The world's defence manufacturers are again identifying the Asia-Pacific as a major market

Stewart Penney/LONDON

By common consensus, the worst effects of the Asian economic crisis have passed and the nations around the Pacific are again considering their defence needs.

At the 1998 Asian Aerospace show, the economic crisis generated pessimistic predictions that the recession would last for 10 years, that the bubble of the high and sustained growth of the region's "Tiger economies" had burst and that worst-hit countries would never recover.

Today, BAE Systems marketing director Sir Charles Masefield says: "We're bullish about the Asia-Pacific region." He says some countries, such as Australia and Singapore, rode out the storm while others, such as Brunei and Malaysia, have recovered strongly. The former has been helped by the recent 250-300% increase in oil prices.

"The situation, if not back to pre-crisis levels, is close to it and the forecasts show Asia-Pacific as the fastest-growing defence market in the next five years," says Masefield. "I have a long list of prospects for just about every country in the region." To some extent, he adds, the list needs to be narrowed, with BAE concentrating on particular opportunities.

This market will not be "just platform sales". It will include "total systems, C4I [command, control, communications, computers and intelligence], whole infrastructure and retrofit", he says. Platforms procured now are expected to have a service life of 30-40 years, so upgrade and retrofit programmes are increasingly important.

Robie Notesteine, Lockheed Martin Aeronautics director of business development for the south Asia-Pacific region, agrees. "The upgrade market seems to be growing in general and we're looking at partners and programmes," he says. As budgets get tighter, so upgrading becomes more attractive, says Notesteine. Lockheed Martin's search for partners in the region has so far turned up "potential - but nothing specific". The company offers upgrades for its F-16, including structural life extensions and avionics and systems improvements including a mid-life update (MLU) programme developed with European F-16 operators - Belgium, Denmark, the Netherlands and Norway - and a similar capability enhancement with Israel Aircraft Industries.

Boeing Military Aircraft and Missiles' director of sales and marketing for the Asia-Pacific region, Peter Briscoe, says countries are interested in packages as it gives them access to economies of scale not normally available.

BAE's Masefield says two other areas which are becoming more important are private finance initiative (PFI)-type procurements and an ever-growing demand for joint ventures and technology transfer, to ensure that defence spending has some benefit to the country's economy. With a PFI, a company or consortium builds a facility - for example an air traffic control centre, simulator complex or air base - and leases it to a government over a long period, removing the capital expenditure burden from a nation's accounts. "I believe the day will come when, instead of talking about the sale of jet trainers, we will talk about contracting for X number of aircraft to be on the ramp at seven o'clock in the morning," he says.

BAE announced a raft of programmes with Malaysian industry at the Langkawi show late last year and has a host of connections in other Asia-Pacific countries. Lockheed Martin has followed this route and is a major partner with South Korean industry on the KTX-2 advanced trainer/light combat aircraft and in Japan with Mitsubishi on the F-2 support fighter.

Fighter contests

Fighter competitions are the most glamorous and South Korea's F-X competition for 120 aircraft is on the verge of exploding into action again. A final request for proposals is due for release later this year. Competing are Boeing, offering a version of its F-15E Eagle, Dassault with its Rafale, Eurofighter putting forward the Typhoon and Sukhoi, offering a version of the Su-30 variously labelled the Su-35 and Su-37. A decision is due in the third quarter of next year.

Boeing's Briscoe says: "South Korea's F-X programme is the biggest near-term prospect. It has got a lot of our near-term attention."

For Boeing, a win would restart the F-15production line. For its European competitors, success would establish their respective products in a region that has traditionally turned to the USA. Industrial participation will be a key F-X consideration and Korean Aerospace Industries (KAI) will probably be offered significant offset work and possibly final assembly.


Lockheed Martin's Notesteine says South Korea is close to finalising a contract to build more F-16s. Samsung - now part of KAI - is close to constructing its 120th F-16, which will bring the initial production programme to an end. Another 50 could be built.

Australia's Project Air 6000, to replace Boeing F/A-18 Hornets and General Dynamics F-111s, is attracting interest from the same manufacturers as those studying South Korea's F-X programme. As well as the F-X competitors, the UK Future Offensive Air System - a Panavia Tornado replacement that could involve a combination of cruise missiles, unmanned combat air vehicles and manned platforms - is under review. An initial acquisition process could start in about five years, for service entry from 2012, while more purchase programmes would follow in 2010 and 2020-5.

