At $2m/yr per aircraft compared to $5m/yr for Malaysia, I wonder how much it has to do with the comparative salaries of the maintenance staff in those countries. Eg, an air-force sergeant in Bangladesh earns a whopping $231 USD per year – officers such as wing commanders earn a mere $650 USD a year – compared to $50,000 USD per year for a Malaysian aircraft maintainer.

Are you sure of those numbers? $650 sounds extremely low. Perhaps you meant $6,500. Same for Malaysia. $50K? Maybe someplace like Brazil, but the Malaysian military still operates within relatively sober Commonwealth traditions AFAIK.

Spit IX – It is for the brake parachute, which Norway needs because they routinely operate from icy runways and they decided not to buy an aircraft with short-runway capability built in. Canada will need it.

Such as? I’d imagine they’d have needed to modify any new AF-focused fighter with a brake chute. The Rafale and Gripen have an approach speed (~125kts) that is somewhat lower than the F-35A (~145kts) and their canards might be slightly more efficient as air brakes than the F-35’s tailplanes. But seeing as the Canadians and Finns employed arrested landing with their F-18s (approach speed approx 130kts), prima facie it doesn’t look like the Eurocanards would suffice without modification. The Rafale M might have been a viable alternative but the difference in cost vis a vis the C variant ($15M/unit) would probably be enough to pay for the F-35A’s drag chute.

This chart shows the Norwegian Krone started high against USD in 2008, with an exchange rate hovering around 0.19 NOK to USD during the first quarter.
Then a rapid drop in the second quarter to 0.14 NOK to USD which lasted until november/december, with a modest rise to 0.15 at the end of the year.

http://www.xe.com/currencycharts/?from=NOK&to=USD&view=10Y

That is about right. NOK had been around the 0.14 level for about half a year when the report was published.
If you look at the overall view, the early 2008 high was something of an outlier.

Run your mouse over that chart again. The grid is a little misleading. The NOK didn’t dip below 0.18 until well into the third quarter. If you take the average exchange rate for the first half of the year, you’ll find it hovering close to 0.195.

While there’s no competition when it comes to operating costs, on plain acquisition the gap between the two aircraft in 2019 will be a lot narrower than one would have guessed a couple of years ago (going by the costs associated with the Swiss proposal).

I didn’t speak about the upgrade, but rather about operational support, especially during Kargil war for example, when, according to several articles I’ve read (in UK magazines) Mirages were exceptionally well supported compared to other provider’s assets.

While the Israelis played an important role in adapting the Mirage for precision strike, AFAIK there was no contribution by Dassault during the Kargil war, outside of what support it normally provided under contract. If you’ve got any articles/news reports saying otherwise, please share.

as for insurance companies, they don’t provide insurance to one person, but to many and use statistics to price their services so that the “good” majority combined with financial placements surpass the cost of the “bad ones”. Dassault doesn’t have that luxury, they have one customer that requires from them to ccept liability over another company’s work while that other company is not under Dassault’s control (and even more, belongs to the customer).. how can you factor that into your price? you have no “good majority” that warrants smooth business an whose payments would cover the costs if HAL doesn’t do the job as required.

If you don’t have the sort of size that can absorb those risks, you can always get your business insured against any specific risk by an outside agency (which in turn will have a ‘good majority’ across its business dealings).

A few months ago, as I posted earlier, Dassault complained that HAL did not build the infrastructures Dassault requested. what can Dassault do if the contract they signed said “Dassault is the sole responsible”? nothing.

Why would HAL invest in Rafale-specific infrastructure before a contract had been signed? There would have been no guarantee that negotiations with Dassault wouldn’t break-down subsequently (forcing HAL to write-off the expenditure as a loss), as recent events seem to suggest.

If the contract says: “Dassault is liable for its share of the job and HAL for his own” Dasssault would agree immediately

Its never that cut-and-dry in practice. There are bound to be loopholes and grey areas which the OEM can exploit to maximize its workshare particularly when it comes to ToT. It may not be as blatantly foolish as it was while drawing up the Scorpene contract, but in terms of incentives, the GoI is in the same boat vis a vis Dassault as it was with DCNS. Once the contract is signed, Dassault has little to lose and the GoI is for all means-and-purposes a pinata, as long as the letter of contract isn’t breached. At that point, it wouldn’t negatively affect the Rafale further export prospects with the market effectively closed and follow-on orders from India being highly unlikely.

