When the Aeronautica Militare placed its initial order for three F-35As, it was able to approach the Italian Parliament with a surprisingly low unit cost: 80 million dollars. This is significantly lower than what European countries are paying for their Eurofighters. But what exactly is unit cost? How is it determined? Is it the cost of manufacturing the airframe? The cost of airframe plus engines? Airframe plus engines plus flight avionics? What about weapons systems integration? What about development costs? Up-front investment? Cost of ownership? What about differences caused by different service requirements? What gets averaged into the unit price can mean a difference of hundreds of millions of dollars. One thing is certain: whether or not it’s included in the sticker price, it will be in a contract somewhere, and will get paid somehow.
Eurofighter (Centre) with Su-30MKI and Tornado
With so many possibilities for juggling the figures, it is no surprise that fighter manufacturers have become expert in doing so, and incidentally created a confusopoly (to borrow a word from Scott Adams) by filling the market with incomparable prices. Defense Aerospace.com’s 2006 paper Sticker Shock: Estimating the Real Cost of Modern Fighter Aircraft is one of the braver attempts to create comparable baselines for the major contenders in the Western fighter market. Some of its findings are unsurprising- the Swedish JAS-39 Gripen is both the cheapest to buy and the cheapest to own, with the French Rafale a close second. The Super Hornet is not nearly as cheap as advertised. But most shockingly, the F-35 is at least several million dollars less expensive per unit than the Typhoon.
That the Typhoon is expensive is something everyone has been painfully aware of. Its tortuous pan-European procurement model and the vascillation and wrangling over different national requirements have contrived to make it one of the great cautionary tales in procurement lore. But that the F-35 is cheaper- well, we’ll see about that.
It should be noted that Defense Aerospace’s estimate of F-35 unit price, $115 million, is significantly higher than the price quoted by the Italian Air Force- and this was in 2006, before the full cost footprint of the F-35 was understood. Winslow Wheeler, the Director of the Straus Military Reform Project at the U.S. Center for Defense Information, estimates the unit cost at $155 million. As far as a country like Canada is concerned, that could go up as far as $167 million. But that is nothing compared with Canada’s share in the total program cost, now estimated to be in the neighbourhood of $46 billion over 42 years- an eye-bugging $707.7 million per plane.
So, are we just comparing apples and oranges? Should we concede that the whole mess is beyond our meagre imaginations and give up trying to make sense of it? No. Because in the end, whatever the sticker price, a certain amount of money has been directed in total to procuring a certain number of new airframes. That global number may be difficult to dig out, but the taxpayer deserves to know how much public money is being spent per aircraft. More than that, it is part of due diligence for a government to properly study all the ways in which these programs might bleed money in order to improve the cost-effectiveness of their purchase. Unfortunately, if they believe a program is in their interest for other reasons, they may deliberately turn a blind eye.
It also matters who’s buying. If you’re paying for the development of an aircraft and the initial orders, your costs will be higher than those of a foreign buyer five years later. If you consider the Rafale’s total program cost of around 39.6 billion euros, then the 115 aircraft built for France thus far average to 344 million euros, which will decrease to around 152 million euros if all planned aircraft are delivered. The flyaway cost for a new customer, however, may actually be in the neighbourhood of the avertised $62.1 million, which of course does not include cost of ownership and may not include certain systems.
In short, it is usually better to buy someone else’s aircraft with a limited defence budget, and, for Canada at least, even a $114-118 million Typhoon (assuming that unit prices have not been reduced) would still be far better than a $167 million F-35. But it is not the sticker price, but rather the total program cost, from the beginning of the program through systems integration through cost of maintenance and upgrades that needs to be considered- and laid out for public scrutiny. If they are not, then no unit cost quoted in any competition can be trusted to reflect the true cost of the program.
BeyondDefence 
Saying that the typhoon is a better choice for Canada simply because of your cost analysis is a little ridiculous to me. You admit that it is difficult to assess the actual cost then go on to say one is cheaper definitively. You also ignore the benefits nationally of participating in the program in terms of high end tech jobs and industry. These benefits offset much of the end cost of the planes. Canada sees none of those benefits from Europe’s fighter. You also ignore claims from the manufacturer of the F35 that the cost continues to go down as more planes are produced. There is also intangibles that need to be considered like the plane’s capability. Which one is better? Why go cheaper if you get a lemon?
1. Both programs have chronic cost overruns, the Eurofighter because of its unwieldy multinational design and manufacturing system and the F-35 because it piles too many requirements into one aircraft. It is always difficult to assess the cost of these programs, but based on all information to date, the Eurofighter is the cheaper commitment. Also, both Lockheed and the Pentagon now have a considerable record of outright lies regarding the cost, capabilities and progress of the F-35 program, whereas the cost of the Eurofighter is a known quantity. Preference goes to the known quantity.
2. Given the comments of American pilots who have flown the Eurofighter and compared it to their own aircraft, its capability is a considerable advance on all Generation 4 fighters. It has won repeatedly against the F-22 Raptor in aerial combat training. The F-35 by comparison does not have the performance parameters to stand up even to older fighters. It is protected only by the combination of its stealth and its sensor system, and in stealth configuration it carries little ordinance and is extremely vulnerable to IRST detection. Particularly for a country like Canada, stealth isn’t worth the price.
3. Given the number of overbudget military procurement programs the Harper government has created, it is time to look at more economical options in any case, such as the Super Hornet or the Gripen, either of which is perfectly adequate to the defence of Canadian airspace.
Now the Dassault Rafale seems to look attractive. Dassault is now saying it could be built here in Canada. The Rafale come close to the Typhoon in air superiority and seems to lead in ground attack capabilities. The unit price is a little more than the Gripen, an the operational costs are more than the Gripen, but cheaper than the Typhoon and of course the F 35. Also Dassault will give the source codes to Canada. I think having the source codes is attractive, you can change the config. of the aircraft without flying to another country to have is done. Who know 15 years down the road no one knows who is angry with you or not. I think if you can supply the parts and update software from within, it afford you with a little more security.
I would tend to agree. The Rafale would be quite suitable for Canada’s needs, assuming that we could cheaply integrate our existing ordinance (a big if), and the French are certainly going out of their way to sweeten the deal.
From what I have read the Rafale weapon systems are not compatible with the NATO weapon systems. All tests designate the Rafale as a fine aircraft, but if interoperability is the norm for a country like Canada (among other NATO allies), does this not pose a significant limitation for combat operations?
I am not an expert, just observer, so your thoughts are valued here.
It’s true that the Rafale isn’t currently compatible with the ordinance Canada uses, but at the time of writing this article, the French had offered to facilitate the integration of more standard NATO weapons (access to source codes etc.)
the canadian m.o.d. would be advised of the cheap purchase cost of hms illustrious, awaiting scrapping and purchase of the u. marine corps version of the harrier