Swiss bet on F-35’s affordability, did they get it right?

Avatar for Skies MagazineBy Skies Magazine | July 21, 2021

Estimated reading time 16 minutes, 2 seconds.

Switzerland announced its selection of the Lockheed Martin F-35A as its new fighter on June 30, 2021, beating off competition from the Boeing Super Hornet, Dassault Rafale, and Eurofighter Typhoon. Switzerland’s Air 2030 competition was valued at up to US$6.5 billion (CHF 6 billion) to replace the Swiss Air Force’s current fleet of F/A-18C/D Hornets and F-5E/F Tiger IIs. A flight demonstration phase in 2019 and comprehensive technical evaluation led to the decision to purchase 36 F-35As from the U.S., along with five Patriot missile air defense systems from Raytheon.

In a statement, the Swiss Federal Council proposed that Parliament should approve the procurement of the F-35A and Patriot. “An evaluation has revealed that these two systems offer the highest overall benefit at the lowest overall cost. The Federal Council is confident that these two systems are the most suitable for protecting the Swiss population from air threats in the future.” Switzerland will become the 15th nation to join the F-35 program of record.

Switzerland would become the 15th nation to operate the F-35. Royal Norwegian Air Force Photo

News of the Swiss decision sent shockwaves through the fighter aircraft industry. The F-35 has attracted criticism over operating costs, mission capable rates and maintainability, and its perceived suitability to the air-to-air role. Yet Switzerland brushed aside that negativity, boldly stating that the F-35 is cheaper than the competition on all fronts, and that it beats them all hands-down on capability.

If a small country like Switzerland considers the F-35 to not only be the most affordable solution, but also the best solution to meet its primary role of air policing in a docile environment — we aren’t talking night one, low observable ingress into a high-density air defense network here — then it could threaten to effectively snuff out any competition to the F-35.

Canada’s Future Fighter Capability Project (FFCP) will undoubtedly be under close scrutiny to see how the F-35 stacks up against the budgets and the competition — which includes Boeing’s Super Hornet and the Saab Gripen E.

According to the Swiss, it’s game, set, and match to America’s fifth-generation stealth fighter that can cover all fighter roles, and do it better and cheaper than anyone else!

Switzerland’s search for a new fighter aircraft has hit a number of notable bumps along the way. In 2011, it selected the Saab Gripen to replace the F-5, however, in a mandated referendum on the decision, the Swiss public refused to back the deal. The country’s defense procurement agency (armasuisse) re-launched the competition as Air 2030. In 2019, armasuisse effectively ejected the new Gripen E from the running after it recommended the Swedish contender should not attend a new round of evaluations because they were designed to evaluate aircraft that are “operationally ready” in 2019. Saab argued that Gripen E would be very much ready and in service by the time Air 2030 was required. Yet, the Gripen was out.

The series of evaluations of each remaining competitor took place at Payerne Air Base in 2019. A further referendum on whether Switzerland should buy a new fighter, or not, was held on Sept. 27, 2020, and this time it was accepted by a small margin, with a budget cap of CHF 6 billion placed on the new fighters.

An F-35A at Payerne during the Swiss trials in 2019. Armasuisse Photo

Following prolonged analysis of the data, the Swiss Federal Council announced its findings, and said that all contenders had met the required specifications. However, with 336 points, the F-35 “showed the highest overall benefit and was the clear winner with a lead of 95 points or more over the other candidates.” It added that the F-35 had scored highest in three of the four main criteria that had been evaluated.

It said the F-35A achieved the best result when it came to “effectiveness” because it had a “marked technological advantage over the other candidates: it includes entirely new, extremely powerful, and comprehensively networked systems for protecting and monitoring airspace. The F-35A is able to ensure information superiority; this means pilots benefit from a higher situational awareness in all task areas when compared with the other candidates. This is especially true for day-to-day air policing.”

It also said that stealth played a part in its findings, with the F-35 being “designed from the ground up to be especially difficult for other weapons systems to detect. The resulting high survivability is a great advantage for the Swiss Air Force.” Significantly, it also said that because the F-35 is “easy to operate and is able to provide information superiority, it requires less training and has a better ratio of flight-to-simulator hours.” In fact, the Swiss evaluators decided that this latter factor means the F-35A requires around 20 percent fewer flight hours than the other candidates, and this means it will require 50 percent fewer take-offs and landings than the Swiss Air Force’s current fighters.

