:: September 2013 Letter ::
Years ago, my high school friends and I passed through that great American ritual known as college application letter day. For some reason, most of the letters arrived the same day. A fat letter indicated acceptance, with the envelope containing registration forms, dorm information, etc. A thin envelope contained a terse note saying that they had received many qualified applications this year, blah blah blah, never bother us again. A friend of mine joked that he expected a fat rejection letter, one that rejected him but also included pages of detailed criticism of him and why he was unsuited for admission.
South Korea has just sent Boeing’s F-15 that fat rejection letter. Long story short: FX-3 seemed decided a few weeks ago when the country’s Defense Acquisition Program Administration (DAPA) announced that Boeing’s F-15SE (Silent Eagle) was the only compliant bidder for the country’s $7+ billion 60-fighter acquisition. The F-35 was eliminated on a cost basis, while Eurofighter was eliminated for something to do with the single/twin seat mix in their bid (and for not being a US plane). All that remained, it seemed, was to negotiate the contract with Boeing.
This went badly wrong. The South Korean air force has voided DAPA’s decision with a requirements coup d’etat, implying that the F-15 was inadequate and that only something truly modern would meet their needs. Short version: go buy us some F-35s. There’s much to discuss…
First, why did South Korea change its mind? A defense ministry spokesman said, “Our air force thinks that we need combat capabilities in response to the latest trend of aerospace technology development centered around the fifth generation fighter jets and to provocations from North Korea.” Well sure. But why weren’t those factors communicated to DAPA at a much earlier stage of this multi-year competition? Why didn’t the RoKAF simply say, “We need the F-35. Please buy some for us”? Like any country, South Korea has many different decision makers and agencies, with different agendas, and many internal and external influences. The air force is one of these decision makers, but obviously it’s powerful enough to exercise a veto over all the others. Like Ted Cruz, in his dreams.
One issue is that South Korea faces two divergent strategic requirements. The first is the nutjob regime that has hundreds of artillery tubes and thousands of tanks positioned just a few miles north of Seoul. A large force of F-15s, with their massive weapons payload, is the ideal weapon for that threat. The second is the long-term threat of being in a dangerous neighborhood with lots of technologically advanced regional rivals (China, Japan, Russia). Something able to deal with the Anti-Access Area-Denial (A2AD) environment is essential for that, which means F-35s. Thus, as South Korea’s perception of these threats (in terms of timing and severity) change, preference for one plane over another shifts. One offers ordnance, the other emphasizes survivability.
Also, it’s likely that internal and external politics played a role in the reversal. Political and military leaders in South Korea have noticed that Japan has signed for F-35s (on top of their 200 F-15s). That might be tough to stomach, given that historic rivalry and animosity. Externally, the US military is likely signaling its strong preference for an F-35 acquisition, to help control costs and to bolster the program. Given the importance of the strategic relationship between the two countries, and the joint training and logistics planning between them, that may have been a factor too.
Regardless of what induced this decision, the result is clear. FX-3 will simply become an F-35 acquisition (for humor value, perhaps DAPA will need to conduct a competition with Sukhoi’s T-50). The F-35 has been given a strong boost, particularly since its first loss in a direct competition would have been a devastating blow. South Korea’s military is respected, a nice addition to the small group of air services that have endorsed the F-35. With the Netherlands recently joining Australia, Israel, Japan, and the UK, the JSF’s market position has improved markedly (although the price tag remains a serious problem for countries less wealthy than South Korea).
What should Boeing do? I’d recommend a fallback plan. Something like, “We respect your decision, even if we’re disappointed in the result. But this new competition will take some time, and F-35A deliveries and operational capability dates are likely to fluctuate. Given your force structure and fleet inventory shortfall problems, may we propose another two F-15K squadrons as a gap filler?”
What’s the impact to the F-15? To be the front runner, and then to be told that you’re too obsolete to be front-runner, is the ultimate fat rejection envelope. It’s almost impossible to follow the aircraft industry and not love the F-15. It’s the best in-production example of charismatic megafauna, the great giant creatures that symbolized Cold War aerospace. It’s also a terrific combat aircraft. But the South Korea announcement kills the SE variant. It also means that the current Saudi Arabian order will almost certainly be the last hurrah, and that the line will close in 2018.
The short-term survival of the F-15 line isn’t a problem for Boeing. But this development highlights a serious military platform sunset problem. Also this month Boeing announced that the C-17 would end production in 2015 (it could be saved, but the odds aren’t good). Unless the US Navy changes its mind or an export order arrives, the F/A-18 will shut by 2016 (Brazil’s FX-2 was the best hope; given the Brazilian economy and animosity towards the US, this looks unlikely). Meanwhile the V-22 is ramping down too, along with all rotorcraft.
The next decade could see Boeing’s military fixed wing business confined to jetliner derivatives (KC-46, P-8). This makes USAF’s Next-Generation Bomber even more of a must-win. It also makes the company’s teaming initiatives with Embraer on KC-390 and Saab on Gripen (for T-X) look like a smart (and necessary) strategy. Of course, teaming with Saab to create a competitor to South Korea’s own T-50 might not have been well-timed, given the FX-3 competition. But at least the company is aware that a military platform waterfall is approaching.
Speaking of charismatic megafauna, Teal Aircraft Binder updates this month include the C-17, and the Military Transport market overview. Other updates include the Rafale, AH-1, AS332/EC225, Ching Kuo, and Mirage F1. Have a great month.
Yours, ‘Til Teal’s Fighter Forecast Covers One Aircraft,
© Richard Aboulafia 1997-2006, All rights reserved.