and credit was cheap. Orders for civilian airliners stretched far into the future.

This year at Farnborough, there have been the usual choreographed announcements of orders for new aircraft (if fewer than in Paris last year). But this masks a future for the industry that looks far bleaker than it did a year ago.

The price of jet fuel has doubled since then and economic growth has slowed in the face of a credit crisis. For manufacturers based in Europe, the weak dollar has given a relative advantage to their competitors in the dollar area.

Some marginal airlines have already gone to the wall, and more may be expected to follow. Others pursuing novel strategies, such as business-only operators, have failed.

Nor is there much comfort to be drawn, at least in Europe, from the defence sector. A year ago the UK, the western European country with the largest defence budget, had in place an industrial strategy that offered greater clarity about future procurement decisions to manufacturers. Now that strategy is in disarray since it proved impossible to sustain in the face of budgetary pressures.

France has outlined a new defence strategy – but has limited its spending to 2 per cent of gross domestic product. Elsewhere in Europe, economic weakness makes it unlikely that governments will be any less reluctant to spend money on defence than hitherto.

There are some silver linings amid the clouds. Some airlines, such as the German carrier Lufthansa, are in a much stronger financial position than in past downturns.

For aircraft manufacturers, order books are strong, on the face of it providing six or seven years of work. Of course, many orders will crumble as the downturn bites. But the increase in fuel prices, along with the push to higher environmental standards, will strengthen the motivation to acquire new fuel-efficient planes to replace old gas guzzlers. Moreover, the fashion favouring turbo-prop aircraft, the most fuel-efficient and environmentally friendly in the skies, should help sustain order books for some.

The aviation industry is stronger than it was during its last downturn following the 2001 terrorist attacks on the US. But that setback was fairly short-lived. This time it may endure for longer. It is far from clear that the industry will have passed through the storm by the next Farnborough show in 2010.