Can you elaborate please?

(This will take us a bit off-topic and is of course my opinion.) The MMRCA for all the ‘most open and fair competition’ was hobbled by never operating within a fixed budget. At least not one that was treated with any appreciable degree of sanctity (the official budget was about $12bn IIRC). The Gripen E and SH were about 35% cheaper than the Rafale (extrapolating from the Brazilian competition and official URFC for the latter), and both shared an engine with the Tejas. The MiG-35 would have been far cheaper still and had extensive commonality with the MiG29UPG & MiG-29K. The F-16 was bit of a wild card; logically it should have been much cheaper but the Blk 60s prices paid by the UAE are steep to say the least (though given what the Omanis are paying for their EFs perhaps the Middle Eastern deals are a less than ideal benchmark).

The issue with the Rafale isn’t quality, its scale. If Dassault had the option of building them at 55 per year like Boeing and spreading out the development cost over couple of hundred aircraft, it would be dominating the market today. Airbus without any similar constraints in the civilian market is having a splendid time.

I could tell you that, after selection, it took a whole year to indians to define techs requirements they wanted for india… Dassault stick RFP (see document above) simply GoI do not trust HAL ans HAL wanna state “a state in the stae”.
Costs are useless if not at isoperimeter, so one can say everything about costs.

Issue isn’t HAL. The GoI owns HAL and the leverage it exercises over it, is only limited by the govt’s gumption. The current govt has lower tolerance for bureaucracy than any that preceded it (it just unilaterally fired the DRDO chief, a few days ago).

On the other hand, once a contract is signed the MoD loses whatever leverage it has over the OEM. If there’s any loophole or ambiguity in the contract, the company will squeeze it for every penny it can extract. And you can bet a 15,000 page contract is rife with holes.

Case in point, the Scorpene deal:

The ‘miscellaneous’ blunder in India’s Rafale deal

There is a delicious, albeit hugely expensive, irony involving the ongoing negotiations to procure 126 Dassault Rafale fighters that, in some aspects, parallels the purchase of six French Scorpene submarines nearly a decade ago.

Both deals straddled general elections a decade apart — 2004 and 2014 — featuring governments that initiated procurement procedures of the respective military platforms, but were voted out of office before inking them.

The BJP-led National Democratic Alliance began negotiating the Project 75 Scorpene contract with France in 2001, but the succeeding Congress Party-headed United Progressive Alliance eventually concluded the purchase in October 2005, some 18 months after forming the government.

The UPA, for its part, began discussions with Dassault in early 2012 for 126 Rafale’s in support of the Indian Air Force’s requirement for Medium Multi Role Combat Aircraft, after the French fighter was shortlisted from amongst six competing platforms from Europe, Russia and the US.

National polls intervened before the complex and costly deal could be concluded; and, in a sardonic reversal of roles, the Rafale deal now awaits NDA administration’s imprimatur.

The subtle irony underlying these two major acquisitions entails more than just the same cast of players — French armament companies, the Congress Party and the BJP.

It involves hugely escalating costs, questionable bids and complex and extended price negotiations which both the ministry of defence and respective service headquarters seem inept in handling.

The comparison between the Scorpene purchase and the prospective Rafale acquisition need elaborating.

In October 2005, the UPA signed the Rs 18,798 crore deal for six Scorpene submarines to be built by Mazagaon Dockyard Limited under a transfer of technology from Armaris comprising Direction des Constructions Navales and Thales of France and Spain’s Navantia.

After a series of mergers and acquisitions, this consortium emerged as DCNS in 2007 with whom all future dealings have subsequently been conducted.

Problems arose shortly after construction of three Scorpene boats began in 2007-08.

It emerged that the original agreement had mysteriously omitted to include varied critical components essential to the Scorpene’s construction including engines, generators, sub-assemblies and raw material like specialised steel.

Accordingly, the Cabinet Committee on Security headed by then Prime Minister Manmohan Singh — presented a fait accompli as MDL had already begun building the Scorpene’s — was forced in March 2010 into approving an additional Rs 1,900 crore for the newly-created Mazagaon Procurement Materials.

The MPM, as a postscript to the main submarine contract agreed to five years earlier, emerged as vital entity to source the additional apparatus from DCNS to kick-start the stalled Scorpene programme.

