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Tuesday, January 7, 2014

Miscalculation: The Need For a New US Fighter Export Strategy in the Global Fighter Market - Part I

Image 1: F-16D, Image Credit: Code One Magazine

The United States dominates the global arms industry; weapon sales by US firms comprise 39% of all global arms exports. In comparison, Russia, the world's second largest arms exporter, only constitutes 14% of all global arms exports (Hargreaves, 2013). In recent years, the value of sales relating to combat aircraft has grown relative to other widely exported weapon systems. Between 2005 and 2009, sales of combat aircraft accounted for 27% of global arms sales (Wezeman, 2010). Over the course of the last half century, US aerospace firms have outperformed and outsold their competitors by large margins due to two factors. One, arms sales openly serve as a means to solidify national security and diplomatic ties. This factor inherently works to the benefit of the United States as its synergies with the US' foreign policy strategy of cultivating strategic alliances around the world. Furthermore, due to the superpower status of the United States, many nations have a large incentive to improve national security and diplomatic ties with the United States. For example, in the recent FX-III fighter competition in South Korea, the Eurofighter consortium's bid was widely believed to be irrelevant as the South Korea Government would not seriously consider a non-American firm due to its potentially harmful effects on the South Korean-US relationship (Scanlan, 2013). The second factor that has historically served to the benefit of US firms is US aerospace firms have had a intimate understanding of global fighter market. The global fighter market can be divided into two categories, the low-end fighter aircraft market in which customers buy aircraft between $30 to $50 million dollars and the high-end fighter aircraft market which countries typically buy aircraft upwards of $50 million dollars (Aboulafia, 2013). The judgement of what is considered low and high-end purely reflects pricing and not performance.

The following is a list fighter aircraft deliveries between the years 2005 to 2009 at both the low-end and high-end fighter market. While it is unlikely that this is a comprehensive list of the global fighter market, it remains a suitable sample size to make credible evaluations of the global fighter market. Countries producing aircraft for their own use, such as the United States, were omitted from the list as the primary purpose of the list is to detail the fighter export market. The primary sources for the following data is the Stockholm International Peace Research Institute (SIPRI), Defense Industry Daily, and Please refer to the notes section at the end of the article for more details.

Of the roughly 596 fighter aircraft that were exported between 2005 and 2009, 80% of fighter aircraft were $50 million dollars or less*. Sales of aircraft delivered exceeding a $50 million dollar unit price, are in bold. The data is in agreement with Richard Aboulafia's assessment from the Teal Group:

"the export market follows a different pattern than the producer countries. Only six export customers have ever purchased high end fighters (in the $65-80 million recurring flyway class)"

Over the course of the last three decades, US firms have successfully marketed aircraft to both the high-end and low-end fighter aircraft markets with the F-16 and F-15 (Center for Strategic and International Studies, 2009). After the end of the Cold War, US firms continued to solidify and expand their market share by offering a host of upgrades and co-production agreements. However, in recent years the US has begun to loose its dominant hold on the low-end fighter export market to European firms, particularly to Saab, the producer of the JAS-39 Gripen.

The Emerging Competitor - JAS-39 Gripen 

Image 2: Jas-39 Gripen

Saab aggressively markets the Jas-39 as a practical low cost solution to air-superiority in an aircraft market where high priced designs such as the Eurofighter Typhoon, F-15E, and F-35 have become the norm. The following is from a Saab marketing brochure on the JAS-39 E:

"Cost-effectiveness underpins development and  production as well as purchase price, operating cost and maintenance – in other words, the product’s entire life cycle. A 2012 study published by IHS Jane’s ranked the world’s combat aircraft by operating cost. The study confirmed that the Gripen system is one of the   most cost-effective systems in comparison with relevant alternatives from other countries such as F-35, Eurofighter, Rafale, F-18 and F-16. Gripen’s operating costs are half the size of the F-18’s and only one-third – or less – the size of the Eurofighter and Rafale, both of which are competitors on the export market. Corresponding costs for the F-35 are estimated to be at least five times larger than Gripen’s."