Thailand is also close to increasing its fleet of F-16s, albeit with used examples. US Congressional approval for the sale of 18 ex-US Air Force F-16A/Bs was given in January. Thailand hopes to finance the deal partially with a refund from a cancelled procurement of eight F/A-18s that fell victim to the economic crisis. At some stage, Thailand will no doubt consider the "Falcon-Up" structural enhancement for its F-16s - and possibly the MLU, which was considered once before. Pre-owned aircraft have proved popular with Thailand, which is committed to acquiring 25 ex-German air force Dassault/Dornier Alpha Jets to be refurbished by Fairchild's Dornier division before delivery.

The Philippines is also considering used fighters to bolster its frontline strength. Ten Northrop F-5A/Bs in service were acquired from South Korea for a nominal sum and Taiwan has offered further examples, although these would be later E/F variants.

The Philippines has also discussed New Zealand's McDonnell Douglas A-4 Skyhawks, which should become available within the next few years as New Zealand has signed a lease for 28 F-16s from the USA. Built for Pakistan, but not delivered because of an embargo, the F-16s will receive Falcon-Up and possibly an MLU. Deliveries have not started and the deal is under review following the election of a new government late last year.

Notesteine says Singapore and Taiwan could make F-16 repeat purchases. Boeing, Dassault, Eurofighter and Lockheed Martin are targeting Singapore as a future customer as it may start replacing upgraded A-4s within the next three years. Singapore is also targeted by the Joint Strike Fighter programme to ensure that the country remains a participant. It is a "pay-for-service" member in the ongoing concept demonstrator phase and the USA is keen to sign up Singapore for the engineering and manufacturing development phase.

Any F-16 follow-on order from Taiwan will bolster its large fighter fleet, strengthened in the past decade with the delivery of 60 Dassault Mirage 2000-5s, 130 Aerospace Industrial Development Corporation Ching-Kuo Indigenous Defence Fighters and 150 F-16s.

BAE, Boeing and Lockheed Martin point to Malaysia as having made the strongest recovery in the region. Malaysia took delivery ofF/A-18Ds and MAPO MiG-29 Fulcrums before the ravages of the economic downturn and has upgraded the MiG-29s. Boeing had hoped for a follow-on order of up 12 more F/A-18s, but this appears unlikely. Malaysia has considered more MiG-29s and has reviewed the Sukhoi Su-27, but any order appears to be some way off as more pressing requirements exist for airborne early warning (AEW) aircraft and shipborne and transport helicopters.

Indonesia has been hit not only by the economic woes of the region, but by the political unrest that led to the downfall of the Suharto regime after more than 20 years in power, the arrival of a UN peacekeeping force in East Timor and free elections. Financial strictures caused the cancellation of an Su-30 order in 1998, while sanctions - lifted by the European Union, but yet to be dropped by the USA - forced postponement of BAE Hawk deliveries.

Vietnam aims to triple its advanced fighter fleet. It has 12 Su-27s and announced plans late last year to order a similar number of Su-30s.

China is potentially a major military aircraft buyer. Sanctions prevent Western companies from offering fighter aircraft, however, and the supply of avionics and systems for indigenous types such as the Chengdu FC-1/Super Seven could also be blocked. As a result, China has turned to Russia and placed orders for Su-27s, which it produces under licence, and Su-30s. Plans to build AEW aircraft with radar supplied by Israel or the UK have not gone smoothly, although an Ilyushin Il-76, modified by Beriev, has arrived in Israel for installation of an Elta Phalcon radar.

China has plans for a sizeable tanker fleet - for which the Il-76 will probably be the platform - and a large number of helicopters to give the army some form of air mobility.

Rotary wings

Boeing's Briscoe says the attack helicopter market is "vibrant" and he underlines the importance of the AH-64D Apache's win in Singapore last year. Although the order was for just eight, it is expected that 12 options will be converted and more orders for the Apache could follow. Singapore also has well-established requirements for smaller maritime helicopters, for embarkation aboard corvettes, and for about 12 medium-lift helicopters, to support four landing ships.

The biggest attack-helicopter competition is Australia's Air 87 programme for 30 machines. Air 87 pits the Apache against the Agusta A129 Scorpion, Eurocopter Tiger and, if Bell Helicopter Textron's appeal is successful, the AH-1Z SuperCobra. Competitors await the outcome of an Australian defence procurement study that will select 12 "golden projects" to be funded in the next budget. Assuming funding continues, first deliveries are due in 2003.

