Cost per Aircraft Question

[puma fixer]

Hi there.


I'm just coming to the end of BES (FEngO degree course) and for an element of my final project, I need to find out how much a Hawk T1, Typhoon, Tucano, Merlin and Gazelle cost / are worth.


Is there anywhere either via dii or google that I could obtain that information and be from a reputable source? Don't really want to pester the PTs.


I tried searching parliamentary documents but to no avail.


Many thanks in advance.

[Pontius Navigator]

Just Googling Typhoon gives a cost of $140 million in 2015.
That immediately throws up questions.

Cost is easy but dates will differ. Currency £ € $ is another variable. Then legacy aircraft will have an historic cost that bears little direct comparison. This then comes to worth.

At $18m in 2003 you could probably buy a T1 on eBay for pocket money.

Incidentally my figure are from Googling. Try it.

[tucumseh]

It is not an easy question. Around 1992, I was asked by the department dealing with a salvage claim by a Norwegian fisherman, "How much does a Sea King cost?" I can't recall the details, but a Mk3 had ditched, in the North Sea I think. But they wouldn't tell me this - just posed the exam question without context.

My reply was, what Mark, and at what build standard? And based on a production run of how many? Her reply was, "A one-off, of the dearest one, as we don't want comebacks". I said £35-40M for a new one; but the question was purely hypothetical as Westland would never accept such a contract, or even bother providing a quote. She was happy. In truth, I hadn't the foggiest, but I knew very precisely what an avionic fit cost in each one, and it was frightening. The V/UHF radios were £130k each, for a run of 600. What would a one-off cost? Presumably he's still buying rounds every night.

[Not_a_boffin]

Classic "how long is a piece of string?" question. If you want what they would cost to produce now, best wet finger estimate will be to get the original unit cost (NAO major project reports used to be a good source for recentish stuff - otherwise it's into Janes or similar - and apply escalation (defence inflation) percentage value since last contract date.


If it's current cost/value you want, the specific term used is "Net Book Value" - have a look through online Hansard and you should get there.


All of course with huge caveats as to what the UPC/NBV values actually represent! Can of worms and more....

[Sky Sports]

Since its such a grey area, and in reality, no one is going to check your figures............make it up!

[falcon900]

Sky Sports has come closest to the method I suspect MoD use...
In reality, these aircraft tend to be acquired as part of a programme, and involve elements of risk and development cost sharing.
So, unlike when you buy a car which has a sticker price of say, £15000, with the manufacturer bearing all costs associated with getting it to the showroom and being responsible should it sell 1 or 100000 examples, aircraft procurement is typically much more complicated.
To illustrate, say the RAF identify a need for a new aircraft type. After determining that dear old BAE are the chosen contractor, a contract is entered to develop and build the Albatross, at a cost of £100m (if only!) for 100 aircraft. So far so simple, but MoD point out that there will be overseas orders for such a wonderful aircraft, and since £50m if the £100m was actually design and development cost, they should benefit from overseas sales, so BAE agree to give MoD £250K per overseas sale. 100 overseas sales are forecast.
What is the cost of the aircraft at this point, £1m or £750k?
Once development work begins, cost overruns are incurred achieving the specified vertical takeoff and landing performance (sound familiar?). AS this was so revolutionary,sic, MoD have to pick up 75% of the 50m overrun. Different cost per aircraft again.
Then MoD ask for a new avionics fit and 100kt higher speed. 2 year programme overrun, with all costs to MoD. Aircraft now too sophisticated to be sold to all but our closest allies, overseas order forecast now cut to 50 aircraft. Different cost per aircraft.
Two aircraft destroyed in testing, programme now cut to 148 aircraft. MoD decide to lease the fleet from BAE finance inc of Grand Cayman at an annual cost of US$ 15m a year for 15 years after which there will be a charge per remaining aircraft of US$1m. 8 aircraft are forecast to be written off during this period.
Australia cancels its interest in the Albatross and buys F 16, overseas order potential cut to 25. And on and on.......
All entirely whimsical, but perhaps allows you to appreciate why Sky Sports wasnt far off the mark! Cost per aircraft is a somewhat arbitrary number at the best of times.

