New Fighter Aircraft: 36-year Life-Cycle Cost Estimate Comparisons

Buying and operating contemporary fighter aircraft is hugely expensive, and the table (below) of cost comparisons suggests it doesn’t much matter whether they are fourth or fifth generation editions, whether stealth or not, still in development or off-the-shelf. The only real way to save money on fighter aircraft is to buy and operate fewer of them.

The attached New Fighter Aircraft cost comparisons Table attempts (in columns 1 and 2) to make sense out of the wide-ranging and often conflicting numbers and approaches that have come from the Department of National Defence (DND), the Parliamentary Budget Office (PBO), and the Auditor General (AG). Column 3 is added to project, for comparison purposes, the costs of the F-18 Super Hornet, a US-built younger and updated sibling to the current Canadian F-18 fighter aircraft, often cited as a credible and more affordable alternative to the F-35.

In the end, over the 36 years these aircraft would be expected to fly, the cost differences among the three are not negligible, but neither are they huge. Though the initial per-unit costs vary greatly, the impact of those differences on the full life-cycle costs is minimal. The differences are essentially all within a 10 percent variance.

The large differences in publicly reported numbers are due to four basic factors:

-the time span used for the various estimates has not been consistent, ranging from 20 to 30 to 36 years;

-the cost items included in estimates vary (e.g. some include personnel costs, others don’t);
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-there is a basic difference between the PBO and DND on both the initial purchase cost and the upgrade costs;

-DND has never included replacement costs for aircraft lost due to normal attrition (which the Auditor-General identifies as an oversight).

The Table therefore converts all the estimates to cover a life-cycle span of 36 years (as the AG suggests). In tabulating the full life-cycle costs, all estimates include the full maintenance, operating (including personnel) costs, with the assumption that these life-cycle maintenance and operating costs would be the same for the F-35 and the F-18 Super Hornet. All the assumptions built into the numbers are set out in some detail in the end notes (the assumptions are many, and many are debatable) .

The PBO life-cycle cost estimate for the F-35 turns out to be only 10 percent higher than that of DND, and the much “cheaper” Super Hornet is actually slightly more costly (for reasons that are explained in the notes) than DND’s cost estimates for the F-35, but it is lower than the PBO estimate for the F-35. The initial capital cost of each aircraft represents a relatively small proportion of the full life-cycle costs.

So, the only way to achieve significant savings on fighter aircraft is either to forego them altogether (which would involve a much broader re-evaluation of future military needs and roles) or to radically reduce their number. The AG says in fact that DND has not offered any clear rational for the currently proposed number – 65 aircraft (p. 17). Initially, DND was looking at 80 aircraft (a number seemingly based exclusively on the number of existing F-18 aircraft that would be left when they are finally retired). The shift to 65 aircraft appears to have been simply a matter of cost rather than any change in operational requirements. Furthermore, the Government has repeatedly suggested that the budget for the initial acquisition will remain firmly at $9 billion ($6 billion for the aircraft and $3 billion for additional infrastructure and initial weapon costs), implying that if the per unit price were to go higher, the number of aircraft to be purchased would once again be reduced.

The issues of Governmental transparency, accuracy, and veracity in reporting on the F-35 procurement process and costs, as pursued in the press and by the Opposition, are obviously of high importance. But the key requirement for a credible security rationale for acquiring a particular number of aircraft of a particular type and capability needs much more attention than it has been getting.