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The F-35 Could Eventually End Production Of Every Other Military Jet
Lockheed Martin
All three F-35 variants at Edwards Air Force Base, Calif. Left to right: F-35C carrier variant, F-35B short takeoff/vertical landing variant, F-35A conventional takeoff and landing variant.
Assuming that Lockheed Martin’s F-35 eventually dominates foreign military markets, most fourth generation fighters will be pushed out of production.
After 2018, the F-35 is likely to capture over a 50 percent share of the global fighter jet market, says Richard Aboulafia, aerospace analyst for the Teal Group, in a February report. At about the same time, most U.S. and European fourth generation fighters are scheduled to end production, with many manufacturers exiting fighter jet production altogether.
“It’s not a positive picture. It’s a very difficult future for the fighter industrial base globally,” Aboulafia tells National Defense.
Few countries require large numbers of fighter jets, and the market is too crowded to support so many manufacturers, says Doug Royce, an aircraft analyst for Forecast International.
“There are too many models chasing too few orders,” he says. The F-35 is “looking to have a very significant international presence that will probably suck up most of the orders from U.S. allies.”
The United States is home to only two manufacturers of fighter jets — Lockheed Martin and Boeing — a result of rapid consolidation in the 1990s. Both companies are battling for sales to extend the lines of their fourth generation fighters. Under current plans, Lockheed’s F-16 and Boeing’s F-15 and F/A-18E/F Super Hornet will go out of production by 2020.
The situation is not much brighter for European manufacturers. The Eurofighter Typhoon — designed by a consortium of U.K.-based BAE Systems, Italian aerospace company Alenia Aermacchi and the Franco-German Airbus Group — will leave the market by 2018 unless there are further orders. If France’s Dessault retains its order from India, it could produce the Rafale until about 2025. Aboulafia says both scenarios are unlikely, and both companies likely will exit the fighter business within the next decade.
Of the European companies, only Sweden’s Saab appears likely to survive as a fighter manufacturer, partly because its single-engine Gripen NG is not a competitor for the more sophisticated F-35, Royce says. The Gripen in 2013 unexpectedly won a contract from Brazil to purchase 36 aircraft.
“But even the Gripen has trouble lining up export customers,” Royce says. “It’s just a tough market because these aircraft have become so expensive and they’re competing for defense dollars with other weapons systems.”
The impact of the joint strike fighter on the European defense industry could be enormous. If the F-35’s price decreases to about $85 million per unit, “the F-35 may do to Europe’s defense industry what the F-16 almost did: kill it,” Aboulafia’s report says.
“America’s aerospace industry knows this, and it helps explain their enthusiasm for F-35,” the report states. “While DoD puts billions into the development of an affordable next-generation plane, Europe is spending next to nothing on R&D for a follow-on to their current generation of rather expensive combat aircraft.”
After 2018, the F-35 is likely to capture over a 50 percent share of the global fighter jet market
Purchasing the joint strike fighter could prompt a chain reaction resulting in more sales for the U.S. defense industry, it says. Because the F-35 is built to be interoperable with U.S. systems, international customers will likely stick with U.S.-manufactured sensor, training and weapon systems.
The success of the F-35 would come at the expense of Boeing, which may find itself pushed out of the fighter business by the end of the decade. The F-15 is scheduled to end production after deliveries to Saudi Arabia in 2019. The line for the F/A-18E/F Super Hornet and its electronic warfare variant, the E/A-18G Growler, is scheduled to shut down in 2016, but congressional orders for additional Growlers in the fiscal year 2015 budget could extend the line.
Boeing is keeping busy with international campaigns for both platforms, says Steve Nordlund, the company’s director of global strike business development.
“We continue to find the market to be quite robust,” he says. “It is a competitive market. … Between the U.S. and the Europeans, there are choices for customers.”
Boeing recently submitted a bid to replace Denmark’s fighter fleet. Its Super Hornet will face off against the F-35 and Eurofighter Typhoon. The company would likely also offer the Super Hornet to Canada if it chooses to begin a fighter competition, he says.
It would have an uphill battle for both competitions, Aboulafia says. Both Canada and Denmark are partners in the F-35 program.
via National Defense Magazine
Price comparison chart of military jet fighters.
Nordlund says Boeing’s marketing strategy centers around incremental upgrades for both aircraft, such as new active electronically scanned array radar for Saudi Arabia’s F-15 order.
