The price of the Lockheed Martin F-35 Stealth fighter jet has fallen below the $100 million apiece mark eroding the global market for older generation aircraft such as the F-16, Boeing F/A-18 and Saab Gripen.
F-35’s price has come down from around US$200 million apiece to US$100 million in the last 3 years. “The next lot of F-35 aircraft (LRIP 10) reflects a $728M reduction in the total price when compared to Lot 9 and marks the first time the price for an F-35A is below $100M,” a Lockheed Martin statement said earlier this week.
In this scenario, the ‘Make-in-India-and-export-to-the-world’ business model proposed by the Indian government to Lockheed Martin, Boeing and Saab for the F-16, F/A-18 and Gripen respectively begs for a strong business case. The three manufacturers, in their media pitches have been talking about meeting the Indian Air Force requirement for hundreds of aircraft and hardly anything concrete about the international market for a made-in-India aircraft.
Lockheed Martin has not sold any new F-16V fighter jets, but has received billions of dollars worth orders for upgrading older generation F-16s to the Viper or “V” version which has an APG-83 Scalable Agile Beam Radar (SABR), a new mission computer, a high-speed 1Gb databus, and a 6- by 8-inch center pedestal display.
Greece, on Tuesday decided to upgrade their existing F-16 fleet to the Viper variant costing anywhere from $1.7 to $2 billion. Taiwan have also initiated upgrading the Republic of China Air Force’s (ROCAF) 144 F-16A/B Block-20 multi-role fighter aircraft to F-16V-standards in January this year.
Close to 500 F-16s from Taiwan, South Korea, Singapore, Greece, Turkey and Egypt are in line to the F-16 upgrade program. Pakistan is also in talks with Turkey to upgrade its 74 F-16s although it is not known as to whether they are seeking an upgrade to F-16V versions.
With F-35 aircraft price falling at a pace of mobile phones price drop, even a cash-strapped country like Greece is considering buying F-35. “If their existing F-16 fleet is upgraded to the Viper variant, it will be compatible with F-35 (in terms of communications and maintenance standards) should Athens go ahead with the purchase,” Ekathimerini, a Greek news portal report Wednesday.
New fighter jet buyers are hooting for the F-35 going by a Lockheed Martin statement over the weekend that the LRIP 10 lot includes 90 55 jets for the US services and 35 jets for international partners and foreign military sales customers.
“The bottom line is unit prices, including jet, engine and fee for all three variants went down,” according to a Lockheed Martin statement Monday.
The F-35A unit price in LRIP-10, including aircraft, engine and fee, is roughly seven percent lower than the previous LRIP-9 contract. Over the past two procurement lots (LRIP-9 and 10), the price of the F-35A has dropped 12 percent.
India has raised two separate RFIs for single engine and twin-engine fighter aircraft. In media briefings executives of Boeing, Lockheed Martin and Saab have put the price of their aircraft at anywhere between US$50 million to US$75 million depending upon the configuration if they land the Indian order.
As the F-35 production volumes grow, its price will fall further and consequently older generation fighter aircraft such as the F-16, Gripen and F/A-18 would become more expensive to produce owing to a falling market and consequent erosion of volumes.
India may well knock on the Trump administration’s door as potential F-35 customer and get into the suppliers’ eco-system.
With no more orders for the F-16 from the Pentagon, Lockheed plans to use its Fort Worth, Texas plant instead to produce the fifth generation F-35 Joint Strike Fighter that the United States Air Force is transitioning to.
Lockheed would switch F-16 production to India, as long as the Indian government agrees to order hundreds of the planes that its air force desperately needs, a Lockheed Martin Spokesperson was quoted as saying by Reuters Thursday.
In Lockheed's case, however, the plan is to build the F-16 to equip the Indian Air Force, and not sell them back into the United States.