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Sticker Shock:Estimating the Real Cost of Modern Fighter
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<blockquote data-quote="SuperEtendard" data-source="post: 165251" data-attributes="member: 128"><p>PARTE 4</p><p></p><p>II. HIGHLIGHTS AND CONCLUSIONS</p><p>The first and most obvious conclusion from this study (see Table 1) is that, in practice, it is</p><p>virtually impossible to compare aircraft costs with a meaningful degree of accuracy.</p><p>Even government auditors, with access to classified data, are unable to agree on actual costs. For</p><p>example, the officially quoted prices for the Eurofighter Typhoon vary by as much as 10% between</p><p>Britain and Germany, while price estimates by the GAO, the Department of Defense and the US Air</p><p>Force for both the JSF and the F-22 vary by as much as 50%.</p><p>That being said, comparisons of even estimated costs provide useful information, not only on the</p><p>relative costs of competing aircraft, but also as the basis for generic conclusions about the</p><p>economics of the industry.</p><p>Thus, Table 1 points to some interesting conclusions about the economics of combat aircraft</p><p>production, and appears to contradict conventional wisdom as to the benefits of international</p><p>cooperation, long production runs and other truisms:</p><p>1. Aircraft designed by a single country are not necessarily more expensive than those</p><p>developed through international cooperation.</p><p>Gripen and Rafale were both developed by single countries, but end up costing substantially less</p><p>than Eurofighter, which is produced by a four-nation consortium.</p><p>2. But single-nation development does not guarantee lower costs, as the three US fighters</p><p>all cost substantially more than the two European “national” fighters, and are comparable to those</p><p>of Eurofighter, a four-nation cooperative program.</p><p>Conversely, the projected unit cost of the only (partly) cooperative US aircraft, the Joint Strike</p><p>Fighter, already exceeds that of Gripen and Rafale and of two other US aircraft, F-18E and F-15E,</p><p>all of which are single-nation designs.</p><p>3. Long production runs do not always lead to less expensive aircraft.</p><p>The F-18E, with a production run of 462 aircraft, costs half as much again as the Rafale, which has</p><p>a much smaller production run of 294 aircraft. JSF will cost twice as much as Rafale, despite having</p><p>a production run almost ten times as large, and half as much again as the F-18E, whose production</p><p>run is five times smaller. All three are modern, multirole combat aircraft.</p><p>4. While charges for major program stoppages and restructurings add to program costs, the</p><p>increase is not proportional to the length of the hiatus. Both Eurofighter and Rafale programs</p><p>were halted and restructured, adding eight or ten years to their development cycle, while F-15E, F-</p><p>18E and Gripen were not, yet this is not demonstrably reflected by the difference in their</p><p>respective cost.</p><p>5. Continuity in development is the best way to avoid cost overruns. Gripen and F-18E (the</p><p>F-15E is not significant in this respect) are the only programs to have avoided lengthy “freezes”</p><p>and large-scale re-designs, and their production costs are notably lower than competitors’.</p><p>Program unit costs of Rafale, Eurofighter and F-22 exploded after they were “suspended” for</p><p>several years for major re-designs or funding shortfalls.</p><p>6. Although these aircraft were all developed beginning in the late 1980s, and for broadly similar</p><p>missions, there is no common ratio between R&D and acquisition costs. Indeed, there seems</p><p>to be no correlation whatsoever between these costs, reflecting each aircraft’s unique R&D itinerary</p><p>and development history.</p><p>In other words, development costs are influenced not by so much be an aircraft’s actual capabilities</p><p>as by a “smooth” management and development history.</p></blockquote><p></p>
[QUOTE="SuperEtendard, post: 165251, member: 128"] PARTE 4 II. HIGHLIGHTS AND CONCLUSIONS The first and most obvious conclusion from this study (see Table 1) is that, in practice, it is virtually impossible to compare aircraft costs with a meaningful degree of accuracy. Even government auditors, with access to classified data, are unable to agree on actual costs. For example, the officially quoted prices for the Eurofighter Typhoon vary by as much as 10% between Britain and Germany, while price estimates by the GAO, the Department of Defense and the US Air Force for both the JSF and the F-22 vary by as much as 50%. That being said, comparisons of even estimated costs provide useful information, not only on the relative costs of competing aircraft, but also as the basis for generic conclusions about the economics of the industry. Thus, Table 1 points to some interesting conclusions about the economics of combat aircraft production, and appears to contradict conventional wisdom as to the benefits of international cooperation, long production runs and other truisms: 1. Aircraft designed by a single country are not necessarily more expensive than those developed through international cooperation. Gripen and Rafale were both developed by single countries, but end up costing substantially less than Eurofighter, which is produced by a four-nation consortium. 2. But single-nation development does not guarantee lower costs, as the three US fighters all cost substantially more than the two European “national” fighters, and are comparable to those of Eurofighter, a four-nation cooperative program. Conversely, the projected unit cost of the only (partly) cooperative US aircraft, the Joint Strike Fighter, already exceeds that of Gripen and Rafale and of two other US aircraft, F-18E and F-15E, all of which are single-nation designs. 3. Long production runs do not always lead to less expensive aircraft. The F-18E, with a production run of 462 aircraft, costs half as much again as the Rafale, which has a much smaller production run of 294 aircraft. JSF will cost twice as much as Rafale, despite having a production run almost ten times as large, and half as much again as the F-18E, whose production run is five times smaller. All three are modern, multirole combat aircraft. 4. While charges for major program stoppages and restructurings add to program costs, the increase is not proportional to the length of the hiatus. Both Eurofighter and Rafale programs were halted and restructured, adding eight or ten years to their development cycle, while F-15E, F- 18E and Gripen were not, yet this is not demonstrably reflected by the difference in their respective cost. 5. Continuity in development is the best way to avoid cost overruns. Gripen and F-18E (the F-15E is not significant in this respect) are the only programs to have avoided lengthy “freezes” and large-scale re-designs, and their production costs are notably lower than competitors’. Program unit costs of Rafale, Eurofighter and F-22 exploded after they were “suspended” for several years for major re-designs or funding shortfalls. 6. Although these aircraft were all developed beginning in the late 1980s, and for broadly similar missions, there is no common ratio between R&D and acquisition costs. Indeed, there seems to be no correlation whatsoever between these costs, reflecting each aircraft’s unique R&D itinerary and development history. In other words, development costs are influenced not by so much be an aircraft’s actual capabilities as by a “smooth” management and development history. [/QUOTE]
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