The company is also selling a package of new F/A-18E/F modifications that can be retrofitted onto legacy planes or included on new aircraft, which Boeing is calling the Advanced Super Hornet. The Navy recently tested two of these features — conformal fuel tanks and an enclosed weapon pod aimed at reducing the Super Hornet’s radar signature. Other possible upgrades include a new cockpit and display and an engine that improves acceleration.
“We’re not under contract for any operational aircraft modifications at this point, but the beauty of the design is that we can add those at any time to an aircraft,” Nordlund says. “That is an option for our customers, whether they be domestic or international.”
Only seven countries have ever purchased a non-domestic fighter jet for more than $50 million apiece, Aboulafia says. The F/A-18E/F and F-15, which cost about $55 million and $80 million apiece respectively, are simply too expensive for most customers. Those who can afford the Super Hornet and F-15 will likely opt for the F-35 instead, which in its most recent contract costs $98 million to $116 million depending on the model.
Nordlund disagrees that the cost of Boeing’s fighters is keeping the company from finding a broader customer base. “We feel that we price very aggressively in the marketplace, especially given the capability that you get out of the aircraft,” he says.
Royce says additional purchases of the F/A-18E/F and F-15 are unlikely. Production will probably end after Boeing finishes delivering E/A-18G Growlers to the Navy and F-15s to Saudi Arabia, he says.
The F/A-18E/F and F-15 are at a disadvantage when compared to less expensive single-engine models like the F-16 and Saab’s Gripen, Royce says. For countries that can afford more expensive aircraft, the F-15 and F/A-18E/F are in a much more crowded playing field, potentially facing off against the Typhoon, F-35, and Rafale.
“The customer base for those aircraft is small enough that you have five, six different models competing for the same limited number of customers,” Royce says. “We saw that in the India competition where the Dessault Rafale was selected as the preferred bidder. ... You had all these competitors that were going for that one contract, because that was really one of the few big fighter contracts that was left.”
Neither of Boeing’s fighters has an expansive history of exports. The Super Hornet has only found one international customer in Australia. The F-15 has fared a little better, and is in use by Japan, Saudi Arabia, South Korea, Israel and Singapore.
Boeing likely has one last chance to sell the F-15 internationally — Qatar’s requirement for up to 72 jets, Aboulafia says. The F/A-18E/F’s prospects are a little more diverse. Besides Denmark, it is also being offered to Qatar, Kuwait and Malaysia, among other nations.
The Super Hornet appears to be in the lead in Qatar, Aboulafia’s report states. The Rafale is another strong contender.
Malaysia announced earlier this year its preference to lease aircraft rather than buy new jets to replace about 18 MiG-29s. Boeing, Saab, Dassault and Russian manufacturer Sukhoi are all contenders, but Saab has experience leasing Gripens to the Czech Republic. That could give it an edge, he says.
The United Arab Emirates is considering buying either the F-15, F/A-18E/F, Typhoon or Rafale to fill a requirement of 60 planes. However, Aboulafia says the country may just bide its time and buy the F-35 later on.
The F-16 — priced at about $40 million per aircraft — is better positioned to grab international sales, Aboulafia says. Saab’s Gripen and F-16 remain the only options for the 30 countries who can afford fighters ranging from $30 million to $50 million per unit, he says.
The F-16 is a great value, offering proven combat capability and reliability to customers at a low cost, Aboulafia says. The company could likely keep the plane in production for much longer if it was marketed more aggressively in places like Qatar, Malaysia and Kuwait.
“I think their strategy right now in the Middle East is to say, ‘Hey, wait a few years and they’ll get F-35s.’ And that might not be a dumb strategy ... but on the other hand, I think there are missed opportunities,” he says.
“They shouldn’t care so much about the F-35 in terms of moving it along,” he adds. “They should accept having multiple products and multiple options for different customers.”
Lockheed is “still aggressively selling” the F-16, says Bill McHenry, the company’s head of business development for the aircraft. The capabilities of the F-35 and F-16 are so distinct — a stealthy, fifth generation multirole jet compared to a low-cost, proven fourth generation fighter — that the aircraft do not compete in the same market, he says. Ultimately, the customer’s requirements dictate which aircraft Lockheed offers.
“The F-35 and F-16 are totally different airplanes,” he says. “You can’t look at them as competitors.” McHenry declined to disclose which countries Lockheed Martin is marketing the F-16.
The company has planned deliveries to Oman and Iraq ending in 2017, but McHenry predicts sales of at least 100 more units that could extend production past then.