The protracted negotiations to purchase this gear — which raised the overall submarine contract price by some 10 per cent — lasted almost 24 months and were primarily responsible for delaying the programme by four years to 2016.

This postponement, in turn, has added serious dimension to the Indian Navy’s operational woes afflicted by its depleting underwater assets.

But more notably, this lapse in conclusively negotiating the Scorpene deal at one go appears to be one by MoD and naval officials who were either professionally incompetent or deliberately careless or both in determining essential equipment that puzzlingly and in all probability, much to DCNS’ delight, emerged later.

At the time of the follow-on agreement with the MPM, defence industry officials had held DCNS responsible for significantly inflating the cost of these supplementary items on the grounds that a large proportion needed procuring from other European suppliers.

Hence, it can be surmised that these ‘assorted’ items were either skilfully or inadvertently omitted from the Scorpene bid or simply tagged on as ‘miscellaneous’ only to be negotiated later, once the submarines construction has started leaving the MoD and Navy no alternative but to acquire them.

In what appears to be a rerun of the Scorpene project, around 50-60 ‘un-priced’ items are believed to have been listed as miscellaneous’ in Dassault’s offer for the Rafale which emerged as L1 or the lowest bidder in the MMRCA tender ahead of the Eurofighter.

MoD sources claim that it is these sundry articles that have emerged as the principal financial hurdle in negotiating the Rafale deal on the basis of its Life Cycle Cost based on keeping the fighter operational for four decades.

It appears that subsequent pricing by Dassault of these so-called miscellaneous but critical items — like in the Scorpene tender — in its deliberations with the MoD’s Cost Negotiation Committee, are responsible for significantly inflating the Rafale contract cost, jeopardising the vendors L1 status and delaying its closure.

Official sources indicate the Rafale procurement has reportedly more than doubled from Rs 42,000 crore (then around $9 billion) earmarked for the MMRCA tender, when it was floated in 2007, to around $20 billion.

Spiraling inflation and the 15-20 per cent decline in the value of the rupee against the US dollar too have contributed to the cost escalation.

Consequently, each Rafale is now reportedly priced between $110-120 million.

The cost of the plant, machinery and tooling which Dassault is required to transfer to Hindustan Aeronautics Limited to licence build 108 of the 126 Rafale’s in Bangalore has also escalated adding to the overall contract price.

But this seemingly Scorpene-like tactic of tagging on ‘miscellaneous’ items to the Rafale contract is unacceptable to the MoD.

Instead, these are deemed by the MoD to be part of Dassault’s final bid, an arrangement that is reportedly unacceptable to the French manufacturer who is seeking to negotiate their costing.

However, what does prompt embarrassing questions for the MoD and the IAF is their failure or worse, possible collusion in categorically evaluating bids, leaving vendors to spring un-anticipated and hugely expensive surprises upon them once it was too late to pull back.

Hypothetically, if the Rafale deal were to be terminated, the entire process to acquire another MMRCA would, under existing Defence Procurement Procedures, begin afresh at a time when the IAF is concerned over its depleting combat squadrons and anxieties about operating ageing assets by extending their total technical life.

Any such move would also seriously dent Prime Minister Narendra Modi’s assertions of upgrading India’s depreciated military capability.

Paradoxically, the ongoing tussle between the MoD and Dassault over the Rafale tender has also prompted a Mexican stand off between the two, in which the latter is not without advantage.

The IAF’s swiftly declining numerical superiority in combat platforms compared with the Pakistan Air Force and the correspondingly widening gap with the Peoples Liberation Army Air Force is, in a sense, a force multiplier for Dassault.

It wasn’t an estimate but a price target (ie KPP) from 1996. The 2001 change to $31M almost seems absurd now.
Yes you won’t get an EF or Rafale for 45 millions. Not even for the revised 31 million which is about 50 million in 2014 dollars. Thing is though the point of the JSF program was to have an affordable 5th gen jet. Much like the F-16 was back in the day vs. the F-15. Now if they reach the current 75 million target, that is not bad compared to the competition. But it was supposed to be cheaper which it isn’t.

1994 to 2019 (FRP) is exactly 25 years. If you consider the F-16 as a benchmark for affordability, keep in mind that the unit flyaway cost projected by General Dynamics for the ACF contract was less than $3 mil each, in 1972 dollars. 25 years later, the F-16 was priced at almost $20 mil. That’s 80% higher than the projected cost (1972: $2.92 mil, 1998: $11.4 mil).