:: January 2007 Letter ::
“Super Mystères! Look honey, Super Mystères!” I yelped as we taxied on the San Pedro Sula runway in Honduras. For some inexplicable reason my wife appeared disinterested. She gave me an I’m-happy-for-you-dear nod, still focused on her magazine. Any aviation buff who travels with a non-aviation companion knows the feeling. They should want to see obscure historic aircraft, yet don’t even look up. What could be the matter? As I thought this, my wife yawned. But perhaps you, dear reader, are more interested. I’m just back from three weeks in Guatemala and Honduras, and it’s time for my annual vacation/aircraft market intelligence letter.
I went thinking I’d find little to write about the military market in Central America. I was right. Yet this non-existent market tells an interesting story about the broader Third World market. And I’ll get back to the Super Mystères in a moment.
Latin American military demand may have collapsed, but this was once a real market, with actual new combat aircraft sales. This market comprised more than just Argentina, Brazil, and Chile. Thirty years ago, Uruguay bought factory-fresh A-37s. They’re still in service. Good luck to anyone trying to sell them new aircraft as replacements. Since the 1980s, Latin American procurement budgets have collapsed, leaving aging fleets of F-5s, A-4s, Mirages, and lots of smaller planes. There are basically three reasons for this:
1. Globalization. Global capital access and offshore manufacturing investment are powerful draws. Governments need to choose between being a global citizen and being a well-armed whack job like Kim Jong-il. Venezuela’s Hugo Chavez clumsily walks the line between these two categories, but most countries go for the cash and maquiladoras. Being a global citizen means stability and civilian government. Both are bad for military spending, unless there is an external threat, which brings us to the second point:
2. Strategic irrelevance. If a country doesn’t want to emulate North Korea, the military quickly loses much of its raison d‘etre. Democracies get along well together, and there are few external threats in Latin America. Most of the ridiculous border squabbles have been settled so there isn’t a lot to fight about. As Henry Kissinger said of South America, it’s a dagger pointed straight at the heart of Antarctica. For the future of the Latin arms market, look at Mexico. Despite economic growth, there’s a tiny military procurement budget and a very low military spending-to-GDP ratio.
Meanwhile, US military support dried up after the Cold War ended, with FMS aid cash falling precipitously after 1990. While the drug war provides a rationale for the resumption of aid to some countries, the US occasionally de-certifies them as drug war allies due to sheer ineffectiveness and corruption. Perhaps the DEA noticed these countries paid their officers with bricks of white powder.
3. Militaries’ declining position in society. The factors above mean domestic marginalization for Latin American militaries. General view of the US military: respected institution with a strong track record of keeping the country safe from external threats; staffed by motivated individuals ultimately responsible to civilian authority. General view of most Latin American militaries: Not so much. It’s relatively easy to forecast equipment demand for popular militaries; it’s virtually impossible to forecast demand when a military might fall from grace. In 1980 nobody forecast that Argentina’s military would one day be reigned in and not buy a single new jet for decades. And in Guatemala, after decades of institutional malfeasance, military spending is now restricted to less than 1% of the national budget.
Collapsed Latin American military spending has helped destroy the light combat aircraft market. The market for light fighters (any jet smaller than an F-16) tumbled from $3.8 billion in today’s money in 1984 to zero by 2000. It’s still zero today. The market for jet trainers (often used in a secondary combat role by smaller militaries) fell from $2 billion annually in the 1980s to less than $1 billion on average since 1994. The market for armed props is also flat. Look at the main players: Embraer (Tucano ALX), Raytheon (now Hawker with its T-6B) and Finmeccanica (every other trainer ever built). They’re pursuing customers that have simply stopped buying new planes.
There’s a silver lining here. While political trends have clobbered an entire class of aircraft, we’re watching the market bifurcate into haves and have nots. Countries with wealth and power and a real external threat have graduated from Third World equipment to The Real Thing. Singapore and South Korea, for example, have gone from F-5s to F-15s and F-16s. I would argue that this is a welcome change. Thomas Friedman once argued that two countries with McDonalds don’t fight wars. Two countries with F-16s don’t fight wars, either.
