PH expects delivery of Korean fighter jets in 2015

[safeorigin]

I'm surprised there's no mention of gripens which currently have the lowest operating cost of any fighter

[Monseratto]

With the TA-50 procurement in limbo due to the downpayment issue, maybe we should lease fighter jets instead like the Malaysian are planning... The SAAB Grippen is a role model in leasing ... And they don't have political strings attached like American weaponry...

Cash-Strapped Malaysia Looks To Lease Fighters | Defense News | defensenews.com

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SINGAPORE‬ — Malaysia’s proposed purchase of fighter jets has switched from a procurement competition to a leasing competition due to affordability issues, according to industry executives.

The Malaysian government put its multirole combat aircraft program in the freezer last year for fiscal and political reasons. Now Boeing, BAE Systems and Saab have, or are about to, submit leasing proposals in the hope of making a deal palatable.

It’s possible Dassault Aviation and Sukhoi, which were also on the original procurement shortlist, are in a similar position, according to executives on the sidelines of the Singapore Airshow last week.

“The Malaysian government are mindful of the need for an affordable solution, so we understand that all the competitors are putting offers on the table for leasing. The program has become very much about affordability,” said Alan Garwood, BAE’s group business development director.

Until recently, the Royal Malaysian Air Force had been looking for a straight purchase of a new jet to replace 18 aging MiG-29 fighters, due to leave service next year.

But Malaysian budgets are under pressure to be cut, making it politically difficult to approve a multibillion-dollar deal for a fighter while the administration is cutting subsidies on items such as food and fuel while hiking taxes.

An industry executive asked whether Malaysia has the political will to make any kind of selection at this time, leasing or otherwise.

Leasing civil airliners like the Boeing 737 is big business, but in the fighter world, it’s a rare event. Sweden’s Saab is the only top-line combat jet supplier involved in leasing, with existing deals with the Czech Republic and Hungary for the Gripen for several years.

Teal Group analyst Richard Aboulafia reckons that Saab’s experience in fighter leasing could give it the edge in Malaysia.

“They have planes to spare, they know how to structure this kind of deal and have a good presence in the region,” he said.

Neighboring Thailand is operating the Gripen, having purchased 12 of the single-engine combat jets.

The current leasing arrangements involve Saab upgrading spare Swedish Air Force Gripen C and D models. It’s likely that a similar formula is being offered to Malaysia.

The Swedish company submitted its leasing option as long ago as 2012. Rival bidders were dismissive of the move at the time, but now, everybody is following Saab’s initiative.

“According to our estimates from 2010 to 2011, defense spending in the Asia-Pacific region grew by $31 billion, [a] 16 percent year-on-year increase, while from 2012 to 2013, the level of growth totaled $14.4 billion,” or 6.2 percent, he said.

“Our tentative estimates for regional defense spending from 2013 into 2014 reflect another slower rise in overall growth, with military investment increasing by $16 billion overall, with a little over half of that attributable to China, or 6.5 percent,” Darling said.

The analyst said he anticipates relatively consistent — but steadily upward — year-on-year defense spending for the region, largely driven by China, but to a lesser extent also by Indonesia.

“As China increases its military might and reach, neighbors as diverse as Japan, India, the Philippines and Vietnam are mapping out fresh modernization plans to achieve satisfactory levels of deterrence,” he said. “Even countries such as Malaysia, which maintains healthy relations with Beijing, have recognized the need to upgrade their hardware in light of China’s growing strength and increasingly assertive territorial claims in the East and South China seas.”