Procurement: Cheap Euros Change The Game


June 15, 2010: India is seeking 126 modern jet fighters, and is willing to spend over $10 billion to get what it wants. There are six aircraft competing for this contract. A year ago, France's Rafale fighter was dropped from the competition, for being too expensive and failing to meet technical requirements. But the Euro continued to decline, and France tended to the technical issues, putting Rafale back in the running. Some of the other five aircraft competing (U.S. F-16 and F-18, European Eurofighter, Russian MiG-29/35 and Swedish Gripen) are also benefitting from declines in their currencies (by about 25 percent) versus the dollar. The Rafale, Eurofighter and Gripen are now cheaper because of the currency declines.

The F-16 and F-18 were always considered frontrunners, partly because both aircraft have extensive combat records and a large number of satisfied foreign customers. But price may be the critical factor. However, the F-18 and F-16 are still very cheap compared to the Rafale, Eurofighter and Gripen, even after the recent currency shifts, mainly because the U.S. warplanes have been produced in large numbers. But because of the changes in prices, the American aircraft are no longer the clear favorites. Current prices for each aircraft are; Rafale $67 million, Eurofighter $91 million, F-16 $50 million, F-18 $58 million, Gripen $48 million, MiG-35 $39 million.

The competition may come down to what extras can be included (weapons, electronics and upgrades). Then there is the life-cycle cost (all costs, including maintenance, operating and upgrades) over the 30 year life of the aircraft. The Americans have an edge here, because of their track record with their own aircraft, particularly the F-16 and F-18. Finally, there is reliability, which, again is a matter of track record and reputation. The U.S. also has an edge here.



Article Archive

Procurement: Current 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 



Help Keep Us Soaring

We need your help! Our subscription base has slowly been dwindling. We need your help in reversing that trend. We would like to add 20 new subscribers this month.

Each month we count on your subscriptions or contributions. You can support us in the following ways:

  1. Make sure you spread the word about us. Two ways to do that are to like us on Facebook and follow us on Twitter.
  2. Subscribe to our daily newsletter. We’ll send the news to your email box, and you don’t have to come to the site unless you want to read columns or see photos.
  3. You can contribute to the health of StrategyPage. A contribution is not a donation that you can deduct at tax time, but a form of crowdfunding. We store none of your information when you contribute..
Subscribe   Contribute   Close