Despite its limited international influence, Sweden has limited defense ties and diplomatic clout when compared to the United States, Saab understands its role in the global fighter market with relation to the second variable and has subsequently specialized in providing aircraft for the low-end fighter market. In certain circumstances, Sweden's status in diplomatic relations grants Saab an advantage as seen in the recent Brazil fighter competition after Edward Snowden's leaks damaged the international reputation of the United States. The low-end fighter market remains a stable niche where Saab is able to find customers: Switzerland, Hungary, Thailand, the Czech Republic, South Africa, and Brazil are all in the process of ordering or operate the Jas-39 aircraft. While the JAS-39 C/D or even the upgraded JAS-39 NG cannot match high-end fighter aircraft in many performance based evaluations, the Gripen's airframe is largely more advanced than the three decade base F-16 airframe and provides enough in terms of avionics to make it competitive with the F-16 and its Russian counterparts. Overall, the Gripen package offers stiff competition to the F-16 and Lockheed Martin cannot afford to underestimate its competitor if it seeks to maintain its portion in the low-end fighter market.

The F-35 

Image 3: F-35A

Lockheed Martin has the unique distinction of producing both the most widely exported fighter aircraft in recent years, the "low-end" F-16 with more than 4,500 aircraft sold, and arguably the most sought fighter aircraft at the "high-end", the  F-35. Lockheed Martin believes the F-35 will succeed the F-16 as the next widely exported American fighter aircraft with an expected 3,100 aircraft ordered over its production cycle (JSF PSFD MOU, 2009). I do not dispute Lockheed's claim on its face value. The following countries have either signed agreements or expressed strong interest in the F-35 program: Denmark, Netherlands, Norway, Israel, Japan, Italy, Turkey, Australia, Canada, Singapore, South Korea and the United Kingdom (Lockheed Martin, 2013). However, these developed nations largely compose the existing high-end fighter market and Lockheed Martin is capitalizing on Boeing's lack of a 5th generation design. Thus, Lockheed Martin is set to take Boeing's historical role of producing the US' main high-end fighter export, the F-15 and its derivative strike eagle. Lockheed Martin has won every fighter competition its entered the F-35 into which speaks to the demand of fifth generation capabilities among traditional high-end fighter market customers.

“...recent market trends signal that the plane that offers the highest capability will win, Aboulafia said.'Look at South Korea. The market has decided that the F-35 wins the countries it is entered in, which means you have to look at the last of the contests where F-35 does not play a role.'” -Andrew Chuter,  AaronMehta,  and Pierre Tran, 2014

Although interest in the F-35 among countries within the high-end fighter market is significant, it is clear that interest in the F-35 among countries that traditionally acquire low-end fighter aircraft is comparatively less mature. From a purely price oriented assessment based on the data above and the cost figures provided by Lockheed Martin, the F-35 is unlikely to be able to fully match the export success of the F-16. Two in  factors will hinder the F-35 success in the low-end fighter market.

The first factor is price. Despite steady cost reductions within the F-35 program, the aircraft is not projected to reach a unit price near of $50 million dollars, even by the most optimistic estimates. By 2019, Lockheed Martin estimates the unit cost of an F-35 will be $85 million dollars in 2019 or $75 million dollars in current 2013 dollars (figures were adjusted for expected inflation by Lockheed Martin). This would make the F-35 cheaper than currently sold F-15E strike eagles or Eurofighter Typhoon Tranche 3A's, which are the two most popular high-end exported fighter aircraft. The Selected Acquisition Report (SAR), provided by the Department of Defense, projects the F-35 flyaway or unit cost will not drop below $70 million dollars even into the 2030s near the projected end of F-35 production. Its worth noting that from a capabilities perspective, the F-35 is worth every penny of the $75 million price for a nation that can afford it as it simply outclasses both the 4th generation F-16 and 4.5 generation JAS-39. However, from a marketing perspective, there are still portions of the global fighter market where its relatively high unit price makes it less competitive even with its substantial capabilities factored in.