Moreover, it said that the F-35, as the newest of the candidate fighters, will be best placed to sustain its technological lead over the planned service life of 30 years. The F-35A also scored best when it came to product support, and achieved the highest rating due to its “efficient operation and maintenance, modern training design, and the high security of supply throughout its service life.” This is attributable in part to the F-35A being manufactured in high numbers and being common to air forces within Europe.

Perhaps most surprisingly, the Swiss evaluation also said the F-35A achieved “by far” the best result in terms of costs — both in terms of procurement and through life. The report stated: “At the time the bids were made in February 2021, the procurement costs amounted to CHF 5.068 billion — well under the financial cap of CHF 6 billion set by voters. Even when accounting for inflation up to the time of payment, procurement costs will remain below the credit limit.” The evaluation said the total costs of the F-35A (procurement plus operating costs) amounted to approximately CHF 15.5 billion over 30 years. It said that the Lockheed Martin proposal was an incredible $2.16 billion less than the nearest rival over the projected 30-year service life!

A Royal Norwegian Air Force F-35A while deployed to Iceland for air policing duties. Royal Norwegian Air Force Photo

The only area where the F-35 didn’t achieve the best result was when it came to offsets to boost Switzerland’s defense industrial base.

The Swiss Federal Council report makes compelling reading with its unwavering support of the F-35 in almost all respects. The fact that it beat all of the competition on both unit and through-life cost is remarkable, especially when considering the high profile issues with operating costs that are being voiced by a number of operators. Lockheed Martin has undoubtedly made impressive progress with its push for an $80-million unit cost for the F-35A, and this would have been an extremely competitive price tag in Air 2030. Indeed, the Federal Council clearly stated that the F-35 was offered at the lowest price, even lower than a Super Hornet, which cost in the region of $50 million a piece in the U.S. Navy’s second multi-year purchase batch.

The Swiss statement on through-life cost makes stark reading against fierce words from Washington over F-35 operating costs. Members of Congress have gone as far as to threaten to cut F-35 production numbers due to unacceptably high sustainment costs. Indeed, the Government Accountability Office (GAO) is backing this thinking until operating costs are brought under control. It’s so serious that the GAO is recommending a delay in a Milestone C full-rate production decision on the F-35 until it meets a specific set of performance goals. 

Recent reports point to an increasing gap in what operators thought they’d be spending on F-35 operations, compared with reality. U.S. Air Force chief Gen Charles Q Brown recently said that he’s contemplating using the F-35 only for “high-end missions” as a means to reduce operating costs. Earlier this year, Gen Mark Kelly, the head of Air Combat Command, said the “capability, the availability, and the affordability” of the F-35A are the three elements of the program that consume most of his time and focus. “We’re not exactly where we need [to be] on target with affordability,” Kelly said. Referring reporters to the F-35 Joint Program Office for specifics, Kelly guessed that the F-35A was running at a cost per flying hour (CPFH) of approximately $35,000 at present. In terms of confidence level of getting to the target of $25,000 by 2025, he said: “I’m not brimming with confidence.”

It’s not just the USAF that’s putting the spotlight on F-35 operating costs. British defense secretary Ben Wallace told a Parliamentary defense select committee on June 23 that he wanted to see “progress” when it comes to controlling maintenance costs on the U.K. fleet of F-35Bs.

Operating cost was a subject tackled by Swiss defense minister Viola Amherd as the F-35 decision was revealed. She said the decision was not made on the basis of reports from the GAO, which “cannot be checked.” She said Switzerland made its decision on the basis of “binding offers.” If the F-35 fails to meet its promised cost performance, the Swiss Federal Council said it would consider the contractor to be in breach of contract.

The Swiss Air Force expects to spend CHF 100 million to make its air base facilities ready for the F-35. Armasuisse Photo

Evidence from other operators suggests that operating the F-35 is simply too expensive, so it’s difficult to see how Switzerland has landed a deal that will easily address this issue.

It’s not even the planned reduction in overall flight hours and increased use of simulators that offer the Swiss such attractive numbers. The evaluators found that even when the same number of flight hours were calculated for all the candidates, the F-35 still came out as the cheapest option.

