With fewer Rafale combat jets on order and no firm export contracts in hand, France is facing difficult choices.

The French defense ministry announced contracts on Jan. 10 for €1 billion ($1.4 billion) in planned upgrades to the Dassault Aviation combat jet. Yet budget pressures have forced drastic reductions in the total number of Rafale aircraft and next-generation weapon systems the ministry plans to buy over the next six years, prompting new spending for renovation of Mirage 2000D fighters and further extending the service life of aging Mirage 2000-5s.

Pressure on the nation's €190 billion six-year defense spending plan is so great that the air force wants to purchase new Swiss turboprop aircraft and associated combat jet simulators as part of an unprecedented change in the way France trains its fighter pilots.

“We are going to basically redesign the entire notion of training with the project 'Cognac 2016,'” says French Air Force Chief of Staff Gen. Denis Mercier, adding that the service hopes to take delivery of the first PC-21 turboprops by 2017.

Despite the fact that financial pressure is reducing the defense ministry's Rafale orders to 26 from 66 through 2019, France is investing in a new F3-R-standard software upgrade that will enable full integration of new weapons and a next-generation laser targeting pod, improvements that will make the aircraft more appealing to export customers.

The fighter's evolution is also expected to keep French design offices occupied as the nation embarks on plans for a future combat air system in the coming years. According to Defense Minister Jean-Yves Le Drian, this includes €700 million earmarked for work on an unmanned combat air vehicle demonstrator to be developed with Britain, a capability that France's new six-year military program law (LPM) says should be operational around 2030.

But for now, with the Rafale F3-R standard to be qualified by 2018, the French air force and navy are looking forward to a more capable multirole fighter with improved air-to-air combat and ground-targeting capabilities. Integration of the Meteor missile is perhaps the most significant upgrade in the F3-R standard. Designated by the U.K., Germany, France, Italy, Sweden and Spain for their future beyond-visual-range air-to-air missile requirement, the missile was qualified in late 2013. In combination with Rafale's new Thales-built active, electronically scanned array (AESA) radar, the Meteor will have a range of more than 100 km (62 mi.).

To date, Dassault has delivered seven Rafales from the fourth production tranche, each equipped with the AESA radar, including six to the air force and one to the navy, according to French defense procurement agency DGA. “As part of the F3-R standard, its formal integration has started and will be fully qualified in 2018,” the DGA says, although budget constraints are again to blame for a reduction in the number of missiles ordered through 2019, to just 100 from 200.

While the agency says “other orders will be possible after 2019,” funding for any additional buys will be determined by the military's next multiyear spending plan starting in 2020.

The new standard will also see Thales develop, test and integrate the New Generation Laser Designation Pod (PDL-NG) under a separate €120 million development contract that follows last year's €55 million risk-reduction phase.

The pod is expected to provide new day/night imaging and engagement capabilities in complex theaters of operations, and it is designed for integration with both the Rafale and Mirage 2000D. Due to budget constraints, however, a previously planned purchase of 45 next-generation pods was cut to just 20, according to the LPM.

The F3-R upgrade also paves the way for full integration of a laser-guided version of Sagem's AASM air-to-ground missile. The French air force declared a limited operational capability for the weapon in May 2013 in response to urgent operational requirements in Mali, with full integration expected to result in significantly greater accuracy and range.

Prior to F3-R qualification in 2018, DGA says it will release an intermediate F3-4+ standard to be validated this fall.

“This will bring additional improvements to the navigation and weapon delivery system, including terrain-following and MICA fire-control system upgrades,” the DGA says, referring to the MBDA-built short- and medium-range air-to-air missile. The DGA adds that while F3-4+ is the last general upgrade until F3-R, “additional improvements will be made to sensors before 2018.”

Looking forward, the agency and industry are already preparing the next generation. As soon as the F3-R is complete, the DGA will begin work on a new standard to be qualified by the mid-2020s.

In the meantime, Dassault Aviation CEO Eric Trappier says he expects to finalize details this spring for the sale of 126 Rafale fighters to India, with contract signature likely this year. Closing the deal would ease pressure on the French government to sustain Rafale production. But with export orders falling short, the government is facing hard decisions about how to take up the slack.

The most recent reductioin in Rafale orders is not the first time France has budgeted with potential exports in mind: Under the previous LPM agreed to in 2008, discussions with the United Arab Emitrates prompted the defense ministry to order just 50 Rafales in 2009-14. But in 2011, the UAE deemed the French offer uncompetitive and, in the absence of any additional export customers, the ministry has been forced to purchase another 16 Rafales over the period, bringing the total increase in foreseen costs to more than€1 billion, according to the French audit agency, Cour des Comptes.

As a result, the sale to India has become all the more urgent, particularly since Brazil announced plans in December to purchase Swedish Gripen fighters instead of Rafales or other contenders. Still, if negotiations with India drag on and export contracts with the UAE, Qatar and Malaysia fail to materialize, Dassault will not be left holding the bag. Thanks to a so-called review clause inserted into the current LPM, the defense ministry could be asked to reconsider its reduced Rafale buy starting in 2016.

In the meantime, the drop in Rafale orders is to be offset with upgrades to existing Mirage fighters. A senior defense ministry official says France will invest “a few hundreds of millions of euros” starting in 2015 to upgrade Mirage 2000Ds, with first delivery of the renovated aircraft expected by 2019. The air force also will further extend the life of its Mirage 2000-5 aircraft, according to Mercier.

“Because of the stretching out of the orders of Rafale, we will maintain for longer than expected the Mirage 2000-5, which is a plane whose radar is at a high level of performance but whose cockpit was designed for 5,000 hours of flight,” Mercier says. “We have already gone to 7,000 hours of flight. So we need to verify whether we can continue up to 9,000 hours.”

For the Mirage 2000D, the planned upgrade will address the obsolescence of the radar, add a gun to the targeting pod and integrate MICA missiles in place of Magic missiles, Mercier says. In addition, Thales is adapting the Astac tactical reconnaissance pod to perform missions currently assigned to the Mirage F1CR.

“Beyond 2020, we are going to be replacing these aircraft with Rafales, an excellent piece of news, because it means the production line will remain active for many years to come,” Mercier says. “Ultimately, we will be OK.”