[dctyke]

In my case a hell of a lot less than a Civvy MT Vauxhall Astra if you happen to dink the bumper! Unless you know of anyone who's been asked to pay a few million towards a bent aircraft! As it was sodexo running the mt and had their own insurance I refused to pay and it all got a bit sticky.

[tucumseh]

escalation (defence inflation) :ok: If only. So few realise that no longer applying this is a whopping annual cut in the defence budget. The proposals we see mooted in the media pale into insignificance.


Falcon - Whimsical? Spot on!

[PDR1]

To illustrate, say the RAF identify a need for a new aircraft type. After determining that dear old BAE are the chosen contractor...

Ah, those were the days! (wipes tears for eye). If you want to reflect current practice that should read:

"After asking dear old BAE to bid with a whole bunch of standards, restrictions and cost-driving coinstraints they offer it to american contractors without preconditions and so remarkably find that the aermican contractors are cheaper. They then buy american and endure years of being ripped off over detailed stuff they hadn't spotted in the contract."


:hmm:

PDR

[tucumseh]

PDR1

Or, run a competition, then award the contract to someone who didn't bid, whose factory happens to be in the Minister for Defence Procurement's constituency.

[PDR1]

Or - run a competition persuading several commercial organisations to invest millions in a bidding process whose sole objective was to drive the price down on the already chosen solution, with no intention of ever seriously considering any other bids.

PDR

[Nige321]

The service enquiry for the crash of Red Arrow Hawk XX179 notes the airframe loss:

'net book value of £374,812.89...'

[PDR1]

Written-down value of a specific (used) aeroplane in the context of a bulk-buy with CFx elements (seats, engine, avionics etc), net of taxes and other burdening costs. You wouldn't be able to buy one for that price - it's just an accountancy number.

Except perhaps on Ebay.

:E

PDR

[ShotOne]

"Just make it up.." Yes. One suspects that's exactly what often happens! The fact that it's nearly impossible to get a straight answer to such a simple question is maybe a matter of deliberate policy. After all many of the qualifications stated here also apply to airliners yet their prices are stated and comparable; Airbus DO publish a price list and I was shown the bank draft for the last A321 I collected from Hamburg ($109million USD if anyone's interested)

[falcon900]

You have put your finger on a key point of difference there. Airliners are developed at the manufacturers risk. There is a unit price at which they are offered for sale to airlines, with various optional extras which can be added in, mostly at a fixed cost.
The problem with so much public sector procurement is that they contract with contractors to produce the item in question. The clue is in the name: contractors. They are world class at coming up with whatever set of optics are necessary to get the contract signed, and world class at exploiting every clause to maximise their return thereafter.
Defence contracts are perfect for contractors as it is so rare for the customer not to change the specification part way through. Even where there has been effective competition before the contract is awarded, once it is underway, the contractor often has an effective monopoly over any changes.
Rope a dope, alive and well after all these years!

[Pontius Navigator]

And not just making things, providing a too. New contract to Service 5 areas comes at 25% over budget. Cancel one item; job done. Of course the price does not drop by a fifth.

[YellowTom]

Definitely not the type of answer Google will give you from a simple query as you've now seen! Some of the more recent purchases have more media coverage about pricing and financing but they are now often airframe plus build plus services deals, such as the P-8 and RC-135.

[lederhosen]

The airliner price list is an interesting topic. As is common knowledge large customers get substantial discounts. Quite often the aircraft are then sold to a leasing company, who lease back the aircraft to the airline. Hypothetically there could be a substantial difference in the amount of the lease and the amount paid to the manufacturer, which can lead to some interesting accounting. The discount can be booked to profit or hidden in the price of optional equipment or perhaps (euphemistically expressed) paid in commissions, which might be the cause of some concern for senior management at Airbus right now. It might also explain why some airlines have such an interesting fleet mix.

