Big news in the military aircraft market

By now most readers will be aware of Brazil's decision (announced yesterday) to buy 36 Saab JAS 39 Gripen NG fighter aircraft (shown below - image courtesy of Saab).

What many may not realize is that this will have a seismic effect on aircraft manufacturers around the globe.  It has all sorts of implications, few of them comforting for the aviation 'powers that be'.

First, it's bad news for Boeing - and for other US aircraft manufacturers as well.  The fallout from the NSA scandal had a lot to do with this decision, as I noted last night.  If other nations begin to suspect that US military hardware and software may have 'back doors' built into it, allowing US agencies to access it and perhaps restrict or even prevent its use in time of need, they're much less likely to be willing to purchase it.  This lends a new and worrying perspective to, for example, Lockheed Martin's maintenance proposals for the F-35 Lightning II (shown below).

This plane differs from earlier generations of combat aircraft in that the manufacturer will provide much of its long-term support.  Operating forces will have only limited supplies of spares and a restricted internal maintenance and upgrade capability.  I'm sure some customers (Israel in particular) have been concerned that this might limit their strategic freedom of operation.  The NSA scandal will have given new impetus to those fears.  What if US technicians performing routine maintenance and upgrades are also accessing technological 'back doors' and downloading sensitive information?  If I were Lockheed, I'd be worried right now about how such fears might affect future sales.  Other US aircraft manufacturers will have to take this into account as well.

Boeing now finds itself in a difficult position as well.  Its F/A-18E/F Super Hornet aircraft (beaten by the Gripen for Brazil's order) is capable, but expensive.  Furthermore, it's coming to the end of its manufacturing cycle.  US Navy orders will be completed within the next few years, and (apart from Australia, which might add to its existing 24 aircraft) there are presently no international customers whose orders might keep the production line open.  Boeing has no successor combat aircraft in prospect in the short term.  That might lead to large-scale factory closings and retrenchment of skilled workers.  The latter won't wait idly at home until the next military aircraft project comes along.  They'll find other jobs, perhaps in other industries, making it hard to replace them when their skills are needed once more.

However, the most important implications are for the development of future combat aircraft.  Increasingly, this is spreading away from the first-world nations that have previously dominated that market.  Other countries are beginning to develop their own combat planes and/or the capacity to do so.  The Brazil/Sweden tie-up is only the latest of several international developments in that regard.

• India is partnering with Russia for the development of the Sukhoi/HAL FGFA (shown below - image courtesy of Wikipedia).  It's a derivative of the Sukhoi PAK FA fifth-generation 'stealth' fighter currently under development.  When it enters service in the 2020's, the FGFA is expected to be equivalent to the US F-22 Raptor in performance and capability.  (The Raptor will have been in service for almost two decades by then, so its technology won't be as advanced, relatively speaking, as it is today).

• South Korea developed its KAI T-50 Golden Eagle advanced trainer and light strike aircraft in co-operation with Lockheed Martin.  Now it's partnered with Indonesia to develop a new supersonic fighter, "designed to be more advanced than the U.S.-built Lockheed Martin F-16 Fighting Falcon jet aircraft. The KFX/IFX fighter jets will eventually be designated the F-33, with a capability slightly below the F-35."  This aircraft will probably have approximately the same capabilities as the Saab Gripen NG ordered by Brazil.  Turkey is reportedly interested in becoming a partner in the project.  If successful, it would probably restrict prospects for sales of fighter aircraft to all three nations by other powers - and be offered for sale to other nations, increasing the pressure in a very competitive market.
• Nor are fighter aircraft the only area of international co-operation that might affect future US sales.  India and Russia are jointly developing the UAC/HAL Il-214 jet transport, which is very similar in size and capability to Embraer's KC-390 jet transport project in Brazil (which we've encountered in these pages before).  Both are likely to offer stiff competition in terms of price and performance to Lockheed Martin's C-130J Super Hercules turboprop transport.  In the case of the KC-390, I'll be very surprised if Sweden's Air Force doesn't buy a few of them as a quid pro quo for Brazil's purchase of Swedish fighters.  This will give the aircraft wider exposure to potential European clients, some of whom will need transport aircraft, but won't want to spend as much as First World manufacturers are asking for their planes.

Finally, many South American nations have joined the KC-390 project or expressed interest in buying some of the aircraft. If they're collaborating with Brazil on transport aircraft, what's to stop them co-operating on fighter production? Saab has already agreed that 'Brazil will have the sales lead for Gripen NG in Latin America with joint opportunities for the rest of the world'.  It's noteworthy that the Brazilian defense minister made no bones about the prospects for future fighter aircraft development when he announced the purchase of the Gripens.

Saab has guaranteed the total transfer of technology of “all systems” including the weapons command software, which will allow future integration of Brazilian-developed missiles and weapons.

. . .

Amorim says “besides this contract we are also currently open to setting up other partnerships, especially regarding fifth-generation fighters”.

Amorim adds Brazil has a strong relationship with the US and is not concerned about limitations to US-sourced components.

Commenting about the Gripen NG, general Saito says “the intellectual property of this new fighter will be ours”.

Saab had earlier promised to develop a $150 million aerostructures assembly plant in the city of São Bernardo do Campo in the State of São Paulo.

There's more at the link.  Bold underlined text is my emphasis.

It's likely that neither Sweden nor Brazil can afford to develop another generation of fighter aircraft alone.  The costs involved in such an undertaking are staggering.  However, if they follow the example of South Korea and Indonesia, or India and Russia, building on a foundation laid by co-operating with First World manufacturers and then using their newly-developed skills and infrastructure to tackle their own designs, this becomes much more affordable - particularly when two nations share the development costs - and practical.  Furthermore, in this way they can guarantee that no US intelligence agencies have engineered 'back doors' into their technology, which might be a strong selling point for prospective buyers in other countries.  Brazil already has experience of such partnerships, co-developing the AMX light strike aircraft with Italy's Aermacchi and Aeritalia and the A-Darter air-to-air missile (about which I've written before ) with South Africa's Denel, and planning to build helicopters and submarines (including a nuclear submarine) in conjunction with French companies.  The relationship between Embraer and Saab will build on this foundation.

Saab and Embraer have both been mid-level success stories in the aviation world in recent decades, in comparison to the giants in the field (Boeing, Lockheed Martin, Northrop, Airbus).  Their association in Brazil's Gripen order and subsequent endeavors might develop their partnership into a major competitor for US and European suppliers.  This will bear watching - as I'm sure US aviation companies are undoubtedly doing right now, with more than a little concern.

Peter