US Fighter Prices Explode As Production End Nears

PARIS --- Congressional notification of possible fighter sales announced by the DSCA on Nov 17 highlight a substantial and unexpected increase in the price of Boeing fighters approved for export, even as they reach the end of their production run.

These prices are also much higher than those of their foreign competitors, and are compounded by the fact that the US dollar’s exchange rate has surged against the currencies of the two buyer nations over the past two years, as these proposed deals were being reviewed by various US government agencies.

According to the Nov. 17 Congressional notifications, the price of a new-build Boeing F-15QA fighter and its “associated weapons package” works out to $293 million per aircraft,

while that of a new-build F-18E/F Super Hornet fighter offered to Kuwait is $252 million.

These prices are far higher than expected for combat aircraft which first entered service over 40 years ago and which, without new orders, will go out of production in a very short time.

By comparison, Qatar is paying $279 million for each of the 24 Dassault Rafale fighters it ordered from France in May 2015 for €6.3 billion (today worth $6.7 billion). The Rafale sale includes a very large weapons package, including 300 Mica and 160 Meteor air-to-air missiles, 140 Scalp cruise missiles, 60 Exocet anti-ship missiles and 300 AAA2M precision-guided munitions as well as training and support, which explain the price tag.

Egypt, which also ordered 24 Rafales in February 2015, paid substantially less than Qatar. Although its price was not publicly announced, leaks to French media peg it at 5.2 billion euros (today worth $5.53 million). However, this price includes a Fremm-class frigate in addition to Mica and Scalp missiles and AASM precision-guided munitions.

After deducting the 600-million euro cost of the frigate, Egypt is paying 4.6 billion euros (today worth $4.9 billion) for its Rafale package, or about $203 million per aircraft, weapons, training and initial support included.

These services are also mentioned in the notification of the F-15QA sale to Qatar, but no indication is provided as to the size of the arms package, nor even of the characteristics of the F-15QA, a new variant which has not been hitherto defined.

It also is surprising to see Qatar, which hitherto has operated just nine single-seat Mirage 2000 fighters, and which has just ordered 24 Rafales with another 12 on option, request the sale of 72 F-15s. Not only this number appears excessive, as has been noted by several observers, but also raises the question of where Qatar will find the requisite number of pilots to fly them.

Weapons are not even mentioned in the notification of the Super Hornet sale to Kuwait, so the cost of this package will have to increase if the sale goes through; depending on the type, number and value of the weapons, the cost per aircraft is likely to exceed $300 million.

This means the 20-year old Super Hornet, even after upgrading with an AESA radar, now costs as much as the latest version of the Rafale, which in addition to an AESA radar and a wider range of weapons, including the game-changing Meteor missile, does not

And that’s not the end of it. The notification of the F-18 sale to Kuwait notes that “Kuwait requires contractors to satisfy an offset obligation equal to 35 percent of the main contract purchase price for any sale of defense articles in excess of three million Kuwait Dinar, (approximately $10 million USD).”

This is likely to add to the cost of any possible deal, as the contractors will have to take on new contractual obligations, so this is another factor that can only add to the Super Hornet’s quoted $252 million average cost.

The latest Rafale sale, concluded in September, was to India, which is paying 7.87 billion euros (today worth $8.37 billion) for 36 aircraft, including weapons, training and initial support. This works out to $232.5 million per aircraft, including weapons, training and support.

Two other export contracts for European fighters were recently signed, one for the sale of 28 Eurofighters to Kuwait and a second for 36 Saab Gripen NG fighters to Brazil.

The Eurofighter sale to Kuwait is worth 7.957 billion euros, according to a statement by its government cabinet, which are today worth $8.450 billion, so its price works out to $301 million per aircraft.

The Eurofighter price benefits from the recent increase in the dollar’s value; at the time when the contract was signed, its 7.957 billion euro cost was worth $9.062 billion, or $323 million per aircraft.

However, in addition to a new Eurofighter Tranche 3 variant equipped with an E-Scan (AESA) radar, Kuwait’s contract reportedly covers a much larger range of services, including an expanded support package in addition to weapons and pilot training.

Brazil’s September 2015 contract to buy 36 Saab Gripen-NG fighters for 39.3 billion Swedish kroner, today worth $4.6 billion; this works out to $128 million per aircraft.

The difference is not unexpected, as the Gripen is a much smaller, single-engined aircraft while all the others mentioned in this article are powered by two turbojets. Furthermore, the aircraft contract does not include Gripen NG’s weapons, which were bought later under a separate contract worth about $250 million, a Saab spokesman said Nov. 21.

The price quoted for the F-15QA to Qatar is extraordinarily expensive, and on the basis of previous sales could even be considered as price gouging.

In October 2010, when the DCSA notified to Congress the planned sale of 84 Boeing F-15SA fighters to Saudi Arabia, the stated cost was $29.432 billion, including an uncommonly large weapons package including thousands of laser-guided and free-fall bombs, 300 Sidewinder and 500 Amraam missiles as well as 400 Harpoons and 600 HARM missiles.

But this package also included the refurbishment and upgrade of 70 F-15S fighters currently in service with the Royal Saudi Air Force, as well as training, spares and even the refurbishment of Saudi air bases.

Including the F-15S upgrade, the cost quoted to Congress for the Saudi Arabian sale – which has since gone through – works out to $191 million for each of the 154 aircraft, again including the huge weapons package and many services not offered to Qatar.

In other words, if the sale goes through, Qatar would be paying a 50% premium for its F-15QAs.

Given the low level of inflation between 2010 and 2016, the fact that the price quoted for Saudi Arabia is six years old is probably not hugely significant. However, a more precise comparison is impossible because the Qatari notification provides practically no information.

"The price of an F-35 isn't looking quite as bad now..."

There is simply no way to compare the pricing, due to the huge number of variables involved, including....

Avionics packages

Spares packages

Training and Maintenance programs

Weapons packages

Where built (here, or in-country)

Industrial offsets

Related programs built into pricing.

So it becomes not apples to apples, but apples to pizzas, pizzas with any toppings or combination you wish. Just have a fat treasury.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.