Back to those Super Mystères. They say it all. Anyone still operating these planes today either doesn’t really need them, or has a terribly misplaced faith in their effectiveness (their effectiveness is particularly questionable since ground power and re-armament is provided by burro-drawn carts). Humorously, they’re parked behind protective embankments. In the unlikely event anyone cared enough to try to destroy them the only people disappointed would be the museum curators expecting them in 1978. But they sit around San Pedro Sula and La Ceiba airports, delighting people like me. (Also to be found at various Central American airports: a C-123 shot up in some squalid jungle war you’ve never heard of, numerous cannibalized 727s and UH-1s, and an A-37 last used to strafe government buildings in a coup gone badly wrong.)
For anyone still trying to sell combat aircraft to these marginal markets, a few other cautionary notes. Don’t use stealth as a selling point—these countries only burn extra-leaded fuel, compromising low observable designs. It’s also tough to promise these customers industrial offsets, unless your plane is built with a lot of cement and hand carved avionics.
Did I write this to make fun of poor old backwards Central American countries, just because their military markets have collapsed (and because their national anthem is often a car alarm)? Hell no. There’s great news on the commercial front. Whenever my faith in the vast and dysfunctional pantheon of Mayan gods is shaken, I think of the miracle of TACA. The current incarnation of the El Salvador-based airline has replaced a collection of generally useless and inexplicably proud flag carriers, and it is now even expanding into South America. They’ve created critical mass and an efficient international route network with 31 A319/320/321s, with 32 more on order. TACA also has a superb safety record in a region where crucifixes line the roads and most travel is done in school buses retired from the Muncie School District in 1958.
Another thing about TACA. They have domestic flights in countries where they aren’t domiciled, like Honduras. This represents a rare sighting of the elusive red-plumed Cabotage Bird. Central America has done better than anyone else at embracing air transport globalization, abandoning the foolish nationalist pride that hobbles market growth and efficiency. This is particularly impressive when you realize that two of the countries involved, El Salvador and Honduras, fought a vicious war with each other a few decades ago. You can’t call these countries backwards when their air transport system is more liberalized than the US and Canada. Chaac, Mayan god of rain and multilateral air service agreements has served them well.
That’s Latin America’s aviation markets in a nutshell. And obsolete military aircraft juxtaposed with modern civil jets are a great travel sight. I love the combination of baroque charm and streamlined prosperity. So consider Guatemala and Honduras in your vacation plans. There are many fine hotels in Antigua Guatemala, but we really liked the Mesón Panza Verde, which has a stellar restaurant. In Quetzaltenango, try the Pension Bonifaz. In Santiago Atitlan, the Hotel Bambú is really nice, with friendly service and great kayaking. In Copán Honduras stay at Hacienda San Lucas and visit Twisted Tanya’s for dinner: On Roatan Island I’d highly recommend Barefoot Cay which has delightful owners and rooms and great scuba diving.
Things to read? For Latin American military history, Robert Scheina’s two volume Latin America’s Wars is all you need (and probably all you’ll be offered). R.E.G. Davies Airlines of Latin America Since 1919 is a good source for pre-1984 air travel history. For leisure, Ronald Wright’s Time Among The Maya is also slightly dated but excellent. John Sayles’ Men With Guns is a fine movie about events in an unspecified Central American country. Most of all check out my colleague Marco Cáceres’ projecthonduras.com website, a model for émigrés wishing to help their home country (and a useful source for travel links).
Back here at home, Teal updates this month include the S-92, EH/US 101, MiG-29, E-6, ERJ 145, C-212, and the Prime Contracts appendix. Have a great month.
Yours, ‘Til Nicaragua Signs For F-35s,
© Richard Aboulafia 1997-2006, All rights reserved.