The second factor is many nations do not maintain the necessary diplomatic ties with Washington to receive sensitive fifth generation technology. The F-35 was designed from the onset for export, unlike the F-22A which is currently banned for export to keep its advanced features "safe" even from the most stalwart US allies, such as Australia. Even with this in mind, its likely the F-35 will not be able to be sold as broadly as the less technologically mature F-16. Under the 1976 Arms Export Control Act (AECA), technology deemed to be "sensitive" by the discretion of the President is banned for export in select countries. The United States routinely withholds sensitive technology from countries it deems to be not "deserving". For example, if Pakistan expressed an interest in the F-35 to replace its current F-16s, many in the United States would agree that it is not in the national security interest of the United States to supply the F-35 to Pakistan due to allegations that Pakistan allowed Chinese engineers to examine its fleet of F-16s among other ongoing defense issues between the United States and Pakistan. Concerns over sensitive technology transfers largely do not apply to the older F-16 or are less acute when compared to the F-35. For example, the most advanced variant of the F-16 is not operated by the US but by the United Arab Emirates (F-16E/F Block 60).

Image 4: UAE F-16E Block 60

Current F-16 orders from Iraq, Oman, and the United Arab Emirates will keep the F-16 production line open until the third quarter of 2017. After F-16 production shuts down in 2017, the United States will not have a readily available fighter aircraft in the low-end fighter export market for at least another twenty years into the 2030s. As capable as the F-35 is, and despite steady cost reductions in recent years, the F-35 is unlikely to fully fill the gap left by the F-16 in the low-end fighter export market. The advanced avionics incorporated in to the latest models of the F-16 serve as piecemeal and incremental improvements at best and do not provide enough new capabilities to grant the F-16 a competitive edge against the new supermanuverable Jas-39NG and Mig-35 which will also be equipped with AESAs. Historically, US aerospace firms will not mass produce a new fighter aircraft without an endorsement from the US military, which would guarantee some orders, even if demand for a low-end fighter from the US exists elsewhere e.g. the failed F-20 Tigershark.

In order to keep the F-16 production line open past 2017, Lockheed Martin cannot continue to offer only incremental F-16 upgrades such as the F-16V "Viper". The Viper does not make any major changes to the base airframe. The only differences between the new F-16V variant and the older F-16C Block 50/52+ is the F-16V includes an AESA radar, improved cockpit displays, and an improved mission computer architecture (Dorr, 2012). While the improvements to the internal avionics will provide a noticeable enhancement to situational awareness, the base F-16 airframe remains unable to evenly compete with more mature 4.5 generation air frames such as the JAS-39 or Mig-29M2. For example, combat exercises at Red Flag 2012 showed the Gripen was able successfully dogfight F-16s flown by veteran aggressor pilots.

With the F-35 program, Lockheed Martin is poised to secure a large market share of the global high-end fighter export market. However, in order to retain its current position as the leading supplier of the low-end fighter market, more than incremental changes to the base F-16 airframe are required to make the F-16 more competitive against increasingly capable opponents. By aggressively marking a heavily upgraded F-16 in the low-end fighter export market, where the F-35 is comparatively less relevant than the F-16, Lockheed Martin can secure contracts from both markets without serious concern of diminished interest in the F-35 or loosing its position as the largest supplier in the low-end fighter market.

Author's Note: Part II will be released Monday January 13th and it will include a list of upgrade recommendations for the F-16, ways to exploit Saab's weaknesses in the international low-end market, and the limits of this paper's analysis will be discussed. As always, feel free to ask any questions in the comments or message me on the forums.


