Monday, 31 May 2010

$580-million tag for IAF's C-17 aircraft can be cut: Boeing


At Boeing's Long Beach facility, outside Los Angeles, where the C-17 Globemaster III is assembled.





A side view of the C-17... a photo does not adequately capture the size of the beast.



The F117 engine, a derivative of the commercial Pratt & Whitney PW2000 engine, that powers the Globemaster and allows it to reverse with the help of thrust deflectors.


By Ajai Shukla
Business Standard, 31st May 2010

Operation Cactus boosted India’s regional stature, when Russian-built IL-76 aircraft airlifted hundreds of paratroopers 2000 kilometers, non-stop, to the Maldives within 12 hours of a frantic SOS from that country’s coup-embattled president. With India’s fleet of 24 IL-76 aircraft now obsolescent, Indian planners have decided to buy Boeing’s C-17 Globemaster III, widely acknowledged as the world’s most versatile military transport aircraft.

The downside: at over half a billion dollars apiece, the Globemaster is also the world’s most expensive air-lifter. With criticism rising of India’s US $5.8 billion purchase of ten Globemasters, Boeing now says that India could actually pay far less.

Responding to a question from Business Standard about the Globemaster’s high cost, Vivek Lall, the India chief of Boeing Defence Space & Security (BDS), has clarified by email that the US $5.8 billion, “is on higher side of what the actual cost could be…. India may not need all the services and items that the US Air Force is offering them. The final cost will be determined by the actual requirements of the Indian Air Force and after negotiations are held.”

In accordance with US law, the US Congress was notified on 23rd April that India wanted to buy ten C-17 Globemaster III aircraft directly from the US government (under the Foreign Military Sale, or FMS, programme) for an estimated US $580 million per aircraft. In contrast, the IL-76, can be bought for less than one-tenth that price: about US $50 million per aircraft.

The US $580 million tag could become even bigger if India buys secure communications (COMSEC) and Global Positioning System (GPS) navigation aids, by signing two safeguard agreements that US law demands but New Delhi has so far rejected: the Communications Interoperability and Security Memorandum of Agreement (CISMOA); and the Basic Exchange and Cooperation Agreement for Geo-spatial Cooperation (BECA). The recent Congress notification indicates that India’s C-17s will not be fitted with COMSEC equipment; GPS security devices; and certain “Government Furnished equipment”.

The BDS chief, Vivek Lall, indicated that Boeing would provide alternatives to the COMSEC and GPS, but said, “We do not discuss detailed aircraft components as the deal is a foreign military sale and is between the two Governments.”

Business Standard has examined requests, placed to the US Congress over several years, for C-17 sales to NATO, Canada, Australia, UAE and Oman to determine how Boeing’s ex-factory price of US $200-220 million for each unfitted C-17 Globemaster escalates to US $580 million for each of the fully-kitted military aircraft that India is buying.

The data indicates that the basic military aircraft, built at Boeing’s Long Beach facility outside Los Angeles, California, costs about US $350 million. An additional US $150 million per aircraft goes on spare engines, maintenance spares, electronic protection systems, and logistics. Finally, Boeing’s global maintenance network for the C-17 --- called the Globemaster III Sustainment Partnership, or GSP --- charges US $75 million every three years --- i.e. US $25 million per year --- to ensure that each aircraft covered in this plan remains flying, functional and available almost 90% of the time.

Boeing has confirmed that India is joining the GSP and that the notification to the US Congress includes that cost.

Once India’s planned procurement of 10 Globemaster IIIs is completed, it will be the largest C-17 user outside the US, which operates 198 Globemasters. Other users are the UK (6 aircraft); Australia and Canada (4 aircraft); Qatar (2 aircraft) and NATO (3 aircraft).

Operating from short, mud-paved landing strips such as those on India’s borders, the C-17 can lift 75-tonne payloads to anywhere in China, Central Asia, the Gulf countries and much of south-east Asia, without refuelling. Capable of carrying 188 passengers, or 102 fully kitted paratroopers, Globemasters have brought out as many as 300 refugees during humanitarian missions from disaster zones like Haiti.

The C-17 can also transport a battle-loaded Arjun or T-90 tank, or a Chinook helicopter with its rotors dismantled.

29 comments:

Anonymous said...

That still doesnt explain how a C17 costs just $200-220 million to USAF if the production cost is $350 million per plane. Also it still doesnt make a C17 better than 10 Il-76.

