Sunday, 30 December 2012

Jet fighter pricing: An exercise in sticker shock

Accessories not included.

This article does an excellent job of showcasing how confusing it is to actually pin down fighter jet costs.  One country's purchase price may be very different from another's cost to buy the exact same model.  Breaking down Canada's $8.9 billion acquisition cost for 65 F-35 leave us with a figure of $136.9 million per plane.  As expensive as this is, it seems as a relative bargain compared to Japan's cost of $238 million per plane or Israel's $202 billion per copy.  Indeed, acquisition costs seem to vary between the $123 million the Netherlands will pay up to the $240 million for the same Norwegian model whose selection was just a little controversial.

Why the disparity?  Part of the reason could be due to Canada's prior investment into the JSF program, but this seems unlikely given the fact that Norway is also a "Level 3" partner like Canada.  Part of the reason is because Canada has not yet made a firm commitment to buy, but Japan and Israel have.  Perhaps the Canadian pricing is much like those ads in the Sunday paper promising a new car for a lubriciously low price, only to find the local dealer "doesn't keep that one in stock".

Price does not include floormats, TruCoat, destination, licence, fees, registration, dealer prep...

Part of the challenge in writing this blog is getting an accurate pricing structure for the Gripen, the F-35, or any other jet.  Sadly there is no "sticker price" for jet fighters.  Procurement costs all differ according to exchange rates, production schedules, import costs, industrial offset promises, "weapon system" costs, and an almost infinite array of other factors.  Often times, a jet's reported cost doesn't include weapons, or often even an engine.  Also, the variant of jet, along with any upgrades is factor as well.  The Tranche 3 Eurofighter Typhoon is much more expensive than the Tranche 1 version, and the EF-18G Growler is more expensive than the F-18F Super Hornet, which is more expensive than the regular Hornet.

The latest estimates for the F-35 are $105 million for the F-35A, $125 million for the F-35C, and $113 million for the F-35B.  These numbers are in constant flux as are the costs for the F135 engine that is not included for that price.  Figure in another $30 million for the motor.

Price not to scale.
That initial article does portray a bit of sticker shock when it mentions Switzerland's Saab Gripen E purchase at $153 million per aircraft.  Seemingly dispelling my argument that the Gripen is a cheaper alternative.  A closer look, however, reveals that this price reflects Switzerland paying for some of the Gripen NG's development costs.  Also, the deal includes a lease of 11 older Gripen C/D models as interim aircraft, as well as training,initial spares, mission planning systems, certification, and support.

No comments:

Post a Comment