Cost per Aircraft Question
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Cost per Aircraft Question
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.
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.
I don't own this space under my name. I should have leased it while I still could
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.
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.
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.
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.
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....
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 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.
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.
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.
escalation (defence inflation)
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!
"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."
PDR
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
PDR
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.
PDR
Except perhaps on Ebay.
PDR
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"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)
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!
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!
I don't own this space under my name. I should have leased it while I still could
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.
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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.
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.
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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£$