Anonymous said...

What the hell..couldn't we just buy new an-124s with latest avionics instead? Mass production is set to restart in 2011 in Russia.

Anonymous said...

Big size fishy .

JTZ said...

Its true do the price being paid make up for the features gained against the IL-76??

TBH- I would believe the IL-76 will continue to be the work horse, but the Globemasters are being used for operations and specific mission profiles. Which is also why only 10 will be requested.

joydeep ghosh said...

@ Ajai sir

why this ghost of CISMOA and BECA always lurks in deals with US.

Why note avoid the FMS path and directly go for a deal with the company. As you know the Army chief General V K Singh wrote to defense minister A K Antony, cautioning the government about the troubles with FMS.

As for pricing, if we are set to become the largest users of these beast outside US, why then just by the reason that we will fly 10 now and possibly buy 10 more at later date; we pay less.

Deals signed through FMS looks like are always plagued by over pricing, spare parts supply issues (C-130J a 4 propeller 12-15 Ton aircraft which the rest of the world buys at $60-70M but India buys @$190M; not to forget the P-8I, cost to India-$220 M/aircraft for a total of $2.1 billion for 8 aircrafts where as it costs the US approx $150M/aircraft; or the Weapons Locating Radars, 50% of which are always out of work due to want of spare parts)

Q. My simple question if Boeing can reduce the price of these C-17s why not the proice of C-130Js be reduced.

Rahul said...

So, we are buying 10 C-17 III at the total cost of 100 IL-76s!!!!

In all likelihood it is most certain that for replacing a fleet of 26 IL-76s India will definitely buy 16 more C-17 III which means India will spend atleast $8 billion more(considering present price will remain freeze).

Unable to get any logic behind...

Ajai Sir, a request, if you have time then please put a blog comparing IL-76 and C-17 III.

Thanks

AK said...

This deal has scam written all over it. Again Congress ministers are getting richer by the day.

Vivek said...

I'm pretty sure the production cost is quite a big lower than $350 million.

http://seattletimes.nwsource.com/html/businesstechnology/2011237608_c17boe03.html?syndication=rss


On a different note sir, you've been on it and I'm assuming you've been on the Il-76 as well at some point. What did you think of the C-17 in comparison? Just simple impression, non-technical.

Anonymous said...

C17 is a wonderful aircraft but but but …….
Forget about the number 10, if we can procure three Il-76 for the price of one C 17 then the net result of operational performance achieved by the Il-76s will be considerably higher with the flexibility from multiple planes against one. Numbers proved its ‘magic’ in many battles. Operational cost and crew number expenses will be negligible compared to the huge price difference.
Also it’s not a good idea to compare our existing Il-76s with the new C 17 .We can upgrade the Il-76 reasonably to reduce the technical gap with the C 17 (Taking into consideration that our existing ground team capability is not so good enough to extract all the technical potentials of C17). Airlifting tanks barely have 1% relevance in actual scenario, which also can be done dismantled in Il-76s.
Plus we can enjoy better bargain and TOT from Russians (who not for friendly sake but for business sake provide us much better options).
C 17 comes with free Trojan of course and Uncle makes sure we sign proper agreements that you don’t dismantle the traps which they set for us. It’s like you pay billions for a bunch of ticking time bombs in some beautiful box which we don’t know when will explode and that we surrender our right to open the box and save our a**

Ra said...

Albeit C-17 is capable of lifting the loads about 1.7 times more than the IL-76, but on the economic front its prices may be exorbitant.

However India may not have other options except to purchase it.

I hope the purchasers may judiciously go for the applications at the extra costs.

Nav said...

