SINGAPORE — Airbus Military is betting a new agreement with state-owned Indonesian Aerospace will revive the fortunes of its tactical transport business, by helping it to secure aircraft orders there and elsewhere in the Asia-Pacific region.

Indonesian Aerospace already assembles the C212 and CN235 under license, but the C295, the largest tactical transport in Airbus Military’s product range, has always been made in Spain, although that is about to change.

On Oct. 26, an industrial cooperation agreement was signed at Indonesian Aerospace’s headquarters in Bandung for assembly of C295s, according to a senior company official. The Spanish have agreed to allow Indonesian Aerospace to assemble some C295s for customers in Indonesia and elsewhere in Asia-Pacific, he says. A memorandum of understanding (MOU) was also signed by Airbus Military and Indonesian Aerospace for the marketing of the C295 in Asia-Pacific, the official says. This is significant because — in terms of the C212 and CN235 — the two companies often fail to work together on campaigns and end up competing against each other. But the two sides are trying to rectify the situation and hope to also sign an agreement for cooperating on joint marketing of the CN235, the official says.

Indonesia’s defense minister, Purnomo Yusgiantoro, was at the Oct. 26 event and signed an MOU for the purchase of nine C295s for the Indonesian air force, the official says. The ministry hopes a firm contract will be signed before year’s end and that the first aircraft will be delivered within 12 months of that, he says. The first two or three C295s are coming from the Spanish assembly line, while the others will be built in Indonesia, he says. Spain will be producing the first units, because Purnomo is pushing for deliveries to begin as soon as possible, but it will take Indonesian Aerospace some time to get its C295 production line ready, according to the official. It already has one production line for the CN235, but it will need to change the jigs. The C295 has a longer fuselage, so the jigs will need to cover two sections behind the aircraft wing and one section in front of the wing.

The official also says an MOU was signed for the sale of three C295s to the Indonesian police.

These potential deals are welcome news for Airbus Military, which in recent weeks experienced a setback in Australia. It has a requirement for 10 tactical transport aircraft, under its Air 8000 Phase 2 Battlefield Airlifter program. But the Australian government recently issued a letter of request for availability and pricing for 10 Alenia Aeronautica C-27Js.

“Defense analysis has confirmed that the C-27J Spartan is an aircraft that could meet Australia’s battlefield tactical airlift capability need,” Australia’s defense minister, Stephen Smith, says in a statement. “This aircraft is operated by the U.S. Air National Guard, which has a planned total fleet of 38 aircraft. Due to the pending closure of the production line for U.S. Air National Guard aircraft, the Australian government has authorized defense to issue a non-binding/no-commitment letter of request (LOR) seeking price and availability information on the C-27J,” with responses expected by February 2012.

Smith says: “The issuing of a LOR does not involve any financial or contractual commitment on Australia to acquire the aircraft.” It will help Australia to determine “whether a broader tender process will be pursued. Future government consideration of this project will involve consideration of other aircraft which could meet Australia’s need. This includes the Airbus Military C295.”

While Airbus Military is remaining optimistic, there is other evidence to suggest that the Spanish are at a disadvantage in Australia. When Aviation Week met Mark Binskin in March and asked him about Australia’s requirement for tactical transports, he responded by saying “you mean the C-27J requirement.” Binskin at the time was chief of the Royal Australian Air Force and is now vice chief of the Australian Defense Force.

Greater prize

Even if Airbus Military loses to Alenia in Australia, it could be argued that Indonesia is a much greater prize, because that country has a larger market for tactical transports and is an influential member of the Association of Southeast Asian Nations. Airbus Military can see there is huge potential for sales in Southeast Asia, which is why its head of sales for Southeast Asia, Jacinto Monge, is moving next month to Indonesia from Spain.

The company is investing heavily in its Southeast Asian sales campaigns. It flew a C295 on a tour of the region this month that included demonstration flights for the Indonesian air force and others so they could see the aircraft’s capabilities, such as landing on unprepared airstrips and performing air drops. Also this month, Monge says Airbus Military flew the C295 to Vietnam for demonstration flights witnessed by officials from the country’s air force, navy, marine police, army and ministry of defense.

Thailand is another market where the local military has old tactical transports, so it is not surprising that Airbus Military flew the C295 there this month as well. “We originally took the C295 to do a demonstration at Don Mueang for the air force, navy and police,” Monge says, referring to Bangkok’s second-largest airport, where the air force stations many of its transports. But after getting to Thailand and seeing the floods in parts of the country, Airbus Military decided to use the C295 for a humanitarian aid flight, transporting drinking water and shelters to aid workers in Nakhorn Sawan province.