Fighter Deal of the Century: Europe – 2, USA – 0

India announced the winners of the down-select in the $9-11B (US) competition for 126 Medium-Multi-Role Combat Aircraft (M-MRCA) which will fill the gap between the high-end, 5th generation PAK-FA and India’s own designed and produced Light Combat Aircraft and replace older aircraft (e.g., Mirage’s) already in the inventory. Making the cut were the Eurofighter Typhoon and the Dassault Rafale, eliminating both US entries. The decision appears to have been something of a surprise to the American side and may have been the spur for American envoy Timothy Roemer who announced his retirement a day after the Indian government’s announcement. The announcement offered no particular insight as to the rationale behind the decision – but several seem to be in play.

1. America as a reliable partner: A recurring theme in the Indian press was open questioning of whether America might chose to pull the plug on parts and support at some future point. Citing examples that included previous embargoes and penalties against India, to include lobbying of the Russian government under Yeltsin to stop a planned delivery of liquid-fuel rocket engines for their indigenous SLV program. They also cited the US embargo on Pakistani F-16s that followed from the Pressler Amendment, forbidding military aid to Pakistan after the 1996 nuclear tests.  And the years of US supply to India’s regional rivals, Pakistan in particular, still rankle.

2. Technical performance: Both US aircraft reportedly suffered in comparison to the Eurofighter and Typhoon in tests held throughout India. One of the requirements levied on the competitors was the IAF’s insistence on comparison flights from the Himalaya’s to the coastal plains, simulating environments where India would have to engage it’s two regional rivals – China and Pakistan. The F-16 was likely not a player in the long run because it is in Pakistan’s inventory and evidently the F/A-18, the largest of the competitors, was not as maneuverable. Nevertheless, it was hoped by the US that, especially in the F/A-18’s case, the weapons system, employing an advanced AESA radar would trump all comers. With the local production requirement after the initial lot, India would then stand to gain substantial insight and access to the Super Hornet’s advanced weapons system, something industry craved. Yet the IAF was insistent on performance and it looks like the Eurofighter and Rafale were the best in that regard. One also wonders if the action in Libya which has seen extensive use of the Rafale and Typhoon (including debut of the LGB for the Rafale).

3. Supply/spares consideration: India’s air force already has extensive numbers of Russian and European aircraft in its fighter inventory, most notably the former with the SU-30MKI and MiG-29’s. Adding a US entry potentially would complicate logistics for the IAF beyond where it already is (Note – the SU-30MKI has a weapons system that is a hybrid of Russian, Israeli and European technology. With half the Sukhoi T-50 run going to India, Russia will be present in the IAF for the long haul. Adding an entry from Eurofighter or Dassault will lessen risk (and cost) for the IAF.

4. Price: With more poor people than all of sub-Saharan Africa, price is a matter of concern for the IAF and the Typhoon and Rafale were less expensive than their US competitors.

So, Eurofighter and Dassault are the apparent winners (with one more down-select to go) and the losers?  Certainly the major aerospace firms that did not make the cut – that much is obvious.  But there are longer-term implications to this.  As much as it hurt Lockheed-Martin and Boeing to be cut out of a contract with a $9-11B (US) potential, they still have domestic work to keep them going.  Saab has been successful in marketing to other second and third tier countries with an air defense package that includes the Grippen and their AEW platform – Thailand being the most recent buyer and Brazil showing interest.  For Mikoyan, however, it may have meant a deathblow.  The Russian Air Force was not prepared to fund development of the MiG-35 by itself, expecting instead that like the Sukhoi T-50, a joint purchase/production with India would offset the costs involved.  As poorly as the MiG demonstrator performed though (reportedly suffering as many as 14 major technical discrepancies in earlier evaluations) and as poor a record as the MiG-29 currently has in the IAF (the popular press refers to them as “flying coffins”), Mikoyan’s future in India, their only real export market, appears to have significantly dimmed – so much so that in spite of an order placed for the MiG-29K as part of the deal for the the purchase and upgrade of the ex-Gorshkov CV (now the INS Vikramaditya scheduled to begin dockside trials late this year and sea trials in 2012), Mikoyan may very well disappear as a recognizable entity in in the merger of Russian aerospace companies, United Aircraft Company (Russia).  Another loser, less noted, is GE and its military engine business.  Already having lost out to Pratt & Whitney in the JSF competition (and with a stake finally put in the heart of the F136 alternate engine) and the KC-X (P&W was partnered with Boeing on the winning entry), GE has one thin hope left  – if Dassault wins, the Rafale is powered by engines made by Snecama, produced by GE’s French partner in their CFM International joint venture.  One bright spot for GE is that their F414 engine, same as that for the F/A-18, was chosen to power the Tejas LCA when an indigenously developed engine failed to live up to expectations.  GE won that competition over the Eurojet consortium.

For those who would argue that the Indian government should have brought pressure to bear on the IAF to include an American manufacturer in the down-select, it is worth pointing out the political firestorm that would have ensued if it came to light that political expediency trumped performance (recall that in 2008, Prime Minister Singh faced a no confidence vote in his government over the nuclear deal with the US).  The IAF, on the other hand, is very much focused on its chief rivals in the region – China and Pakistan and that drives its analysis and selection.  To be blunt, the US offerings did not measure up – and that should be something taken to heart in corporate boardrooms as well as the E-ring.  With so much emphasis being placed on the bleeding edge of stealth and networked sensors, epitomized by the F-22 and F-35, the US is rapidly pricing itself out of the export fighter market and the likelihood of winning another competition, like the like the MRCA is dimming.  Next up will be Brazil and its FX-2 competition, which reprises India’s M-MRCA with all the same players (save Sukhoi’s SU-35 vice MiG) and it appears that many of the same issues besetting the Super Hornet in the M-MRCA competition have raised their head here too:

“On the flip side, the Super Hornet offers poorer aerodynamic performance than other competitors, falling behind in areas like maneuverability, acceleration, etc. This weakness is compounded by the fact that Super Hornets sell for about $75-90 million each, placing them above the Grippen, F-16 E/F+, and the SU-35, but below the Eurofighter. Concerns about America’s propensity to use arms export bans as a political lever add a final complication to the Super Hornet’s odds.” (emphasis added)

 

Driving Brazil’s concerns, like India, is a rival neighbor (Venezuela) that has one advanced fighter (SU-30MKS) and is considering supplementing that fleet with the SU-35.  The performance of the two European offerings in the Indian competition and in action off Libya will figure very prominently in Brazil’s decision, despite intense lobbying by the US government.

Back to India – there are some upsides to the down-selection.  Consider – the US, absent the potential of the M-MRCA deal has already supplanted Russia as the leading arms seller to India.  With orders on the books for C-17s and P-8Is and the lead in that will provide for airliner purchases, Boeing in particular is positioning for a long-term major presence.  There are other orders with US firms for C-130s and AH-64 Apaches as well – more opportunities to establish supply and training pipelines that may accrue long-range benefits.  The US also conducts the most exercises with the Indians – and with platforms like the P-8I providing expanded opportunities for joint training and exercise with the Indian Navy, there appear to be more, expanded opportunities on the horizon.  Still, one must wonder what the reaction in Beijing will be in light of the choice and its implications for the region – both in terms of export potential of their own brand of fighters and what the selection says about regional perceptions of US power and prestige.

And right now, they have to be liking the odds.