Half a billion for each each aircraft, and that too without the secure communication kit (COMSEC) and Global Positioning System. Obviously this GPS system is not the commercial GPS, although it might use the same satellites, but I think this GPS would use the military frequencies and would be more accurate. I am not very bothered about secure communications, as Bharat Electronics Limited (BEL) can come-up with a system of its own (like BEL's Data Link II system for Indian Navy's P-8I Poseidon). If India is not going for these kits then surely the cost should be much less. We need to bargain hard. 10 IL-76 for the price of one Globemaster (translating to 100 IL-76s as compared to 10 Globemasters) sure looks very cost efficient (and IL-76 is not a "junk" equipment).
Finally, I think, numerical superiority is also important. Especially, in today's low-tech guerilla-based operations. You need hi-tech to fight a hi-tech enemy. But the realities of the present day is very different (the same argument which led to a debate on UK's Trident). All the high-tech US equipment is not helping in Afganistan and Iraq. Millions of dollars of equipment are blasted-off by IED's (and the soldiers getting killed). For a country like US they can afford it, but can we? In Iraq, a numerical surge in the number of troops have relatively calmed the situation (I think the same strategy is being planned in Afghanistan). So numerical superiority is also important, both in the number of troops and also hardware. US can afford a huge increase in hi-tech hardware (as you mentioned, US operates approx. 200 Globemasters)...but can we??? I think it is better to shop for equipment that we can really afford and then use our indigenous technology to make it cutting-edge.

Anonymous said...

to a novice like me and a common tax payer , this purchase sounds insane .

india is still a poor country and i am sure there must suitable alternative than this high priced albeit supremely sophisticated planes.

even the overall defense purchase from uncle sam doesn't look a prudent thing to me. none of our adversaries - china and pakistan have very technologically sophisticated armed force . and it looks like we are funding pakistan in an indirect way. uncle sam bestows largesses to his favorite nephew from the profit he makes with defense deals with india.

A Taxpayer said...

"Operating from short, mud-paved landing strips such as those on India’s borders......"

The only thing correct about that statement is that it is exactly what Boeing wants you to write. Why don't you ask them to provide examples of short mud-paved landing strips where C-17s have even been with a 75 tonne payload ?

Broadsword said...

A Taxpayer (but not A Thinker):

I don't suppose you've heard of Chushul, Fuk Che, Daulat Beg Oldi and a dozen more such airstrips and advanced landing grounds that can take the C-17.

To think some more on your behalf... you don't have to take off from these high altitude airstrips with 75 tonnes of load. You have to land with that kind of load. And, for that, you need just 1000 metres of dirt runway.

When your C-17 takes off from those runways after flying in 188 soldiers, an Arjun tank, or a Chinook helicopter... it will be close to empty.

It doesn't take a genius to figure that the Chinook is way too expensive for India at US $580 million a pop. And we all hope that India negotiates a much better deal than that. But, rather than sneering, it's always better to think about why defence planners are coveting the capability that the C-17 offers.

Anonymous 09:05:

Of course a C-17 isn't better than 10 IL-76s. There are some missions that 10 IL-76s can do much more effectively than a single C-17. But there are some missions that a single C-17 can do, which a hundred IL-76s can't.

The comparison with an IL-76 is a false one. India's IL-76 fleet costs so much to keep flying, and provides such low serviceability rates (currently 25%) that the thought of buying more makes IAF planners go ballistic.

A better comparison would be with the C-130J, which is coming to around US 200 million per piece. Is a C-17 better than three C-130Js?

Anonymous said...

Man, I can't stop laughing...Now we are talking...$580 Million for a C-17.

Rewind to my earlier comment about the 2008 Flyaway cost of a C-130J being $62 Million and India paying $200 Million. This follows this path. C-17 costs the US AF $200 M and now it costs $600 M for the IAF.

I can write a ton of stuff about cost points with current operators (Australia paid $780 M for 4 C-17's in 2007 & $80.7 M for joining the "sustanibility program"; UAE bought 6 C-17's in 2008 for USD 1.7 Bilion-which was part of a bigger deal with 12 C-130J's and 6 C-17's for a cumulative $3 Billion), the fact that the C-17 production line is going to be closed pretty soon as the US AF is unhappy with the plane (cost of maintenance & operability issues) and how the Long Beach workers at Boeing went on a strike demanding better severance packages as they anticipate the line being closed, how the C-17 program is curently kept alive not by defence requirements but by US Lawmakers to stop job losses in the event that the assembly line closes. But I have a serious lack of motivation to put that stuff here. If someone has already made the "jugaad" to roll a $200 M plane for $600 M-i am sure he/she has done his job pretty well. As for the public explanation of the cost difference-I am in the aviation industry-so go pack that BS somehwhere else.

@ Ajai

Remember that i had raised a question about blog neutrality post your "Boeing sponsored US trip" and you had replied to stop coming to your blog once i detect a tint of one-sidedness. Well-this is where i stop coming to your blog. The reason-Inspite of the bloated cost of both the C-17 & C-130J, you are trying to convince folks about the cost while not giving a objective reviews of the cost using past deals and like-to-like operators.

