How much does an F-35 cost?

A complex equation
The cost of research, development and testing is such that the inclusion of a proportional share of these fixed costs (resulting in a so-called ‘unit programme cost’) will result in a much higher value than the marginal cost of simply building one aircraft (the ‘unit production cost’). An even higher unit cost estimate can be arrived at by including through-life costs. These tend to dwarf the initial procurement cost of an aircraft and its weapons systems.

But even simple unit production costs (UPC) can vary. Some nations include initial spares, Government-Furnished Equipment, and role equipment and even some training systems costs (making the UPC more of a unit procurement cost) in their calculations; some include Value Added Tax, while some costs are even calculated on a resource accounting basis, and others exclude the cost of major elements — sometimes even excluding the engine from the reckoning. On occasion a cost might be quoted in (say) dollars at 2003 value, requiring an adjustment to take account of inflation. Sometimes you can find markedly different costs (all officially validated) for the same aircraft for the same customer at the same time, all calculated on a slightly different basis.

And cost is not the same as price. When selling F-35s to export customers, for example, Lockheed Martin will want to cover the costs of the export campaign, and will rightly expect to make some profit, while the US government will expect to recover some of the investment made in research, development and testing. Some nations require that export aircraft always cost more than those delivered to the domestic customer, sometimes by imposing an export levy. And for the export customer, price is also affected by where its currency stands in comparison to the US dollar at the time of signing a contract, while prices can increase or reduce as production continues, according to whether inflation or improvements in production efficiency are more significant.

The whole subject of costs and prices is a minefield — especially when trying to compare the prices of different competing aircraft from different countries.

But because of the very high cost of designing, developing and manufacturing a modern combat aircraft, a programme with a large production run will usually be a programme able to offer lower unit prices. And in the post-Cold War world, there is no programme bigger than the JSF.

The requirement
The Pentagon’s requirement still stands officially at 2,443 production aircraft, plus 14 development jets. Most of these are for the US Air Force, with 260 F-35Cs for the US Navy and 340 F-35Bs and 80 F-35Cs for the US Marine Corps. Eight partner countries notionally intend to buy 697 aircraft, down from original announced intentions to buy 730. These nations comprise Level One partner the UK, Level Two partner Italy, and Australia, Canada, Denmark, the Netherlands, Norway and Turkey.

All of these partner nations have invested in and contributed to the costs of development, and have brought the strengths of their own industries to the programme. The UK joined in 2001, contributing $2 billion, with Italy providing a further $1 billion. Australia, Canada, Denmark, the Netherlands, Norway and Turkey each contributed more than $100 million.

Further aircraft will be sold to countries outside the current partnership, including Singapore and Israel, who are classed as Security Co-operative Participants, and to non-participating nations such as Japan, which has already placed an order for F-35As. Lockheed Martin has said that it expects to sell at least as many F-35s to other countries as to the eight partner nations.

All of this means that the F-35 programme can benefit from real economies of scale, and this should help to hold down prices.

The planned affordability of the F-35 is also intended to be achieved through a very high degree of commonality across the three versions of the aircraft, with extensive use of common parts and systems, and by low production costs, which are being brought about by the use of cutting-edge lean manufacturing techniques. Low wastage and ultra-streamlined assembly methods are intended to reduce parts holdings and to significantly cut production time.

Lockheed Martin did not neglect through-life costs, either, being more than aware that these represent the lion’s share of the cost of any military aircraft. The F-35 was therefore designed from the outset to be supportable and maintainable, with low operating costs and support costs that its maker ambitiously forecast would be about half those of current-generation fighters.

But despite all of this, the Joint Strike Fighter is rapidly becoming a byword for cost growth, and is already the world’s most expensive defence programme.

The full article can be read for free in the sample issue of combat aircraft