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:: July 2018 Letter ::

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Dear Fellow Happy Farnborough Tarmac Pounders,

Every few years, the good people behind the Farnborough Air Show wake up early, put on a pot of tea, and exclaim, “Oh right…we’re supposed to hold an air show today. How do we do that again?” The results are chaotic and confused but, somehow, they pull it off.

Every few decades, European governments and companies wake up early, put on a pot of tea, and exclaim, “Oh right…we’re supposed to create a new pan-European fighter program. How do we do that again?” The results are chaotic and confused but, somehow, they pull it off.

This year saw both. At Farnborough, the UK government and industry unveiled the Tempest, a twin-engine concept fighter plane. This is the second new European fighter concept, after the Franco-German Future Combat Aircraft System (FCAS), announced in April. Unlike FCAS, Tempest is mono-national, but, let’s face it, the UK hasn’t built a combat aircraft on its own since the last Lightning rumbled off the line ~50 years ago. European countries are presenting plans and requirements, aware that none of them (aside from France…more on that in a moment) can go it alone, and instead seek a place on something multinational.

These developments echo the mid-1960s and mid-1980s, when a flock of concept planes and proposals coalesced into Tornado, Eurofighter, and planes from France and Sweden. This time much has changed, while some things haven’t. First, four things that are different today:

1. Trump. The first president to question the US’s NATO alliance commitments is inadvertently promoting European self-sufficiency and hurting US weapons prospects. Last Farnborough, the UK announced two major contracts – P-8 and AH-64E – for US systems with minimal local content. It looked like the F-35 would meet RAF and RN needs indefinitely. This Farnborough, instead of a planned Boeing AWACS contract, the UK announced Tempest, a purely UK initiative. As Dassault CEO Eric Trappier commented, “I see the British have woken up.” Similarly, a few months ago, the head of the German Air Force was forced out due to his preference for the F-35 over a Euro-solution. Thanks to Trump, European fighter sovereignty is back in vogue, either at a national or continental level.

2. Brexit. FCAS began life as a Franco-UK program. Brexit may (or may not) put the kibosh on UK involvement in pan-Euro programs; right now, nobody wants to start a program with engineers lining up for passport stamps or laborious customs checks for prototyped components. If a miracle happens by next March and we see a soft Brexit, the UK could be back in the pan-Euro fighter club. But if it’s a hard Brexit, that might be good for Tempest; nationalist nostalgia and national fighter sovereignty are close (and inbred) cousins.

3. Mind the Gap. There wasn’t much of a gap between Tornado and Eurofighter. The post-Eurofighter gap may be another story – the last one may be delivered in 2024, even with a proposed second Saudi tranche. Waiting until 2040 for next-gen fighter procurement dollars might be a stretch for European industry. But on the positive side, a year ago, Europe’s fighter future looked like a trough to nowhere.

4. Post-Cold War European Defense Budgets. Trump’s right about this. In several cases, they’re laughably low. And they typically prioritize stuff that employs people, not research programs. Given its budget, Germany can’t be regarded as a reliable program partner.

However, plus ça change, plus c'est la même chose. These five factors remain in place:

1. Russia. The holiday from history is over. For Europe, Trump’s bromance with Putin further highlights the strategic risk. That could drive defense budgets higher, even in Germany.

2. Saudi Arabia. The kingdom provided the only significant export orders for the Lightning and Typhoon and the sole export order for Tornado. The Al Yamamah Tornado deal involved tens of billions of dollars, a very big incentive for all three industrial partners. The Kingdom likely sees what Europe sees: for political reasons, a second source for combat aircraft is highly desirable. Since they want a UK-led second source, they may offer development money, particularly if they want am industrial role under Crown Prince Mohammad bin Salman’s Vision 2030.

3. France. Still hard to work with. They’re still capable of building their own jet, a capability they’d like to keep (the UK is the only other European power with this capability, but it hasn’t shown the political will to fund it). When asked to join Eurofighter as the fifth nation, France politely requested a 46% program stake. And Rafale production looks set to outlast Eurofighter production, making it easier for French industry to bridge the gap discussed above. Consider FCAS: France is taking lead on the fighter component of the project, which means Dassault will get most of the airframe and the production line. Are there any doubts about Safran taking lead on the engine, or Thales taking lead on EW, radar, and all things avionic? Where’s the scope for meaningful partnerships? As an alternative, perhaps a Franco-French cooperative effort?

4. Too Many Companies. There’s been a surprising lack of consolidation in European fighter companies. Even Saab is still around as a prime. This month Airbus CEO Tom Enders proposed a BAE/Airbus fighter merger. This has been tried before, and it would only make a Franco-German fighter more problematic.

5. US Planes Are Still Attractive. Despite efforts to go it alone, the F-35 offers an appealing off-the-shelf solution, just as the F-16 and F/A-18 did. While four NATO countries bought Eurofighter, eight NATO countries bought US planes. If Trump is followed by a pro-NATO US president, that could kill any new Euro-initiatives.

There’s my overly-simplified guide to the new European fighter landscape. This is why Teal Group mostly provides ten-year forecasts; all this stuff is still far off in the land of speculation.

Yours, ‘Til The USAF Gets Su-57s After Putin Makes An “Incredible Offer,”
Richard Aboulafia
 

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