Price of F-35A Estimated to be Halved by 2019

Lockheed Martin predicted that the unit price of the F-35A fighter jet would drop to approximately 90 billion won (US$83.5 million) by 2019. The model is the sole candidate for the Republic of Korea Air Force’s Fighter eXperimental (FX) project.

The price is equivalent to about 50 percent of what was estimated by the Defense Acquisition Program Administration (DAPA) through its advance research. However, the price of about 90 billion won is possible only when global sales is well underway. Besides, the actual price is likely to differ, because the sale is made on an inter-government contract basis.

Lockheed Martin Managing Director Randy Howard, who is in charge of its F-35 program in Korea, said on March 21 that his company agrees with the remark of Christopher Bogdan, senior manager of the F-35 program of the Department of Defense, that the price per unit would be around US$80 million to US$85 million by 2019. Mr. Bogdan made the remark on March 12 in Canberra, Australia.

“The unit price includes those of the fuselage, engine, avionics equipment, and mission systems,” said the managing director, adding, “In addition, the total cost of the introduction includes not only the unit price but also those for logistical support, spare parts, repair and maintenance equipment, training programs, simulation centers, alternative mission equipment, corps creation, and air base construction.” He continued by saying, “Lockheed Martin is trying to produce the F-35A at the lowest possible cost and provide a fifth-generation fighter jet at the price of a fourth-generation product.”

Gary North, vice president for customer requirements for Lockheed Martin, explained on March 12 that the price of the F-35 for the US Air Force dropped continuously, and would fall further once the mass production system is put into place in 2017. “The monthly output is 3.5 units at present, but the Fort Worth plant alone will be able to manufacture 179 units each year once the entire production lines are in operation,” he said.

In the meantime, some experts are pointing out that the price forecast from Lockheed Martin and the US Department of Defense is too optimistic. A high-ranking official at DAPA recently mentioned that the estimate seemed to be the most optimistic value under the assumption that the sales volume will reach 3,200 or so without a hitch.

At the 74th Defense Acquisition Program Committee meeting back on January 27, the agency estimated the total cost of the 40 F-35As scheduled to be imported between 2018 and 2022 at 7.4 trillion won (US$6.8 billion). However, if the Lockheed Martin’s forecast is right, Korea can introduce the 40 units at a cost of approximately 5 trillion won (US$4.6 billion), which can be divided to the introduction cost of 3.6 trillion won (US$3.3 billion), and the rest for the auxiliary costs mentioned above.

The amount is as much as 2.4 trillion won (US$2.2 billion) less than DAPA’s estimate. Still, it does not take into account the various variables that could arise during the negotiations. “All of the countries have purchased the F-35 on a foreign military sales basis without exception,” DAPA explained, adding, “The actual contract price is likely to differ greatly from the highly optimistic estimate.”