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Avoiding the ‘Death Spiral’

With Canada, Netherlands, Italy and the U.S. considering or already have reduced their buys, more cancellations will severely impact the procurement and future maintenance cost of the remaining fleets. Such a drop may already be in process. Canada is reconsidering its commitment to buy 65 F-35As, while the Netherlands has delayed decision to buy in another two years and is likely to scale down its order from 85 to 68-52 planes. Washington itself has delayed 410 of its 2,443 orders for F-35s beyond 2017. Italy was planning to buy 140 airplanes, but after the US decision to trim its orders Italy also reduced its requirement to 90, which further increased the aircraft price.

[ismember]Sequestration, as well as congressionally directed reductions to the System Design and Development program in FY13, has the potential to either stretch the development program out or reduce the capabilities we can deliver to the warfighter. Additionally, these increases may result in reduction of aircraft quantities, which would in turn increase unit costs even more and cause them to relook their commitment to the program. “It is vital to keep our partners in the program, any foreign partner pooling out will have an effect on the others, a ‘death spiral’.” Bogdan warned.

The news about cost coming down have not eased international pressure among the partner nations, particularly in Canada, and the Netherlands, where support for the F-35 became a political issue during recent election campaigns. Ottawa has already requested information from competing manufacturers in the U.S. and Europe, reconsidering past decision to buy the F-35.

The situation in the Netherlands is more complex. As international F-35 are entering limited operational testing, flown by US and British pilots, the first Dutch F-35A has already been delivered and the second is due for delivery by the summer of 2013. But Dutch pilots are expected to enter the tests campaign only in two years. Committed to buy 4 F-35 for operational testing, the Dutch government ordered to store the planes until the final decision on the successor of the F-16 currently in service. Washington expects the Netherlands to stick to its commitment to the program, but given the planned budget cuts, the Dutch government is likely to scale back to as low as 52 airplanes.[/ismember]

Denmark is also keeping its options open, and is likely to evaluate Saab’s Gripen NG, Boeing’s F/A-18 Super Hornet, Eurofighter Typhoon as alternatives to the planned procurement of 30 F-35As. The decision was postponed three years ago amid a budget crunch that followed the monetary crisis of 2008.

On the upside – Britain, Norway, Australia and Turkey seem to be backing the program, with Israel and Japan already committed to firm contracts. Singapore has shown tremendous interest, they are quite enthusiast about the airplane and are expected to make their decision by this summer. By June, South Korea is also expected to make its decision.

Norway remains one of the program’s strongest international supporters. On Friday (April 26) Defense Minister Anne-Grete Strøm-Erichsen has asked Parliament to approve the order for the first batch of six F-35 aircraft included in the main contract of 48 aircraft at a cost of around $10.5 billion. [ismember]Norway plans to buy six aircraft annually, from 2017 and to 2024. Norway has already committed to buy four planes that will be delivered in 2015 and 2016. The first four aircraft produced under the LRIP 7 phase will be used for training, along with two of the six from the new order. The first of the six aircraft will be delivered in 2017.

Oslo’s support was rewarded by reciprocal commitment from the U.S., selecting the APEX ammunition made by Nammo for integration with the F-35’s GAU-22A quad-barrel gun. The Norwegian-developed Kongsberg Joint Strike Missile (JSM) has also been accepted to be one of the first foreign made weapons to be integrated into the Joint Strike Fighter, once this will be fully funded by the Norwegian Armed Forces.[/ismember]
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Other topics addressed by Bogdan were:

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