The newest configuration, the F-16V, is available as a new production aircraft. The improved capabilities — like Northrop Grumman’s scalable agile beam radar, modernized computers and glass displays in the cockpits — also can be retrofitted onto old F-16s, McHenry says.
Royce agrees that the F-16’s low cost could net further orders of aircraft that stretch production. “But there’s also a huge fleet of existing F-16s that will be coming out of U.S. stocks and from European customers that will be available on the used market,” he says. “There’s probably a lot of customers who will just turn to the used market rather than buying new aircraft.”
The F-16 has been purchased by 28 nations, many of which are considering modernizing their fleets. Singapore, Greece and Turkey are potential customers for upgrades.
Original equipment manufacturers are traditionally chosen to perform upgrades, but BAE Systems emerged as a challenger to Lockheed in 2012 after South Korea selected the company to modernize its F-16s.
Lockheed suffered another blow when the Air Force in the fiscal year 2015 budget cancelled its F-16 modernization plans, including installation of Northrop’s radar and new avionics. However, some of those elements may still be revived, McHenry says. Taiwan, which planned to acquire the same radar as the Air Force, will continue as Lockheed’s first customer to modernize its F-16s with the Northrop radar.
Lockheed has also presented a menu of upgrade options to Singapore and Greece, he says.
Ultimately, the consolidation in the fighter industry is “something that should be of great concern,” Aboulafia says. Hope remains for Boeing to retain its fighter capability through future Navy and Air Force efforts to field a sixth generation jet. If Boeing lands the contract for the Air Force’s long-range strike bomber, that would allow the company to keep its fighter jet department open to develop a sixth generation jet, he adds.
The best-case scenario is unfortunately impossible, Aboulafia says. If Boeing produced the F-16 instead of Lockheed, the United States could remain home to two manufacturers of fighter aircraft, and Boeing would aggressively market it.
Boeing “could do so much with that plane. They would love to have a plane at that price point, and Lockheed Martin has been kind of neglecting that plane,” he says. “If only it were a saleable asset, that would solve everybody’s problems — more competition in the marketplace, Lockheed Martin could walk away from it, and Boeing would have something new to sell.”
Read more: As F-35 Ramps Up, Legacy Fighters Face Existential Threat
- AUG. 19, 2014, 1:42 PM
- businessinsider
Lockheed Martin
All three F-35 variants at Edwards Air Force Base, Calif. Left to right: F-35C carrier variant, F-35B short takeoff/vertical landing variant, F-35A conventional takeoff and landing variant.
Assuming that Lockheed Martin’s F-35 eventually dominates foreign military markets, most fourth generation fighters will be pushed out of production.
After 2018, the F-35 is likely to capture over a 50 percent share of the global fighter jet market, says Richard Aboulafia, aerospace analyst for the Teal Group, in a February report. At about the same time, most U.S. and European fourth generation fighters are scheduled to end production, with many manufacturers exiting fighter jet production altogether.
“It’s not a positive picture. It’s a very difficult future for the fighter industrial base globally,” Aboulafia tells National Defense.
Few countries require large numbers of fighter jets, and the market is too crowded to support so many manufacturers, says Doug Royce, an aircraft analyst for Forecast International.
“There are too many models chasing too few orders,” he says. The F-35 is “looking to have a very significant international presence that will probably suck up most of the orders from U.S. allies.”
The United States is home to only two manufacturers of fighter jets — Lockheed Martin and Boeing — a result of rapid consolidation in the 1990s. Both companies are battling for sales to extend the lines of their fourth generation fighters. Under current plans, Lockheed’s F-16 and Boeing’s F-15 and F/A-18E/F Super Hornet will go out of production by 2020.
The situation is not much brighter for European manufacturers. The Eurofighter Typhoon — designed by a consortium of U.K.-based BAE Systems, Italian aerospace company Alenia Aermacchi and the Franco-German Airbus Group — will leave the market by 2018 unless there are further orders. If France’s Dessault retains its order from India, it could produce the Rafale until about 2025. Aboulafia says both scenarios are unlikely, and both companies likely will exit the fighter business within the next decade.
Of the European companies, only Sweden’s Saab appears likely to survive as a fighter manufacturer, partly because its single-engine Gripen NG is not a competitor for the more sophisticated F-35, Royce says. The Gripen in 2013 unexpectedly won a contract from Brazil to purchase 36 aircraft.
