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Tuesday, March 29, 2016

Canadian Rafale Cost Could be as low as $15 Billion for RCAF

Written by JDR - CAFDispatch Author
Published: March 29, 2016

As the debate continues as to which aircraft the Royal Canadian Air Force should choose as it's replacement to the McDonall-Douglas CF-18's a report came out today from Europe that France has agreed to sell Qatar the Rafale fighter at a fairly reasonable cost.

It should be noted that the costs estimates present in this post for the RCAF are my estimates based on information available.

The Dassault Rafale deal to Qatar includes 24 Rafale fighters (specific model details were not released), MBDA missiles and training for 36 pilots and 100 mechanics. The agreed cost, $7.5 Billion. It is assumed that these 24 fighters will be built in France, as with the smaller deal previously made with India.

What makes this deal interesting is that Dassault has previously stated that it would allow the majority of Rafael's to be built in Canada should the RCAF choose its aircraft. This could greatly reduce the cost of purchasing the aircraft; and it would create jobs in the Canadian aerospace industry which desperately needs a boost.

Canada's original F-35 purchase estimate was for 65 fighters, at a cost of $14.7 Billion (a 2012 figure) This number we know was a complete lie - it was discovered within a year that the purchase price would be closer to $25 Billion. That didn’t include Canada-specific modifications, ongoing maintenance and other costs

However by 2014, the purchase price had ballooned to nearly $56 Billion, and once you considered the maintenance costs and life-cycle management of the F-35 - it was going to cost an estimated $126 Billion over the 30 estimated lifespan of the Joint Strike Fighter.

With all the hidden costs, lies, and general distaste for the way the Harper Government was managing the seemingly "secrete" purchase - the F-35 purchase was put on hold. (Where it still stands today)

If we take the cost estimate of the Qatar deal and calculate it according to the 65 fighter plan Canada wants - it seems it could possibly cost $22 Billion - but this figure includes the cost of the MBDA missiles Qatar wants. Canada could opt out of this option. This estimates a cost of around $312 Million per aircraft (including training). But let's be honest - sales to Middle East countries always seem to be inflated. Egypt purchased 24 fighters for $5.6 billion. India just announced it will purchase 36 for $8.8 billion.

If we consider that the Rafale was built in Canada - the price (including intellectual property rights transfers) might get closer to the flyaway cost of around $150 million per air frame. Canada has been training Commonwealth pilots since the Second World War, and would therefore also require less training from the French Air Force. Even at a higher estimate of around $240 million per air frame, Canada would only be paying $15 billion for an aircraft that entered service nearly 20 years after the CF-18's and  2 years after the Boeing F/A-18 Super Hornet which is also being considered.

One snag in this wheel is that despite potential delays to the F-35 IOC, the Pentagon recently dropped the estimated price of its acquisition of 2,457 fighters by $12.1 billion. The drop marks a 3% decrease on the expected costs declared a year ago. This could potentially dissuade the program’s nay-sayers who have often derided the program’s soaring costs, potentially persuading Denmark and Canada who are currently on the fence, to perhaps continue with their participation in the Joint Strike Fighter Program.

For those who long for the days when we purchased the CF-18's (which had a flyaway cost of around $40 Million - those days are long over. Any fighter purchase will be into the tens of billions. Let's just buy the right one - and one that