  1. U.S. leads global arms exports surge, Steve Hargreaves, 2013.
  2. America the Isolated?, Fareed Zakaria, 2013.,9171,2143560,00.html
  3. Will South Korea Ever Choose an FX-III Fighter?, CRAIG SCANLAN, 2013.
  4. F-35 Program Information, Lockheed Martin, 2013.
  5. U.S. Competitiveness in the Fighter Aircraft Export Market, Andrew Jesmain, 2009.
  6. JSF PSFD MOU, 2009.                     
  7. F-16V Is Latest ‘Viper’ Variant for Fighter Market, ROBERT F. DORR, 2012.
  8. How does the F-16 perform against its adversaries in dogfight?, Dario Leone, 2012.
  9. Saab Offers Gripens at Used F-16 Price, GERARD O'DWYER, 2010.
  10. F-X2: Brazil Picks Saab’s JAS-39 Gripen-NG over Rafale, Super Hornet, Defense Industry Daily, 2013.                                                                                                                                       
  11. Boeing And Saab To Propose Gripen For T-X, Bill Sweetman, 2013.
  12. SPECIAL REPORT: Flying the flag, Gunnar Akerberg, 2012.           
  13. Lockheed Martin F-35 JOINT STRIKE FIGHTER A “Low Observable” Approach, Vassilios A. Evangelidis, 2004.                                                                                                             
  14. Variable-stability In-flight Simulator Test Aircraft, Multi Axis Thrust Vectoring,, 2013.
  15. F-16 'Power-by-Wire' flight without back-up a success,, 2000.                     
  16. Advanced Fighter Technology Integration,, 2013.                                           
  17. JSF Diverterless Supersonic Inlet, Code One, 2000. 
  18. Have Glass/Have Glass II Top Coat Paint Application Services, Federal Business Opportunities, 2013.                                                                                                     
  19. Lockheed Martin F-16 Fighting Falcon, Scramble - The Aviation Magazine, 2013.
  20. F-16 "Have Glass" paint finish - what is it?, Darson, 2009.
  21. F-16 Fighting Falcon  The Most Technologically Advanced 4th Generation Fighter in the World, Lockheed Martin, 2013.
  22. Radar Cross Section (RCS), Global Security, 2011.
  23. F-16C/D Block 50/52,, 2013.                                                                         
  24. The UAE’s F-16 Block 60 Desert Falcon Fleet, Defense Industry Daily, 2013.
  25. Lockheed & Mitsubishi’s F-2 Fighter Partnership, Defense Industry Daily, 2013.
  26. AN/ASQ - Equipment Listing, Andreas Parsch, 2008.                                 
  27. F-16E/F block 60,, 2013.                                                                             
  28. Revolutionary AESA Technology, Raytheon, 2013.
  29. Scalable Agile Beam Radar (SABR) for the F-16, Northrup Grumman, 2013.
  30. Production of the F-16 will likely continue through 2020,, 2013.                     
  31. The Saudis’ American Shopping Spree: F-15s, Helicopters & More, Defense Industry Daily, 2013.
  32. Trouble for the Twin-Engine Giants?, Andrew Chuter,  AaronMehta,  & Pierre Tran, 2014.
  33. April 2012 Letter, Richard Aboulafia, 2012.           


* Data is from Stockholm International Peace Research Institute (SIPRI), Defense Industry Daily (DID), and Please note that this data does not compose the global amount of aircraft delivered between 2005-2009 but does serve as an adequate sample size to make assessments of the global fighter market. Data provided by SIRPRI indicated combat aircraft, which includes fighter aircraft, thus DID and provided clarification as to how many units were delivered that were actually fighter aircraft vs. other types of combat aircraft. Approximately 20% of all fighters sold can be considered high-end fighter aircraft if all 25 F-15E's ordered by Israel were delivered during this period. However, this is not the case. Deliveries of  some F-15E units to Israel occurred prior to 2005 but the author was unable to find an exact delivery schedule of F-15Es to Israel. Thus, the percentage of high-end fighter aircraft delivered between 2005 and 2009 is actually less than 20% of total fighter aircraft deliveries. The majority of aircraft delivered to Israel during this period are a result of the Peace Marble V F-16 sale. Please also note that the data provided shows aircraft deliveries which is not necessarily equal to the size of the entire aircraft order. For example, the four Eurofighter Typhoon aircraft delivered to Saudi Arabia are part of a 72 aircraft order but only four of these aircraft were delivered in 2009. The data also includes second-hand deliveries of used aircraft.


  1. Hi Matt,

    Great Article as uswal, but I think you missed the date when you said "Monday December 13th " for part II

    I know 2014 is still trying to sink in, but its either January 13 or you really mean the next part will be 11 months from now.
    Any way, good article, awsome

  2. Hi Matt,

    Another Good Article.

    So what's the future hold for the USA and single engine or twine engine?

    Will the F18/F15/F16 just be completely phased out and replaced with the F35 single engine, and new 6th gen twine engine for the USA, of about 200 produced just like the F22. (i would think that would be the go, have the best in small numbers)

    Or Will there be a new generation 4+++ high end with an new airframe mass produced at a lower cost of the F35 or a Low end 5th gen single engine F35 released. To replace all those F16.