While some of the cost details have raised eyebrows, ultimately, the F-35 deal that has been outlined for Switzerland is a tantalizing one. The Swiss figures provide a fascinating window on F-35 export pricing, which as a Foreign Military Sale should not exceed U.S. domestic prices. The Swiss result will undoubtedly have many analysts reaching for their calculators to better understand how this F-35 deal has been constructed, and how it will translate to other competitions — like Canada’s FFCP.

Canada is already a partner in the F-35 program; it contributed funding to its development and has a foothold in the global supply chain, but with no obligation to buy. A planned deal for 60 F-35As was halted in 2015 by now-Prime Minister Justin Trudeau, who said the argument for having a stealthy, fifth-generation fighter “no longer makes sense.” He argued that many other fighters are available at much lower price points. So, Canada opted for fact-based decision making to get its fighter decision right.

A decision on Canada’s fighter competition is now expected early next year, with the Super Hornet, Gripen E, and F-35 going head-to-head. Unlike in 2015, Lockheed Martin has got F-35 unit cost down; much of the early concurrent development work has been completed; issues resolved; and the very capable Block 4 version is closer to reality.

If the Swiss numbers are accurate, the F-35 could prove to be an affordable option for Canada’s $19 billion (US$14 billion) budget. However, experts are questioning how the Swiss numbers add up.

Politics aside, it’s important that any potential customer fully understands what they are getting into. Much of the real cost in a fighter program comes from the support side — the through-life cost, and the unexpected or hidden costs. There’s no point in having fighters that are too expensive to operate over a long period of time.

Fifth-generation fighter or not, it should come down to the best performing and the cheapest option.

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8 Comments

  1. Absolute insanity. Why does a nation that is only 348km wide need a supersonic aircraft? And one that actually can’t fly supersonically because that destroys its expensive stealth characteristics?

    The country, which has no enemies, could better use the billions to pay for flood defense.

    1. I couldn’t agree more. Even more than the fact that they have no enemies, they’re literally SURROUNDED by allies! Any country that wanted to attack Switzerland would have to go through someone else first. This is why they were able to fly the F-5 for so long. There’s definitely something shady going on in Bern.

  2. When a government confident claims the impossible, they’re lying, just like the Swiss government.

  3. I read the actual Swiss report and holy cow! It was so all over the place with falsehoods that I began to wonder if I was reading a comedic parody of the real report. It reads like a bunch of kinds in grade 1 wrote it by committee using rock/paper/scissors to make decisions. It clearly wasn’t done properly.

  4. Insane and remarkable in contrast to e.g. GAO??? The much quoted $ 80M is e.g. LM’s quoted re-occuring fly-away cost in then 2012 dollar rate. Re-occuring cost is all the parts and direct cost of assembly, manpower, electricity etc but do not include fix cost like the jig that is used for the asssmebly, nor research costs, training, the plant itself , transport, etc. Thus, only a part of the cost. Only correcting for inflation since 2012 when the program was re-aligned due to spiralling cost increases is at least 16%. Thus, in 2021 dollar rate the $ 80M is infact closer to $ 93M and it is a very conservative estimate since the missed milestones have accumulated and will continue to do so in the future, especially regarding Block 4 nessesary to achive full combat capability, engine maintanence and durability and more the 83 severe non-disclosed issues. Maybe it is better to stick to cuckoo clocks instead? Because all the politicians’ horses and men is not going to fix this humpty dumty back into order again.

  5. I think the best choice for the Swiss would be the Gripen E/F. I’m flabbergasted that Swiss public blocked the sale of 22 Gripens in 2014 (referendum) and now there purchasing 36 very expensive F-35As. The Gripen’s $5,000/hour operating cost is much lower than the $25,000/hour projected operating cost of F-35. While it can be argued that the F-35 appears to be a more mission capable aircraft, a country that is surrounded by friendly (and mostly NATO) neighbors, doesn’t need such a high cost fighter jet. The Swiss only need to look towards their neighbor, Austria, who purchased the Eurofighter Typhoon in 2002. Austria now wants to replace their Eurofighter Typhoons before the end of their 30 year life span because of the high operating cost. In reading this article, I see that the Swiss will hold LM in breach of contract if the F-35 operating cost exceed a certain level. My advice to Swiss is start looking for some good lawyers.

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