U.S. Fighter Aircraft Pricing Themselves Out of the Export Market (excerpt)

(Source: National Defense Magazine; posted Oct. 28, 2013)

At a time when U.S. arms manufacturers are turning to overseas markets to help make up for declining sales to Pentagon, analysts warn that the high prices of American fighter jets could place U.S. firms at a competitive disadvantage.The arrival of the F-35 Joint Strike Fighter gives manufacturer Lockheed Martin Corp. an opportunity to sell the world’s most technologically advanced aircraft. But its price tag, in excess of $100 million per airplane, will make it unattainable for most non-U.S. buyers, according to new analysis by The Teal Group, a market research firm. Other perennial contenders in international competitions, Boeing’s F/A-18E/F Super Hornet and F-15 Eagle, also are becoming out of reach for many nations.“We've jacked up the price of fighters,” says Teal Group Vice President Richard Aboulafia. “The export market’s reaction? ‘No, thank you,’” he tells industry executives at a meeting hosted by the Air Force Association, in Arlington, Va.Although the average unit price of fighters sold internationally today is $65 million — about the cost of a Super Hornet — the bulk of the export market increasingly wants F-16 prices, which is about one-third less, says Aboulafia.Of 52 countries that buy fighters worldwide, 30 are in the $35 million to $50 million price range, he says.American firms face a “real issue” trying to sell higher end machines, Aboulafia says. There are currently just five F-15 users after 40 years of trying to sell it internationally, and one non-U.S. user of the Super Hornet after 15 years of competitions, he says. “That's not good.”As the manufacturer of the F-16, Lockheed effectively owns the keys to the kingdom of export fighters, says Aboulafia. The problem is that the company is focusing its marketing efforts on the F-35 as it courts international buyers, and only a handful of countries can afford it.“It's very telling when you go to [Lockheed’s plant in] Fort Worth, Texas, that the F-16 line is treated like the red-headed stepchild,” he says. “I don't think it's necessarily in their interest to keep it going. … But it is concerning because, in terms of the export market, the F-16 line is extremely relevant and necessary.”The majority of buyers over the coming decades will shop for fighters in the price range of the F-16 or the Mirage 2000, made by France’s Dassault Aviation, Aboulafia says. “And that is the market that we're in danger of abandoning.” (end of excerpt)-ends-