Fighter Export Market
Too many swings, not enough roundabouts?
July 2001
One of the few areas of major interest at an otherwise quiet Le
Bourget Air Show was how the players in the combat aircraft market
were shaping up to each other. As with most market segments, there
are regular up and downturns as factors change to in influence
matters, be they economic or political. And the immediate lead-up
to the show saw a few matters come to a head - or not - which could
well provide some signs for the future.
NORDIC LIGHTS
If there is a trend that is becoming prominent, it is the Saab/BAES
JAS-39 Gripen's race back up the charts. Gripen was the first
fourth-generation aircraft to hit the market and looked as if it
could clean up in a wide number of areas very quickly. The
principles of advanced technology backed up by low unit price and
low cost of ownership always looked a good bet, overcoming the very
Swedish specifications of the aircraft.
But the years since Gripen's launch on the export market - ever
since the mid-1990s - saw a near-deafening silence in terms of
interest in the programme. Despite a number of evident advantages,
Gripen was losing out to US contenders especially F-16. For those -
and there were many - who thought that Gripen would do well, this
situation was surprising to say the least.
But suddenly the tea leaves look more than good for the
Anglo-Swedish aircraft. The selection in South Africa in 1999,
followed by a contract, was the breakthrough. But the fact that it
was the only aircraft backed by a fully compliant bid into the
Czech Republic also means that it is in prime spot there. The Czech
contract is not a given. Even Saab sources see it as a 60-40
contract - a 60 per cent chance that a deal will be signed and 40
per cent that Prague won't buy anything at this time.
The question is whether a signed deal in the Czech Republic will
lead to a bandwagon in Europe. Many observers feel that Austria,
which is in quite serious need of new aircraft, could be the next
country to opt for Gripen. Certainly, existing links between Sweden
and Austria over the JAS-35 Draken bode well for Gripen's
chances.
But a bellwether could well be Poland. It was widely speculated in
the week before the Le Bourget show that a deal for 36-48
refurbished F-16s would be signed - after all, President George
Bush was stopping off in Warsaw almost specially for such a
purpose. But his trip came and went with no contract. Questions to
Lockheed Martin at the show saw responses that indicated that the
firm had little interest in Eastern Europe, especially in the
aftermath of the confirmation of the 50 aircraft Israeli
order.
To be fair to LM, it is possible to believe that the hoops through
which many Eastern European countries are making bidders leap could
make such deals not worth the effort. This seems to have been the
case with the Czech deal, certainly. However, requirements for
local pricing and local language bid documents did not put LM off
undertaking such work for the Polish deal. If left-of-centre
parties win the September 2000 Polish elections,then the chances of
a Gripen deal will arguably rise.
The Gripen team is also becoming more ambitious about the possible
export markets beyond the traditional areas of Swedish influence.
The new area to break could be Latin America, where moves are afoot
by the team to jemmy its way into the South American continent. The
Brazilian RFP, for issue this August, is a first possibility.
Although "Team France" has bought a stake in Embraer, this is not
regarded as a block to purchase of another aircraft. Key in Sweden
is likely to be links established over the Amazon Surveillance
Programme, which saw the Swedish Ericsson Erieye sold to Brasilia.
One might also see moves to integrate Rafael's Python, and IAI's
Litening onto the aircraft as a good move for Latin America. Dare
one think that it will not be too long before the Israeli Darby
BVRAAM is seen hanging off a Swedish Pylon?
This opens a second possibility in Latin America: Chile. "But
They've already ordered the F-16", we hear you cry. Well so far,
not so good. Too many reports are circulating that the deal is far
from done. Changes in government in Washington DC and changes of
staff in Santiago have led some to see the fighter programme in
Chile as open again. Wait and see on this one but another potential
one for Gripen to win.
"I'LL DO ANYTHING, FOR YOU, DEAR, ANYTHING ..."
Defence Analysis has stated for the past two years that Dassault 's
Rafale has to win two of the major export deals - out of Singapore,
South Korea and Brazil - in the next five years to keep the
programme, even the French programme, affordable. This view still
stands as far as Defence Analysis is concerned. Yet the options for
Rafale still don't look as good as they could, and if anything,
look slightly darker. Indeed, one might even hear squeaks of
desperation coming from Saint Cloud.
One sign of Dassault's desperation is the plethora of options that
the company and the French Government are offering in export
support. "What do you want? You can have it!" Which possibly raises
a question in many customers' minds: if this aircraft is as good as
it is claimed, why offer all the options?
