Going back to the cost/price issue for a bit since critics like to raise it as a major concern (I was getting a tad bored with the semantics game of 5th Gen etc anyway). Now first up, please let me state that I am not discounting this concern as a valid one. So let’s look into this whole issue a little more.
First up, when people discuss price, what exactly are they talking about? “What?” you may say, “isn’t it obvious?”. Well, actually it isn’t, especially when people start throwing around $ figures without qualification or full details. Why do I say this? Well for one, there is no one single price. As the diagram below succinctly shows, there are actually multiple possible prices able to be referred to. Of course this is something that many critics either don’t appreciate themselves or sometimes conveniently ignore since they think it makes their points all the more forceable. Neither is all this some sort of corporate double speak meant to confuse you. Rather, as with some of the other issues discussed it is just another case of the real world being a little less black/white then some would try to imply. Don’t blame me...it’s just the way it is!
Now, depending upon which price you refer to, you may be including or excluding certain aspects. At the most basic level, you have what is referred to as the
Unit Recurring Flyaway Cost or
URF. This is the cost to the service (read military customer) to buy the aircraft from the producer (Lockheed Martin & Co. in this case) and fly it away. Interestingly, this is also the price that I believe most people would think of if you were to ask them what the price of the aircraft is. Now it is also important to remember here that the F-35 comes mission capable as a part of the URF price, unlike many of its competitors that need additional systems/pods etc added in to reach the equivalent level of mission capability.
Moving beyond URF, you get various costs such as total
Flyaway Cost, where Non-recurring costs and ancillary equipment are added in. However these tend to be amortised across the production quantities. Examples of such costs might include the initial tooling up or milling machine machine programing costs (if you were machining metal parts). These are the type of costs that need to be incurred but which typically only occur once right at the start of production - e.g. you don’t reprogram the CNC mill each time you make the same part. The result of all this being that the price is always dependent upon the quantity of aircraft (or indeed individual parts) being produced – the higher this number, the lower the individual cost…
Next we see
Weapons System Cost. Here you start seeing such additional aspects as Tech Data/Publications and various training and related. Once again though, these items tend to be amortised across production orders/buys – e.g. you don’t buy a whole new set of publications with each aircraft bought.
Moving on, we have
Average Production Unit Cost (APUC). Not only does this include those costs already discussed above, but it also starts to add in the cost of initial spares. Now, one has to also remember here that the size of this initial spares might vary from service to service, customer to customer. It also may include things that later prove un-needed. Importantly, at this point one starts to see the influence of different operating scenarios as well as budgetary considerations starting to take hold. And yet again, the cost of these spares tends to be amortised across the aircraft quantity. These spares aren’t necessarily small change either, especially if one starts to include things such as above fit engines…
Beyond this, we have
Program Acquisition Unit Cost (PAUC). Now this is one a lot of people like to throw around (often because it starts generating some large numbers). The PAUC figure includes amortisation (yep, that term again!) of all the development costs across the expected production run. This one especially can result in significant price rises when production numbers are reduced: the development costs have already largely been sunk/spent/incurred (which ever term you like) and as a result, each time you buy one less aircraft, these costs need to be spread out over a smaller quantity. This one is also a bit of a ‘Catch 22’ in that theoretically, one can try to spend more time on development (e.g. build more proof of concept demonstrators; do more design work etc) all with an aim of ensuring that production and entry into operational service proceeds smoothly and that arguably latter production costs are lower. Unfortunately though, the more you do this, the higher the development costs and thus by default the higher the PAUC.
Now moving beyond this, we have the
Life Cycle Cost where you start including operations and support costs (e.g. consumables etc). Also very closely related to this is the final ‘cost’, the
Total Ownership Cost which includes more support items, other infrastructure costs as well as ongoing mods and updates. These ones really start opening you up to multiple variables because each different customer (once again, read military service) has a unique set of requirements and options for their aircraft and the way they intend to support and use them, not to mention the level of additional infrastructure and the like that may or may not be required. To help exemplify how this works, let’s look at the F/A-18 (the classic version, not the Super Hornet). The operators of this jet include the USN, the USMC, the RAAF, the RCAF, the Kuwait Air Force, the RMAF, the Finnish Ilmavoimat, the Spanish Ejército del Aire and the Swiss Air Force. Now, no two of these services use the F/A-18 in the same manner or with necessary the same equipment fit out and as such their life cycle costs and total ownership costs all vary. For instance, one thing the RAAF and RCAF discovered (and which has been well documented) was that their aircraft were experiencing different fatigue growth then their USN brethren: Much of the USN fatigue usage is dominated by carrier catapult take-offs and arrested landings (obviously), which create great stresses on the undercarriage and fuselage whereas RCAF/RAAF fatigue usage exhibits higher and sustained g loadings that have a greater effect on the centre fuselage and wings. As such, the RAAF/RCAF aircraft have required different maintenance and modifications/upgrades then their USN counterparts to deal with this. As such, this alone would generate differing Total Ownership Costs for the RCAF/RAAF Hornets then their USN counterparts.
