Report: It's A $7 Billion Market Outside NATO

The next ten years will see continued growth in purchases of new fighter aircraft. Outside North America and Western Europe, this will especially be the case in Asia where up to $7 billion may be spent on new fighter programs. In Eastern Europe and Latin America, several countries will be making important strategic decisions about the future of their air defence capability in the near future. It is therefore essential that the companies involved are aware of these opportunities in order to offer the best possible conditions to potential buyers.

India expects to experience sustained economic growth in the next decade and wants to ensure that no threats to the subcontinents security will endanger this growth. In line with that, there will be large-scale purchases in order to boost capability and replace old equipment.

Approximately $3 billion have already been spent on 140 new Su-30s that will be delivered between 2007 and 2017. "Up to 130 medium sized fighter aircraft are also needed, and a notable shift was made when it was announced that F-16 is considered as a strong contender. Also, more new training, special mission aircraft and helicopters are needed for all three services. All these purchases will be followed by additional related contracts for MRO and Training and Simulation worth hundreds of millions of dollars," according to Marko Lukovic, Research Analyst at Frost & Sullivan.

China is much more of a mystery, as the nation's defence procurement system is still completely opaque. It is known that they have been heavily modernising their Armed Forces over the past decade, but it is not certain what kind of a mix of modernised domestically produced and imported equipment the Chinese have managed to acquire. It is known that the purchases of Su-27s have stopped after about 120 were built. "However, it is unclear whether this had happened because they wanted to build them with better avionics after the EU sanctions are lifted as expected, or because the indigenous J-10 fighter is considered to be a better value product," Lukovic added.

Chinese Defence industry is eagerly awaiting the final decision regarding the lifting of EU sanctions and will continue the procurement drive only after the necessary adjustments have been made to include new technologies they expect to buy, should the sanctions be lifted.

In Eastern Europe, the countries currently in focus are Bulgaria and Romania. Both of these countries have been looking to buy western aircraft for over ten years in anticipation of joining NATO, but there were other more pressing priorities. Now that both countries are full NATO members, it seems fighter aircraft procurement is finally due. Judging by their spending to date, Romania is likely to purchase up to 50 second hand F-16s Block 15 or similar, which will then incrementally modernised as funds are made available, probably with Israeli assistance. The Bulgarian procurement decision is still very much open to speculation, but it is hoped that their plans will be announced soon.

In Latin America, most countries have cash-strapped Air Forces that need replacement of a large portion of their inventory but cannot afford it. There are, however, a few notable exceptions such as Chile and Colombia. Chile has placed an order for 10 Block 52 F-16 and will be negotiating a second batch later this year, while the Colombian government has just announced that it has set aside $540 million for a purchase of 22 new combat aircraft to be used against the guerrillas and drug producers.

Although it is the most powerful country in the region and the largest economy, Brazil has cancelled the troubled F-X fighter project. As most of Brazilian Air Force inventory has passed or is very near the end of service life, it is to be expected that 20-30 combat aircraft will be ordered in the next 5 years. Otherwise, the current airworthy fleet will find it increasingly difficult to control airspace over the Amazon and prevent narcotics transports.

"From the few example listed above, it is clear that the procurement of fighter aircraft will continue steadily in the next decade in countries outside North America and Western Europe," Mr Lukovic states. There is a clear market shift towards the emerging regional and global powers such as China, India, Brazil and South Africa that want to go beyond pure self-defence and project that power.

Mr Lukovic further observers a notable shift in procurement methodology, especially in India and Brazil, where the emphasis on quality and value for money has gained in prominence, and procurement decisions are no longer based purely on political reasoning.

"It should also be noted that procurement of fighter aircraft in countries mentioned above is relatively undeterred by the emergence of Unmanned Combat Airborne Vehicles (UCAVs), although some of them have long-running UAV programmes." Despite the fact that the global defence requirements have changed beyond recognition in the past 20 years, the multirole capability has ensured that there will be a requirement for manned combat aircraft for at least another two decades.

FMI: www.frost.com