The fact that it is known that the existing French model is
underpowered, especially in hot and high conditions, is not a good
start when looking to sell to one of the three countries mentioned
above.
There is another problem facing Rafale. Although one can look at
the planned development path and see it as a good move in respect
of incremental acquisition, it also permits potential buyers to put
things off. Why buy a Rafale F2/Block 05 standard aircraft for
delivery at the end of 2004 when you can get a better version in
2006? And perhaps worryingly for the much-delayed Rafale programme,
the model on offer for 2006 delivery is one that offers a number of
systems - helmet mounted display, full weapons capability - which
are on offer from rivals such as the Gripen and Typhoon from the
start.
On top of this, the Rafale F3/Block 10 standard will see an active
array radar replacing the existing passive E-scan RBE2. Now, there
tends to be a rule of thumb: if there are that many changes in a
programme, then wait until the home customer has taken delivery of
the system and has discovered all the bugs. This could mean that
potential clients wait until well after 2005 before looking at
Rafale.
TYPHOON BLOWING IN?
So, if the "top-of-the-range" Rafale has problems with its market
position, then what of Eurofighter Typhoon? The situation is
slightly mixed. Of course, the Greek deal still looks to be on,
although for confirmation after the Olympic games, although some
form of finance package like that offered to Prague for the Gripen
might allow Athens to confirm before 2004.
A standard advantage of Eurofighter is that since it is designed to
NATO standards it should be compatible with existing NATO-spec
(especially US) weapons. Unlike Rafale, where special clearances
would be needed to allow integration of more than a few weapons,
Typhoon can take the lot and will enter service with the four
nations with about as wide a range of weapons as has ever seen on a
new aircraft. This flexibility, which extends to avionics and
similar systems (Germany with Rafael's Litening LGB pod), can only
help.
While not as pressed as Rafale, Typhoon does need to get its export
market foundations sunk deeper than they are today. Promising signs
in Norway (now delayed), a deal (deferred) in Greece are a good
start but some big prizes need to be claimed, - such as the
obvious Singaporean and South Korean opportunities. Defence
Analysis would point out too that there is a not-widely-recognised
far-term Mid Eastern "ringer."
If Typhoon can win one of the two Far Eastern prospects - and in
Singapore it is about last in the running behind F/A-18 and Rafale
- then it will gain some serious credibility, as well as production
offtake to cut overheads. Chances in South Korea are deemed to have
improved with a perceived decline in the chances for the favourite,
Boeing's F-15K. Changes in politics in both Seoul and Washington
are deemed to have damaged the F-15K's profile. South Korea must be
crucial for Typhoon.
The ringer for Typhoon is Saudi Arabia. As Defence Analysis's 2000
Fighter Market Survey commented, although there has been much,
ill-informed talk about Saudi Arabia, things might just be falling
into place for the aircraft and changes in Riyadh's procurement
strategy are key. Rather than running an F-5 replacement programme,
then a Tornado F3 replacement programme, then an early model F-15
replacement programme, and so on, there are indications that Riyadh
is looking to bundle things in a different way.
The new perceived path would see one aircraft being selected to
replace both F-5 and Tornado F-3. Obviously, looking at what these
models do, stress would be on a modern air defence aircraft with
some multi-role capability. The issue of the early model F-15s
could then be addressed later, possibly by the same selected
aircraft. In effect, a rolling, batch-by-batch procurement would be
undertaken. The question for Typhoon is whether it can be seen as
an F-5 replacement, being so much bigger. But if the argument is
that if instead of 70-80 F-5E/Fs and 24 Tornado F3s only 48-60
Typhoons would be needed, then it stands a chance.
Outsider prospects are back in Europe. Although Norway looked as if
it favoured Typhoon, only when the ink is on the contract can one
relax - if even then. But the return of the Netherlands to assess
Typhoon opens up, again, the prospect of cleaving the European F-16
User Group in twain. And catch one of the four nations and the
chances of getting at least one of the others rises
exponentially.
As an aside, Rafale's incremental approach could be said to
reinforce the differences between it and Typhoon, but in the
latter's favour. After all, once all the additions are added to
Rafale, it then just becomes a lighter, more expensive Typhoon -
but still with fewer useful additions such as direct voice
input.