Now getting back to the question of F-35 cost. Which cost are we talking about? At the most basic level if you want to compare against alternative fighters (i.e. does the F-35 cost more/less then say, a Eurofighter Typhoon,
regardless of whether you believe the capabilities offered by each are equal or not), you need to start using the URF since this eliminates many of the variables detailed above. In very simple terms, it allows you to say “All other elements (e.g. operating costs etc) being equal, which aircraft can I buy more of for a fixed amount of money”. Now, in terms of URF, where does the F-35 sit in comparison with other alternate fighters?
Well, according to the latest readily available public information (from the U.S. Selected Acquisition Report (SAR)), the average URF is given as $78.7M for the F-35A, $106.5M for the F-35B and $87M for the F-35C, in 2012 USD. That assumes a total production run of 2,443 aircraft for the U.S. plus 697 for the international partners and 19 FMS for Israel.
As a comparison, the URF of the latest F-16 model is supposedly around the $60 - $70M USD mark. That for the latest Tranche 3 of the Eurofighter Typhoon is reportedly €90M (~US$111M). For the Dassault Rafale, I have seen costs in the €60 – €70M (~US$74 - US$86M) region.
Now, I will not state that any of these costs is exact and I’m sure someone will jump up and down pointing that out. Anyone who has experience with this sort of thing will know that trying to discover actual prices of combat aircraft is harder then finding the proverbial “hens teeth” or if you prefer, it can be likened to being “a riddle, wrapped in a mystery, inside an enigma”. Quite apart from the fact that no two aircraft deals are alike (even for the same platform), the fact is that most companies will guard their prices closer than the crown jewels and won’t willingly go through the ‘luxury’ of having their costs/prices published openly for all to see. What I have tried to do though is to provide the best information I could without spending an inordinate amount of time researching. Now if you want to do this and can provide irrefutable proof of your numbers then by all means please do so.
Before moving on, there is one other aspect of the URF (and by default, all of the other pricing that builds upon it) that needs to be considered. This is the fact that as production numbers increase (both in total quantities and years in production), you will see the URF will continue to come down as production efficiencies and lessons learnt kick in. To a degree this is also due to the price curve aspect that I pointed out a few pages back. I can assure you that I have seen this occur even between a couple of years of production as people discover better, more efficient, less costly ways of doing the same thing. The important thing to take away from this is that just because you see a price reference today, it is in now way guaranteed that that is the fixed price for ever and a day.
Now, I am sure some of you will like to point at other costs (if only because they can via the SAR). Well, let’s take the PAUC and APUC as a figure to look at, though please do remember the aspects of these prices that I pointed out above. Now looking at some of these figures can be quite easy because the latest SAR actually provides this info in a nice graphical format:
Now, I am sure people will jump on this and point out the price increases. Look, I’ll even help you: both PAUC and APUC have apparently increased roughly 51% over the last 10 or so years. No-one is denying that. However, whereas some here are trying to paint this as an out-of-control death spiral (dream on boys and girls, no-one in any official position is seriously talking about canceling the F-35 program), the fact remains that it is far from this. As already pointed out in earlier posts, changes to the way the customers buy aircraft and the quantities they are doing so has a major impact on the price (for instance, if you keep buying in very low quantities, of course the prices are going to remain high because companies can never get down the price curves). The fact that production is still in the relatively early stages means that there is still some way to go on this front for some of the reasons I have already pointed out. Out of interest, I think there have been something like a total of 117 aircraft either delivered or on order/in assembly – mind you, this is kind of a few more then a program such as the beloved TSR.2 in case anyone thinks this would be a simple program to also cancel….
Now, are these costs higher than everyone would have liked? Of course they are. Do you really think Lockheed Martin and their partners or even their customers enjoy all the pressure being applied because of this aspect? Of course not! Those of us involved in producing components for the program can also assure you that the pressure to reduce prices is enormous. However, just as assuredly, this is not something that is easy to make so...without a magic wand that is. Moreover, some of those cost drivers are for things that have already occurred (e.g. increased development costs) and thus without a time machine are unable to be recovered no matter how hard we all work. It’s all well and good for some here to jump up and down and yell “it’s not good enough” or “we told you so”. However, once again, I would simply ask “where was all this supposed expertise when it was apparently needed?” and more so, what do you propose to do about it?
Finally, as has already been highlighted many times, the cost of not having the F-35 is, in my opinion, even greater…unless of course the countries involved with the F-35 or looking at acquiring it, decide to go without a modern combat aircraft altogether… Now whilst some may well consider this an option, I can assure you that the majority will not. Does anyone here really see the USAF trying to keep its existing fleets of F-15s, F-16s and A-10s (some of which are getting on for 30 odd yrs old) in service or foregoing new designs when all of their allies or more importantly supposed competitors are getting new equipment? Does anyone really think that you can simply cancel the F-35 tomorrow, start a new fighter (or UCAV) program that will provide equal of better capability and that it will be in service in a short time and with no repeats of some of the issues experienced with the F-35? I’m sorry boys and girls, but that is the realm of fantasy and dreams. Oh, and by the way, don’t also forget that attempting to do so, especially in the midst of the worst economic period since the Great Depression would devastate the industry involved and put thousands of people out of work...not that that matters to anyone.
So if the best you have is "Well yeah they are buying it... But, But, they aren't shouting it from the rooftops so it doesn't count." Well you got me there LO. I guess I will just have to settle for the aircraft selling, and worry about the pride later. Pride doesn't make the aircraft cheaper though, production does. 
