Frost & Sullivan, LONDON: In the next ten years there will be a continued growth in purchases of new fighter aircraft. Outside North America and Western Europe (Eurofighter and/or JSF buyers), this will especially be the case in Asia where up to US$ 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 and this could lead to contracts potentially worth hundreds of millions of dollars being offered to fighter aircraft manufacturers. It is therefore essential that the companies involved are kept aware of these opportunities in order to offer best possible conditions to potential buyers.
When it comes to Asia, the two most interesting cases are India and China, although more purchases are also to be expected by Malaysia and Indonesia. India expects to experience sustained economic growth in the next decade and wants to ensure that no threats to her security will endanger this growth and to reinforce her position as a global power. In line with that, there will be large-scale purchases in order to improve certain capabilities and replace equipment nearing the end of service life.
US$ 3 billion were already spent on 140 new Su-30s that will be delivered in the period 2007-2017. Up to 130 medium sized fighter aircraft are needed to substitute obsolete MiG-21s, and a notable shift in procurement practices was made when India announced that Lockheed Martin F-16s are considered as strong contenders for this role. On top of that more new training, special mission aircraft and helicopters are needed for all three services. This will be followed by additional related contracts for MRO and Training and Simulation worth hundreds of millions of dollars.
China is much more of a mystery, as her defence procurement system is still completely opaque. It is known that they have been heavily modernising their Armed Forces over the past decade, but because of the shortage of reliable information it is not certain what kind of a mix of modernised domestically produced and imported equipment the Chinese have managed to acquire. It is now known that the purchases of Su-27s have stopped after about 120 were bought from Russia or licence-built in China. However, it is unclear whether this had happened because they wanted to build them with better avionics after the EU sanctions are lifted, or because the domestically built J-10 fighter is considered to be a better-value product in the long term.
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 priority was given to re-equipping and reforming their Armies and Navies. Now that both countries are full NATO members, it seems that the moment to decide what aircraft to buy has finally arrived, and not before time as the current inventory has limited capability and is nearing the end of its lifecycle. The Romanian Air Force has upgraded its MiG-21s as an interim solution, pending the long-awaited transfer to new fighter types in the next three years.
Judging by their procurement practices 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.
In Latin America most countries have Air Forces that need replacement of a large portion of their inventory, but they are short funds. 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. The Colombian government is again on the offensive against the guerrillas, and has just announced that it has set aside US$ 540 million for a purchase of 22 new combat aircraft. Twelve companies have already expressed interest to take part in the bidding process.
Although it is the most powerful country in the region and the largest economy, Brazil has cancelled the F-X fighter procurement project that was anyway plagued by delays due to lack of financing. Before cancellation, strongest contenders with highest offsets were SAAB Gripen, Dassault Mirage 2000 and Sukhoi Su-37. 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 in a new procurement project. Otherwise the current airworthy fleet consisting of a handful of upgraded F-5BRs will be under a tremendous amount of pressure trying to control airspace over the Amazon and prevent flights transporting narcotics.
From the few examples 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. There is a clear market shift towards the emerging regional and global powers such as China, India, Brazil and South Africa (Gripen) that want to go beyond pure self-defence and project that power. Other countries will also be buying but much less and over much longer periods. There is also a notable shift in procurement methodology, especially in India and Brazil where there is now much more of an emphasis on quality and value for money, and procurement decisions are no longer based on purely 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 (especially China) have long running UAV programmes.
In spite of 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.