US ASPIRATIONS
The joker in the pack is the Joint Strike Fighter. An early
decision to either keep to the original procurement strategy, or to
even accelerate it, would mean that many bets are off. The best
gift that President Bush can give to Europe is to slow the JSF
procurement cycle. Then, even though there might be few threats
facing a number of nations, European states specifically, their
ageing aircraft might well need replacing anyway. All of the
European F-16 User Group are natural JSF customers and ought to
fall like ripe fruit - if the product is there on time.
The nub of the matter is that by the second half of the decade, any
version of F-16 is going to look past its best. Such were the
comments from a number of observers at the Paris Air Show when the
Gripen was flying - it seems to eclipse today's and tomorrow's
F-16s. Does anyone believe that, say, the Netherlands will buy a
Block 90 F-16 in 2008-10? Or Turkey? If there is hope for the F-16,
then it is to get as many aircraft new or secondhand, into new
markets over the next 2-3 years.
After that, Defence Analysis rates its chances in many markets as
falling away. In its place, the US will in effect only have one
offering: the F/A-18E/F Super Hornet.
Although there is little doubt that it is an exceptional aircraft,
its current price is higher than all of the European offerings -
and this cannot help its market chances. Until the F/A-18E/F can be
shown to come at or below the Rafale/Typhoon price, including
support, then it is going to be hampered. But it is regarded by
many as best placed in Singapore, and a win there would get its
foot in the export doorway.
But does anyone believe that Finland or Switzerland will buy the
E/F in the future? If Boeing can pull off future sales and they
are really future then it will be in a position to defray some of
the US Government's costs on the programme. But perhaps the biggest
problems facing F/A-18 are: firstly, it didn't sell in its initial
versions to as many countries as F-16 (Australia, Canada, Finland,
Kuwait, Malaysia, Spain, Switzerland), so could be said to be less
well bedded in; and, secondly, as a twin engine aircraft, it now is
slap-bang in the middle of the Rafale/Typhoon marketing
range.
The above is an article for your viewing pleasure :-)
Now, for your points...
1. True that we are not a more important ally than S.Korea, but our
fighter competition is regarded as the 2nd most lucrative, and thus
important, after S.Korea's. With S.Korea's competition in limbo
right now, our competition is more important than ever. True that
the F-15K was offered with the APG-63(V)1, which is not the AESA
version, but then the US has the power to exert diplomatic pressure
on the Koreans to choose F-15, through the use of US troops in
Korea as leverage. They won't do that in Singapore. They might
push, but not that hard. Thus it comes down to a fairer
competition. Boeing is currently REALLY desperate to keep the F-15
production line open (if they cant win the Korean or Singaporean
competition, the F-15 line closes, thats why politicians are
lobbying so hard for the F-15 in Korea), so if they dont offer the
APG-63V(2).... that's their choice, but then they're less
competitive, that's all. Theres one other reason why I dont think
the F-15 will be selected. With SIngapore having a habit of small,
repeat orders, it will have trouble if it gets the Eagle. Once
Boeing finishes production for our Eagles, they will close the
production line, assuming they dont win the Korean competition.
That means, we buy all the F-15s we want at one time, or dont buy
at all. Now speculation is that Singapore is getting between 20~40
aircraft, but most agree its about 24. Will that be enuff to
replace the Skyhawks and Tigers? Doubt so.
2. Are you sure Dassault's bid comes with an AESA radar? If so,
that would mean they are offering the F3 version, can you confirm
that for me? I'm sure the F2 version comes with a Passive
electronically scanned array radar. Also, is the AESA radar the
AMSAR, or the AESA derivative (or follow on) of the RBE 2? The
radar of the Typhoon is the only area which loses out to the
Rafale, but this will be corrected with the Tranche 3 version,
(featuring the AMSAR radar) I guess.
3. The missile thingie works against the Rafale just as it would
against the Typhoon. In fact, the Rafale would have a lower chance
of AMRAAM integration than the Rafale. The french have never been
particularly well-liked by US and the rest of Europe. (serious! the
reason why America is not so enthusiastic of cooperating with UK on
defense projects is because secret technologies will 1 way or
another, find their way to France) As for getting AMRAAMs from the
Yanks, thats not a prob. We already own AMRAAMs, and so additional
sales wont be a problem. And Micas, I dont like. :-) The Meteor
would come online in about 2008~2010, which would perhaps be (at
most) slightly later than when we get the Typhoons, that's
all.
3. The Charles de Gaulle is a joke. Its experienced so many
problems, it was regarded as a pier-queen. The last joke of the
Charles de Gaulle was that its propeller broke (!?), and had to go
for extended repairs, lol. But that's irrelevant to the Rafale, of
course....