Japan and Malaysia have longstanding attack helicopter requirements. The former has been studying a development of the Kawasaki OH-1 for its 100-machine AH-X programme, but Briscoe says Boeing is "standing by" with an offer if the Japanese Ground Self Defence Force rejects an OH-1-based solution.

The status of Malaysia's programme is less clear. In 1996, the Denel CSH-2 Rooivalk from South Africa was selected, but no formal order for the 12 aircraft has been signed and other manufacturers are starting to suggest that the competition could be re-opened.

Briscoe, meanwhile, says Boeing believes that, as the economic situation in Asia Pacific improves further, so will opportunities for the CH-47 Chinook heavylift helicopter. "There are going to be markets and they will break out in the next three to four years," he says.

Australia, Indonesia, Malaysia and South Korea all have medium to heavylift helicopter requirements, or are expected to within a few years, while Taiwan, which ordered CH-47SDs recently, could order more examples. Taiwan needs to replace its UH-1 utility machines, for which the Sikorsky S-70/UH-60 Black Hawk is the favourite. South Korea is licence producing the UH-60 - and has orders for 140 machines - with Korean continuing to push for a contract for 40-60 more helicopters. Malaysia has been linked with a deal for 40 Mil Mi-17s.


Maritime and shipborne competitions in Asia-Pacific in recent years have tended to be battles between GKN Westland, offering its Super Lynx (above), and Kaman, offering SH-G Super SeaSprites. Spoils in Australia and New Zealand went to Kaman, while Westland won in Malaysia, and has orders from South Korea. Malaysia ordered six Super Lynx 300s last year.

GKN Westland Helicopters' regional business director for South-East Asia and Australia, Des Hassan, says the Lynx win in Malaysia will allow the company to underline the savings from support and training commonality when Malaysia starts searching for 12 anti-submarine-warfare (ASW) machines for offshore patrol vessels (OPVs). Westland will offer the EH Industries EH101 as a replacement for Malaysia's Sikorsky S-61 Nuris.

The Philippines and Thailand each require six to nine maritime patrol helicopters. Westland's Lynx could meet both needs, says Hassan, but Kaman will put up a stiff fight in Thailand, particularly as the helicopters are to equip ex-US Navy frigates. An offer of 10 SeaSprites has been on the table for years. The Philippines requires land-based search and rescue machines, for which ex-UK armed forces' Westland Sea Kings are contenders, says Hassan, adding that the manufacturer will support the bid and offer a refurbishment programme. The Philippines is unlikely to decide before the end of 2001, however.

Similar helicopter needs exist in Brunei and Indonesia, but neither is likely to start a competition until late 2001. Brunei has three hangarless OPVs on order, for which six helicopters will be required, says Hassan. Indonesia needs to replace grounded Westland Wasps, and will buy around 12 machines.

Hassan says Westland is watching Australia's maritime helicopter needs. The Royal Australian Navy (RAN) has seven Westland Sea Kings, which it uses as utility machines, and another four to six could be acquired from UK stocks as the helicopters are retired. As with the Philippines, Westland will offer a refurbishment package, says Hassan. In the longer term, Westland is watching the RAN's surface combatant requirements closely. Any such aircraft is likely to be required as a utility machine capable of an ASW role change and may need a greater lift capability than that of the H-60 family, says Hassan, suggesting the EH101 may be suitable.

Tankers and transports

Lockheed Martin handed over the first C-130J Hercules to the Royal Australian Air Force late last year. The manufacturer hopes the RAAF will convert some C-130J options to firm orders. Australia is studying alternatives and has been briefed by Airbus Military Company on the A400 and by Boeing on the C-17 Globemaster. New Zealand has options on the C-130J, negotiated as part of the Australian deal. The incoming New Zealand administration may drop an F-16 lease and buy the C-130Js instead.

Japan has a longstanding requirement to replace its elderly Kawasaki C-1 jet transports and, like Australia, seeks tankers. The Japanese tanker requirement is most likely to be met with Boeing 767s, a type that forms the basis for the country's E767 AEW aircraft. The transport requirement may be merged with a navy need for a new long-range maritime patrol platform. Australia is watching the UK's Future Strategic Tanker Aircraft programme and may follow the UK's PFI scheme.

Australia's Light Tactical Airlifter programme - in which the Casa C295 fought the Lockheed Martin Alenia Tactical Transport Systems C-27J - may be scrapped, meanwhile, after a review of defence acquisition projects, while a similar competition in Taiwan has slipped because of financial issues.

Source: Flight International