Cost per flying hour proves a thorny subject for F-35 overseers
An usually public disagreement between senior Pentagon officials on the per-hour flying cost of the underscores the continuing uncertainty in the U.S., by far the largest F-35 customer, about total ownership price tag of the stealthy fighter.
The debate only reinforces the concerns of international customers who have opted to delay their purchase of thefighter until they better understand the operating cost, which dwarfs development and purchase prices that have skyrocketed.
Pentagon officials have said for months that they want an “apples-to-apples” comparison between the F-35's cost per flying hour (CPFH) and the price to operate legacy fighters it will replace. But the different figures recently put forth by the F-35 program executive officer, U.S. Air Force Lt. Gen. Christopher Bogdan, and Pentagon procurement chief Frank Kendall, who expects a higher CPFH, show that comparing prices is not simple. An agreed-upon number, however, is much needed in Washington and abroad, as customers prepare to outline their F-35 commitments, decisions that will have financial repercussions for decades to come.
After months of studying the issue, Bogdan told Dutch lawmakers late last month that the single-engine, stealthy fighter would cost about 10% more to operate than the, one of the workhorse aircraft it will replace.
The CPFH for the F-35A, which the Netherlands intends to buy, is $24,000, according to a U.S. military official. Bogdan provided the data to Dutch legislators, including a “side-by-side comparison of flying-hour costs between the F-16 and the F-35,” the official notes.
These figures are “preliminary,” program officials say. Though F-35A flight training has begun and testing continues, the data gathered do not reflect an entire life's worth of use. Ongoing durability testing will help determine if any parts or systems will require support that is not built into the CPFH.
As the price of F-35 development has spiked and unit cost doubled since the contract to Lockheed Martin was issued in 2001, and in-service dates have slipped dramatically, would-be customers have grown increasingly cautious about not only the fighter's purchase price but also the cost to operate it.
The Netherlands is reviewing plans to buy 85 F-35s, and Dutch officials said in March that they may cut as many as 33 from the purchase.
The price estimate Bogdan cited to Dutch lawmakers did not stand for long. As soon as it was reported in the press, Kendall raised questions about it. He says the figure is more aggressive than the official one that will go to Congress this month in the Pentagon's selected acquisition report.
Bogdan's 10% figure “is with a certain set of assumptions,” Kendall told reporters at the Pentagon. “I'm not sure we want to use that set of assumptions.” No specifics were provided about these assumptions, however.
The figure presented to Congress will be lower than that in last year's selected acquisition report, Kendall says, which cited the F-35A CPFH at $31,900, versus $22,500 for the F-16 C/D.
“That's going to come down this year. I don't think that is going to come down as much as Chris Bogdan indicated,” Kendall says, adding that he “doesn't like the metric very much.”
Kendall says there are at least six ways to calculate F-35 CPFH, depending on the assumptions behind the calculation. And it can be misleading. If you fly a fleet less—as is expected for the F-35 due to advances in simulators—the per-hour cost increases. But the overall ownership price may be equal to or less than that of legacy fleets.
“The question that I think matters is, 'what is the cost of ownership?'” Kendall says. “What is it going to cost you to have comparable levels of readiness for that aircraft? That is going to vary by country.” It depends on how much each operator flies the aircraft, how many spares are procured and the seniority of maintenance staff performing specific tasks, among other things.
The U.S. Navy has estimated the cost at more than $1 trillion for 50 years of service, though F-35 overseers have been hard at work to refine assumptions and bring that number down.
Lockheed Martin officials concede that the F-35 CPFH will be higher than that of the legacy fleets it will replace. But they argue that the total ownership price will be lower than that of all those fleets—such as the, F-16 and A-10—combined. This was a selling point for the aircraft in its early days.
CPFH is just one factor of total ownership cost. Sustainment is the area with the most potential to reduce cost, Kendall says. Development is well underway, with more than 40% of flight testing complete. Though risk is still present, especially in software work, Kendall says he is “cautiously optimistic” about F-35 development.
Production pricing is, for now, fairly well-known based on “actuals,” or numbers gleaned from early production lots, he says. The early aircraft will cost roughly double the predictions from 2001, when Lockheed Martin beatfor the work. This alone has prompted international buyers to delay their purchases, contributing to a higher per-unit cost early in the program. For example, when Turkey announced it was shifting its buy two years, each aircraft in the lot in which the country was expected to buy increased about $1 million, Bogdan says.
But Bogdan remains hopeful that the F-35A can reach a per-unit price of $80-90 million, based on current purchase plans from partners.
So, while the program office is focusing on lowering ownership cost, Bogdan says he expects to continue pushing Lockheed through annual production contracts to take on more risk in delivering ever lower pricing. Furthermore, he is shifting to the company some cost of potential retrofits to early production aircraft. These aircraft could need as much as $5 million in retrofits following discoveries made in flight-testing—which is ongoing even as new aircraft roll off the Fort Worth production line.
Meanwhile, Kendall's staff is conducting yet another review of F-35 sustainment after the Pentagon received feedback from contractors during an industry day. He says performance-based logistics are being considered for the fleet, which is slated to replace Navy, U.S.and Air Force fighters.
|Contract||Number of Aircraft||AIRCRAFT DELIVERED||TARGET COST at Award*||Current Estimate||TARGET Unit Cost|
|LRIP 1||2||2||$511.70||$561.60||F-35A, $222.1|
|LRIP 2||12||12||2,349.60||2,671.60||F-35A, 161.7F-35B, 160.7|
|LRIP 3||17||17||3,290.10a||3,801.70||F-35A, 128.2F-35B, 128.0|
|LRIP 4||32||14||5,082.20||5,408.80||F-35A, 111.6F-35B, 109.4F-35C, 142.9|
|LRIP 5||32||0||3,800.00||N/A||F-35A, 105F-35B, 113F-35C, 125|
|Notes: Cost in $U.S. millions, excluding engines. Engine pricing for LRIP 3, for example, is as follows: $16 million for F-35A/C and $38 million for F-35B. Potential retrofit cost could be as high as $4.86 million per aircraft.*Costs for LRIPs 1-4 include sustainment. Cost for LRIP 5 does not.Sources:and F-35 Joint Program Office|