Asia’s fighter mar­ket in per­spec­tive

Vayu Aerospace and Defence - - Commentary - Richard Aboulafia, TEAL Group

The Singapore Air­show is im­por­tant to the world’s fighter man­u­fac­tur­ers for one very sim­ple rea­son: Asia takes 24 per­cent of the world’s com­bat air­craft ex­ports by value. That makes it the sec­ond-largest ex­port fighter mar­ket in the world, after the Mid­dle East. Over the past 10 years, a to­tal of 561 jets worth $39.1 bil­lion in 2018 dol­lars were ex­ported by the world’s fighter man­u­fac­tur­ers, ex­clud­ing Rus­sian and Chi­nese de­signs. Of these, 128 air­craft worth $9.2 bil­lion went to Asian coun­tries, in­clud­ing Aus­tralia.

The Asian fighter mar­ket is also grow­ing at a strong pace; the re­gion’s fighter or­der back­log is con­sid­er­ably larger than the his­tor­i­cal mar­ket. Al­most 200 Lock­heed Martin F-35s are on or­der for Aus­tralia, Ja­pan and South Korea, with Singapore likely to join the F-35 club in the next 10 years. More Korea Aero­space In­dus­tries T-50/FA-50s are on the way for Thai­land, with more likely for the Philip­pines. Re­gional de­mand for ma­jor up­grade pack­ages, such as the South Korean, Sin­ga­porean and Tai­wanese F-16 en­hance­ment pro­grammes, mean fur­ther work for Western fighter primes.

The driv­ers be­hind this mar­ket are clear and strong. Re­gional ten­sions, his­tor­i­cal griev­ances, su­per­power ri­val­ries, and on­go­ing ter­ri­to­rial and re­source ac­cess dis­putes all mo­ti­vate Asian air ser­vices to bol­ster their air power ca­pa­bil­i­ties. Only com­bat air­craft com­bine fast de­ploy­a­bil­ity, real-time sur­veil­lance and pre­ci­sion lethal­ity into one cost-ef­fec­tive pack­age. Mean­while, the abil­ity of Asian coun­tries to pay for new jets has served as a mar­ket cat­a­lyst. Most of the re­gion has en­joyed strong eco­nomic growth, par­tic­u­larly in South Korea and Singapore. Rel­a­tively high com­mod­ity prices have bol­stered govern­ment re­sources in emerg­ing Asian mar­ket coun­tries, such as In­done­sia or Thai­land.

Only Malaysia stands out as an ex­cep­tion; while the coun­try has the re­sources needed for a strong mil­i­tary, it has let its air power ca­pa­bil­i­ties badly lag. A fighter com­pe­ti­tion could be­gin in 2020, but there have been false starts down this road be­fore. Ja­pan, South Korea, Aus­tralia and Singapore have rep­re­sented the high end of the mar­ket, both in Asia and glob­ally. Un­til 2015, only these coun­tries, plus Is­rael and Saudi Ara­bia, have ever pur­chased an ex­ported fighter with a unit price greater than $50 mil­lion.

His­tor­i­cally, that has meant op­er­at­ing a Boe­ing F-15 (or in Aus­tralia’s case, an F-111, fi­nally re­tired in De­cem­ber 2010). The ar­rival of the F-35 is trans­form­ing this high-end mar­ket, and while Boe­ing will get con­sid­er­able up­grade work, it is un­likely that it’ll sell ad­di­tional cur­rent-gen­er­a­tion fight­ers in the re­gion. One no­table char­ac­ter­is­tic of the re­gion is that U.S. man­u­fac­tur­ers dom­i­nate the Asian ex­port fighter mar­ket to a much greater de­gree than any­where else. While Das­sault and Eurofighter have done well in the Mid­dle East, they have yet to sell any of their cur­rent-gen­er­a­tion fight­ers east of In­dia. Saab has sold 12 Gripen C/Ds to Thai­land, and Korea Aero­space In­dus­tries’ T-50 now has a re­gional pres­ence, but Rus­sia and China play a mar­ginal role in Asia’s fighter mar­ket.

For the fu­ture, Korea Aero­space In­dus­tries is press­ing ahead with the KF-X, a medium-weight, twin-en­gine fighter, de­signed in con­junc­tion with In­done­sia. Even though South Korea is con­sid­er­ing ex­pand­ing its 40-air­craft F-35 buy with an ad­di­tional 20 fight­ers, the KF-X may go ahead, too; the coun­try has a very large F-4/F-16 re­place­ment re­quire­ment. As­sum­ing that in­dige­nous projects will con­tinue to play a rel­a­tively mar­ginal role in meet­ing re­gional fighter re­quire­ments, Asia will be a growth story for Western fighter primes for many years to come.

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