Fighter Mart to See Renewed Buying
But Who Wins Hinges on Washington

"Paris is being shrouded by events in Washington."

That's the word from Richard Aboulafia, lead aerospace analyst with the Fairfax, Virginia-based Teal Group. While world fighter markets will almost undoubtedly recover from their lowest ebb since the dawn of the jet age, who ís to get what depends largely on whether the U.S. decides to go ahead with its Joint Strike Fighter, over which Boeing and Lockheed Martin are in a deadly competition.

If the JSF is canceled, says Aboulafia, countries like Norway could opt for new European aircraft rather than making do with stopgap F-16s, for example. Greece, meanwhile, has stopped short of a Eurofighter commitment, apparently having decided to wait and see what happens to the American program. "It's really Washington that holds the cards," says the man from Teal.

It's a crucial time, because with civilian aircraft markets believed with few exceptions to be entering a down cycle, fighter aircraft represent a positive segment as they emerge from a market trough.

In shocking contrast to civilian aircraft, "the market has not grown since its all-time low point in 1995," Aboulafia says. U.S. fighter procurement fell from 382 combat aircraft in fiscal year 1986 to 28 in fiscal 1995. Fiscal 1991,fully a decade ago, was the last year that the U.S. bought more than 200 tactical combat aircraft. The budget for this year calls for the U.S. to buy 69 fighters, up just a bit from fiscal 2000's 62.

Here in Europe the post-Cold War procurement holiday has been even more pronounced, "with almost zero combat aircraft procurement in Britain, France, and Germany since 1992." World export markets have been "clobbered" by a combination of low commodity prices, particularly for oil, and the Asian economic crisis.

"The fighter market has hit an absolute rock-bottom all-time low point," Aboulafia says.
Assuming the JSF goes ahead, U.S. producers will have just over half of the market (51.6%) over the coming decade, Teal predicts, while the Europeans take 33.1%. A total of 2,938 combat aircraft worth some $134.4 billion (in 2001 dollars) will be built worldwide in the 2001-2010 period, the firm says.

That compares with a total of 3,781 fighters worth $130.6 billion (also in 2001 dollars) built between 1991 and 2000. More than 22% fewer aircraft, in other words, but worth some 3% more as advanced jets like the F/A-18E/F, F-22 and Eurofighter 2000 take respective 17.1%, 13.6% and 21.8% shares of the world market by dollar value.

Eurofighter will take even more if the JSF is canceled, and far more over the following decade. "If JSF is killed or significantly delayed, the U.S. aircraft industry will be at a severe disadvantage after 2010, and the U.S.'s status as a superpower will diminish," Aboulafia says. Strong words.
But maintaining current JSF plans, as well as planned F/A-18E/F and F-22 buys simultaneously, would put U.S. fighter spending ahead of Cold War levels, "a politically untenable proposition." And that simple analysis doesn't even take into account fluctuating non-jet and ground defense needs, let alone a potential missile-defense system.

Teal's prognostications are fraught with qualifiers and the prognosticator himself is uncharacteristically unsure of himself. While Europe would seem the ripest for a fighter jet market recovery, German and French defense budgets remain near all-time lows in terms of GDP. "Few politicians anywhere seem able to convince taxpayers to part with cash for fighters," says Aboulafia. "Even among U.S. Republicans, budget hawks now outnumber defense hawks."

But warbird manufacturers can probably, at bottom, take heart, as countries with cash are always going to need to defend themselves. "If past human behavior is any guide," Aboulafia concludes, "aggression will continue to plague us."

By Rich Piellisch