“But even the Gripen has trouble lining up export customers,” Royce says. “It’s just a tough market because these aircraft have become so expensive and they’re competing for defense dollars with other weapons systems.”
The impact of the joint strike fighter on the European defense industry could be enormous. If the F-35’s price decreases to about $85 million per unit, “the F-35 may do to Europe’s defense industry what the F-16 almost did: kill it,” Aboulafia’s report says.
“America’s aerospace industry knows this, and it helps explain their enthusiasm for F-35,” the report states. “While DoD puts billions into the development of an affordable next-generation plane, Europe is spending next to nothing on R&D for a follow-on to their current generation of rather expensive combat aircraft.”
After 2018, the F-35 is likely to capture over a 50 percent share of the global fighter jet market
Purchasing the joint strike fighter could prompt a chain reaction resulting in more sales for the U.S. defense industry, it says. Because the F-35 is built to be interoperable with U.S. systems, international customers will likely stick with U.S.-manufactured sensor, training and weapon systems.
The success of the F-35 would come at the expense of Boeing, which may find itself pushed out of the fighter business by the end of the decade. The F-15 is scheduled to end production after deliveries to Saudi Arabia in 2019. The line for the F/A-18E/F Super Hornet and its electronic warfare variant, the E/A-18G Growler, is scheduled to shut down in 2016, but congressional orders for additional Growlers in the fiscal year 2015 budget could extend the line.
Boeing is keeping busy with international campaigns for both platforms, says Steve Nordlund, the company’s director of global strike business development.
“We continue to find the market to be quite robust,” he says. “It is a competitive market. … Between the U.S. and the Europeans, there are choices for customers.”
Boeing recently submitted a bid to replace Denmark’s fighter fleet. Its Super Hornet will face off against the F-35 and Eurofighter Typhoon. The company would likely also offer the Super Hornet to Canada if it chooses to begin a fighter competition, he says.
It would have an uphill battle for both competitions, Aboulafia says. Both Canada and Denmark are partners in the F-35 program.
via National Defense Magazine
Price comparison chart of military jet fighters.
Nordlund says Boeing’s marketing strategy centers around incremental upgrades for both aircraft, such as new active electronically scanned array radar for Saudi Arabia’s F-15 order.
The company is also selling a package of new F/A-18E/F modifications that can be retrofitted onto legacy planes or included on new aircraft, which Boeing is calling the Advanced Super Hornet. The Navy recently tested two of these features — conformal fuel tanks and an enclosed weapon pod aimed at reducing the Super Hornet’s radar signature. Other possible upgrades include a new cockpit and display and an engine that improves acceleration.
“We’re not under contract for any operational aircraft modifications at this point, but the beauty of the design is that we can add those at any time to an aircraft,” Nordlund says. “That is an option for our customers, whether they be domestic or international.”
Only seven countries have ever purchased a non-domestic fighter jet for more than $50 million apiece, Aboulafia says. The F/A-18E/F and F-15, which cost about $55 million and $80 million apiece respectively, are simply too expensive for most customers. Those who can afford the Super Hornet and F-15 will likely opt for the F-35 instead, which in its most recent contract costs $98 million to $116 million depending on the model.
Nordlund disagrees that the cost of Boeing’s fighters is keeping the company from finding a broader customer base. “We feel that we price very aggressively in the marketplace, especially given the capability that you get out of the aircraft,” he says.
Royce says additional purchases of the F/A-18E/F and F-15 are unlikely. Production will probably end after Boeing finishes delivering E/A-18G Growlers to the Navy and F-15s to Saudi Arabia, he says.
The F/A-18E/F and F-15 are at a disadvantage when compared to less expensive single-engine models like the F-16 and Saab’s Gripen, Royce says. For countries that can afford more expensive aircraft, the F-15 and F/A-18E/F are in a much more crowded playing field, potentially facing off against the Typhoon, F-35, and Rafale.
“The customer base for those aircraft is small enough that you have five, six different models competing for the same limited number of customers,” Royce says. “We saw that in the India competition where the Dessault Rafale was selected as the preferred bidder. ... You had all these competitors that were going for that one contract, because that was really one of the few big fighter contracts that was left.”
Neither of Boeing’s fighters has an expansive history of exports. The Super Hornet has only found one international customer in Australia. The F-15 has fared a little better, and is in use by Japan, Saudi Arabia, South Korea, Israel and Singapore.
Boeing likely has one last chance to sell the F-15 internationally — Qatar’s requirement for up to 72 jets, Aboulafia says. The F/A-18E/F’s prospects are a little more diverse. Besides Denmark, it is also being offered to Qatar, Kuwait and Malaysia, among other nations.