    The F35 and F22 airframes can not be sold at low cost. So what's the answer, I am trying to get at.

    Something has to replace the F16's, will it be local production by each countries. Making there own Gripen Fighter at home. It's not that hard these days with so much technology transfer between countries, and If the USA is willing to sell them engine, and the country build there own airframe and do joint venture on avionics. It's working for India and Pak, which are going down that path. I can easily see SK and Japan doing the same.

    What about France, doing a low or High end 5th gen? I don't see them just sitting this out over the next 20-30 years.

    I think more and more country's will be moving towards single engine, low cost, low running cost and able to upgrade with domestic products there aircraft.

    As the capabilities of 2 major power going to Air Combat with each other is unlikely. Russia is struggling to sell Su35's in large numbers, No one will be buying china J20/J31. Even France deal with India is for them to be produced in India.

    Interested to read part 2

    Good article matt :-)

    1. Twin engine prospects for the US are pretty bad, both the F-15E and F/A-18E are loosing out. As highlighted by an interesting article from Defense News, Trouble for the Twin-Engine Giants?, the market for high-end twin engine fighter aircraft is pretty limited.

      The Eurofighter Typhoon is doing really well though all things considered due to interest from GCC countries. I see the F-35 taking the majority of the high-end fighter market in Europe and allied nations in Asia. The high-end market in the gulf will likely continue go toward the Eurofighter at least in the short term, Saudi's are really upset right now with US and have indicated they want their foreign policy to be less dependent on the US, another order of 72 Eurofighter aircraft is under consideration. The UAE though seems happy with its F-16E's and ordered another 25. They also have a fighter bid underway between the Rafale, F/A-18E, and F-15E but the Eurofighter has been eliminated. They have also voiced interest in simply waiting until the F-35 gets approved for Gulf countries sometime in the 2020s.

      The US won't produce a brand new 4++ aircraft as the US military has no need for one. Even if interest abroad is strong for an export only type aircraft, US firms have historically opted not to pursue it or they'll be billion dollars in the hole without guaranteed orders e.g. the failed F-20. That's why I think its so important to upgrade the F-16 beyond these piecemeal upgrades as their will not be a replacement anytime soon.

      France frankly screwed itself with the Rafale. The Rafale is too expensive for past and current customers of the French Mirage 2000 to buy and its performance is arguably less than the Eurofighter. So you have an aircraft that occupies a useless niche in the spectrum of performance and cost: it can't quite match the top of the line 4++ competitor but it isn't sufficiently cheaper to make a difference. The India order was really a fluke and there is a lot of evidence that Dassault low balled India to win. To my knowledge, French aerospace firms are only experimenting with stealth UAVs and their knowledge of stealth is limited when compared to the US so they won't be making a fifth generation aircraft of any kind in the near future.

      Always good to hear from you stone :)

  3. Gee, Would have thought France, would have at least a new Generation plan on the Books. Wonder what will they do?

    I can't see them buying F35, that will be a black eye to national pride for France.

    Maybe a 5th gen Euro Fighter involving all EU nations, but half are buying F35?

    I was thinking after I wrote my previous comments, on what will be the Future of Fighter Jets.
    After a few hr;s looking back at 2013 and the advancements of Air Superiority over the year that Drones, are capable of.

    I Came to the conclusion, of what the Future will hold.
    If you want to get recognise of an Area, you send out a Drone that can stay up in the air for 24/48 hrs
    If you want to Hit a Soft Target, you do it with a Drone, that has Hell Fire Missiles.
    If you want to Hit a Hard Target, Drones are now carry larger Bombs.
    If you want to take out Surface to Air, a Drone has a better chance of jamming, identifying and destroying, with no risk to Human pilots.
    If you want to Supply and support the troops you use a Drone, not an twine engine fighter.

    Cost as well. For 1- F18/F15 say rough, $70 million per one over the cost of a Predator of about $4m per one, that gives you 17 drones, that carry 8 hell fire, 2-4 heavy bombs, and can stay up to 48 hrs in the air, with no human life at risk.

    This is Just some of the Advancements in 2013 with the Reaper being replaced with a new Generation coming out able to engage air to air targets and stay up in the air longer and carry more payload.