[DirtyProp]

True, but at least tracking down costs of civvies airframes is - or should be - easier than military ones.

[ShotOne]

Lederhosen that's all true but the point is that the buyer (as you rightly say, often a lease company) knows the price up-front. If the manufacturer messes up, it's their problem and the customer is not on the hook for squillions£$

[TBM-Legend]

The answer to a maiden's prayer!!!
https://www.aircraftcompare.com/helicopter-airplane/BAE-Hawk/358

[falcon900]

The question which the comparison with airliner prices really begs, IMHO, is whether we should continue the pursuit of the "perfect" aircraft, or whether we should behave more like smaller nations who buy their military aircraft "off of the peg" so to speak.
For well understood historical reasons, we in the UK have tended to seek "bespoke"solutions to our front line aircraft requirements, resulting in the MoD bearing considerable development and marketing risk with the inevitable attendant cost burden. No doubt defence contractors have been only too happy to encourage this, but the fundamental cause of the problem is the desire to specify bespoke solutions. Greater flexibility in terms of accepting solutions which are good rather than perfect could be considerably lees expensive, without necessarily compromising fitness for purpose in any meaningful way.

[tucumseh]

falcon900

I tend to agree, but I think I'd start with basics, like insisting on commonality at equipment level across our Services. We have aircraft where 50% of the cost is in the avionics. I mentioned a £130k radio example earlier. One reason it was so expensive was it was built to an RN spec, which needed (among other things) a specific Rx Only frequency band and very stiff harmonic rejection figures. The RAF and Army didn't need this (or thought they didn't) so went off on their own. Had they been told to use the RN spec, the unit cost would have plummeted. And embarrassment avoided years later when they were forced to nick RN radios from store.

This all about Requirements setting, which is something we do very poorly. My very last job before retiring was being handed a spec the Army thought very difficult to attain. I had a year or so to go, and they said if I delivered by then, that's as much as they could expect. The solution was already in service with the RN and RAF, trials took place the following week, and 15 sets (more than needed) were deployed to Afghanistan a week later. I'm afraid that is all too common - except the bit about knowing what's already in service. We have entire project teams reinventing decades-old wheels. The waste is astronomical.

[Pontius Navigator]

tuc, I remember decades ago there were 3 VHF boxes. Each could be crystalized to meet the extant complan. Now in those days a radio was very much like a, well, radio. The RAF used 2 of the boxes and the RN used the third.

[YellowTom]

Buying "off the peg" is working well for some of our most recent big purchases. We don't have a P-8D or an RC-135Z etc.

[Pegpilot]

You can draw interesting government procurement comparisons by looking at DfT's current Azuma High Speed Train project for the east and west coast lines as well as Great Western. Here too, a unique, custom built design has been specified by HMG involving a "bi-Mode" solution whereby electric trains are lugging around mostly idle, underpowered diesel engines for use beyond where the wires stop. It is virtually impossible to determine the initial acquisition cost as it's a leasing deal, where the rental charges reflect capital cost but also financing cost (which the builder and its partners bare, at a higher interest rate than the state would pay) and ongoing maintenance, as well as a risk provision for the builder prepared to take on such a complex and one-off design. There are indeed suggestions that leasing cost structure is a useful way for HMG to save face by not having the data on the sky-high capital cost of this farcical fleet. A good rule of thumb is to never allow the state to specify and procure directly on complex engineering projects.

[drustsonoferp]

Buying "off the peg" is working well for some of our most recent big purchases. We don't have a P-8D or an RC-135Z etc.

Buying in a model as close as possible to Commercial Off The Shelf is also resulting in challenges in terms of meeting our own regulations, such as evidence for certification, or how much we recognise the opinions of another certifying body, if we cannot easily access the evidence ourselves. None of these things are quite "free", if we judge not only in monetary costs, but risks and flexibility etc as well.