The Super Hornet appears to be in the lead in Qatar, Aboulafia’s report states. The Rafale is another strong contender.
Malaysia announced earlier this year its preference to lease aircraft rather than buy new jets to replace about 18 MiG-29s. Boeing, Saab, Dassault and Russian manufacturer Sukhoi are all contenders, but Saab has experience leasing Gripens to the Czech Republic. That could give it an edge, he says.
The United Arab Emirates is considering buying either the F-15, F/A-18E/F, Typhoon or Rafale to fill a requirement of 60 planes. However, Aboulafia says the country may just bide its time and buy the F-35 later on.
The F-16 — priced at about $40 million per aircraft — is better positioned to grab international sales, Aboulafia says. Saab’s Gripen and F-16 remain the only options for the 30 countries who can afford fighters ranging from $30 million to $50 million per unit, he says.
The F-16 is a great value, offering proven combat capability and reliability to customers at a low cost, Aboulafia says. The company could likely keep the plane in production for much longer if it was marketed more aggressively in places like Qatar, Malaysia and Kuwait.
“I think their strategy right now in the Middle East is to say, ‘Hey, wait a few years and they’ll get F-35s.’ And that might not be a dumb strategy ... but on the other hand, I think there are missed opportunities,” he says.
“They shouldn’t care so much about the F-35 in terms of moving it along,” he adds. “They should accept having multiple products and multiple options for different customers.”
Lockheed is “still aggressively selling” the F-16, says Bill McHenry, the company’s head of business development for the aircraft. The capabilities of the F-35 and F-16 are so distinct — a stealthy, fifth generation multirole jet compared to a low-cost, proven fourth generation fighter — that the aircraft do not compete in the same market, he says. Ultimately, the customer’s requirements dictate which aircraft Lockheed offers.
“The F-35 and F-16 are totally different airplanes,” he says. “You can’t look at them as competitors.” McHenry declined to disclose which countries Lockheed Martin is marketing the F-16.
The company has planned deliveries to Oman and Iraq ending in 2017, but McHenry predicts sales of at least 100 more units that could extend production past then.
The newest configuration, the F-16V, is available as a new production aircraft. The improved capabilities — like Northrop Grumman’s scalable agile beam radar, modernized computers and glass displays in the cockpits — also can be retrofitted onto old F-16s, McHenry says.
Royce agrees that the F-16’s low cost could net further orders of aircraft that stretch production. “But there’s also a huge fleet of existing F-16s that will be coming out of U.S. stocks and from European customers that will be available on the used market,” he says. “There’s probably a lot of customers who will just turn to the used market rather than buying new aircraft.”
The F-16 has been purchased by 28 nations, many of which are considering modernizing their fleets. Singapore, Greece and Turkey are potential customers for upgrades.
Original equipment manufacturers are traditionally chosen to perform upgrades, but BAE Systems emerged as a challenger to Lockheed in 2012 after South Korea selected the company to modernize its F-16s.
Lockheed suffered another blow when the Air Force in the fiscal year 2015 budget cancelled its F-16 modernization plans, including installation of Northrop’s radar and new avionics. However, some of those elements may still be revived, McHenry says. Taiwan, which planned to acquire the same radar as the Air Force, will continue as Lockheed’s first customer to modernize its F-16s with the Northrop radar.
Lockheed has also presented a menu of upgrade options to Singapore and Greece, he says.
Ultimately, the consolidation in the fighter industry is “something that should be of great concern,” Aboulafia says. Hope remains for Boeing to retain its fighter capability through future Navy and Air Force efforts to field a sixth generation jet. If Boeing lands the contract for the Air Force’s long-range strike bomber, that would allow the company to keep its fighter jet department open to develop a sixth generation jet, he adds.
The best-case scenario is unfortunately impossible, Aboulafia says. If Boeing produced the F-16 instead of Lockheed, the United States could remain home to two manufacturers of fighter aircraft, and Boeing would aggressively market it.
Boeing “could do so much with that plane. They would love to have a plane at that price point, and Lockheed Martin has been kind of neglecting that plane,” he says. “If only it were a saleable asset, that would solve everybody’s problems — more competition in the marketplace, Lockheed Martin could walk away from it, and Boeing would have something new to sell.”
Read more: As F-35 Ramps Up, Legacy Fighters Face Existential Threat