    Some big ??? over twin engines, and the entire Fighter Jet programs.

    So what's the Future? If i was to Guess. In a combat situation, I don't know, I can't see the F35 going Up against T50 or J31, we just do not leave in that Era, there will not be another Hitler, or Great WW1 or WW2.
    There will be not No massive Air Battles like in WW2. I think that is a very important Question that a few ppl have pick up on when it comes to military spending and expenditure. No country will spend the money on having a military to take on the USA, the USA with it's Allies.

    As for the boggy man China, Concern Yes and No, actually War with the West, No! Conflict in the region, I think Japan will start something before china dose. Should governments around the world be spending 5% of GDP on defence budgets, yes, but in what direction and what a military stands for in 2020's is questioned. Like brits are having.

    China has every right to have a strong military, it has a population of 1.3 Billion, and it's military spending of $200Billion is small compared to the US and the USA/Allies combined. Should the China have a 5th generation fighter Yes, it there right to do so.

    One last note, the intervention of Britain and France in SA, seen the use of Euro fighter and Dassault, to bomb the targets, the US sent in Drones, which where more heavily used than the Jets. Also the Apache helicopter was used heavily as well. Which is another factor that will contrubet against having fighter twine jets up in the air for air support.

    Sorry matt wrote way to much again, when i start i don't mean it, i get to passionate about debating about china, air, military and subs..

    last, last comment.
    The USA always needs a enemy, but the greats enemy is within. Congress is a bigger threat to US ppl than any foreign country. (quote form Geo Stone)

  4. Matt

    you might want to have a read of this.

    it's 44 pages, got some interesting stuff

    1. As for your last post, to some extent that's certainly true (about drones) or will be more true a decade from now. There are some plans to make UCLASS a missile truck of sorts that could support F-35's and F-18's which is something I"ve been advocating for a while (a UAV acting as a missile truck in an air-to-air role).

      The whole doom and gloom narrative that the US is a declining super power and will soon become irellivant are pretty far fetched especially in UAV tech. Even the Israeli's cannot match the US in terms of UAV technology.

      I agree Congress is the single largest "threat" to US national security and stability above China, Russia, AQ, etc. Honestly many of America's problems have sensible answers but the political system is fundamentally broken. Thanks for the Air-Sea-Battle Australia doc, I'll be sure to give it a read after I finish the F-16 article tomorrow night.

  5. Be interesting to see the recommendations:
    An ideal F-16V for me
    Along with the new cockpit and AESA Radar etc.
    IRST/EOTS in nose
    GE-132 engine (not sure if the UAE get a say here)
    Increase wing area to 375sqft (See Agile Falcon concept & F-2A)

    Over Gripen E the fantasy F-16V would have better range on internal and should have better TW and basic wingloading figures across operational weight ranges.

    Gripen E still has a bigger nose which could house a bigger radar and offset any advantages of a better AESA.

    Too close to call really - and Gripen integrates with that little Embraer R-99 AWACS with SAAB radar in etc - perfect for tight budgets.

    Of course you only get what you pay for - so prepare to lose airframes to engine failures as they age.

  6. Should also add an internal EW suite goes without saying IMO

    1. I had many similar ideas revolving around reducing weight and increasing thrust which aught to improvements to maneuverability and I'd expect some marginal improvement to range. In terms of AESA tech though, Sweden is pretty far behind and the Raven AESA is actually mechanically pivoted which, as Defense Industry Daily points out, increases the risk for potential failure. I haven't seen any data on how many TR modules are in the Raven I know the F-16E Block 60's radar has 1,000 T/R modules.

  7. Yes European AESA very first Generation - even Japan have had their own AESA in the F-2A for years - and looking at the problem reported with APG-79 on DOTE reports it's not going to be an easy ride.

    One issue with current AESA radars is the apparent reduced scanning FOV - allowing the dish to be steerable could give it a better scanning range in azimuth & elevation - they must feel this is enough to risk failures due to more complexity.

    The radar is collaboration SAAB/EDS/Selex Gallileo - work on this might end up in the EF-2000?

    Reducing weight in the 16 seems very difficult to me especially when you need more capability internal to the airframe which needs new hardware. If only there was room for a scaled down EOTS then we could get rid of the Sniper pod also.