Long live greased palms, partial media & public sector inefficiency to come up with weapons platforms.

Tats

Anonymous said...

I would expect the IA to go with a couple of A380 (Freighter version).

A380F costs 200 mill less and can ferry a few times the capacity of a c17. And there wont be any sanctions to contend with either.

Anonymous said...

If operating from short mud-paved landing strips is the criteria, we can still trade a C17 for 10 An70. Tech superiority is good but we need numbers in face of an overwhelming enemy like China. Else we would be left where US is headed as described by their DOD recently "one ship on each coast and one plane on each coast"

joydeep ghosh said...

ajai sir

dont mind I m picking out some of your mistakes

in reply to A Tax Payer you said 'It doesn't take a genius to figure that the Chinook is way too expensive for India at US $580 million a pop.'

Since when the Chinook started costing US $580 million a piece.

in your reply to Anonymous 09:05:
you said 'A better comparison would be with the C-130J, which is coming to around US 200 million per piece.'

in that case the 6 no. of C-130J should cost US 1.2 billion, but as far as I remember the deal is US$ 962 million under FMS.

But if its really US$ 1.2 billion then we have to be careful about hidden cost on the deals executed through FMS.

By the way the 4 day India US strategic summit is starting today. Any expectations from this dialogue.

Broadsword said...

Anonymous (Tats):

I won't waste time wishing you goodbye because I'm pretty sure you'll be back here, posting your views (note: not information, views) under a different Anonymous!

My article has no views. It has only information and brings out: (1) The high price of the C-17; (2) That this high price is without sensitive electronics (3) That Boeing says it could bring the price down; (4) An analysis of the components of that price. No views, only information.

Your post, in contrast, has only views. What little information you have posted is factually incorrect. What is especially sad is that you seem to be deliberately misrepresenting information that is freely available on the internet.

Just so that other visitors don't get misled by your disinformation, here's a breakdown of the Australian C-17 sale: This is from the DSCA website.

(1) On 3 April 2006, the Defense Security Cooperation Agency notified Congress of a possible Foreign Military Sale to Australia of up to four C-17 GLOBEMASTER III aircraft, as well as associated equipment and services. The total value, if all options are exercised, could be as high as $2 billion. (verbatim from the DSCA website) So that's $500 million per plane

(2) WASHINGTON, July 22, 2009 – On July 17, the Defense Security Cooperation Agency (DSCA) notified Congress of the Government of Australia’s request to continue participation in the USAF/Boeing Globemaster III Sustainment Partnership (GSP), which consists of support for four Boeing C-17A aircraft. The estimated cost is $300 million. (verbatim from the DSCA website) So that is US $75 million per plane, every three years, i.e. US $25 per plane, just like my article says.

Total per plane: US $500 million + US $75 million for a three-year GSP membership. My math tells me that's US $575 million, not far from the US $580 million that the India sale has been pegged at.

Again note: what I am purveying is information. I'm not saying this is expensive, cheap, or middlin'. I'm telling my readers that this is what it is.

My only regret about blogging is that I inadvertently provide pamphleteers like you a platform to air your propaganda. Otherwise where would you publish??

Thanks!

Munish said...

I feel C17 is expensive.

A new Russian-Ukrainian AN124-150 can life 70 ton to 8500+ KM and have occasional capacity of 150 tons.

AN124 costs 70 Million/piece. Why not we buy 20 AN124 and say 6 C17 for special missions for replacement on all IL76.

chandrabhan said...

Col Shukla,

This is a joke being perpetuated on Indian tax payer by the 'New Shiny toy' and Imported maal hungry IAF in consent with American prime minister MMS.. sorry Indian PM.

Since a C17 carries 78 tons of payload and IL76 carries around 48 with the new engines, I C17 will suffice for 2 IL76's - $100 million. Also assume 50% of operational readiness for IL76 and 100% for C17 what shd be the cost? $200 Million. $380 million for the bells and whistles! How many tanks do we transport to Daulat beg oldi everyday? They can be dismantled and carried. Are we going to transport AGNI 1,2,3,4,5,6 etc to North east?

Why not simply hire an AN124 which even Nato uses to transport heavy stuff? and the fun of it is that we have to pay additional in case we can satelight navigation.

Add to this Robert gates has conveyed he is not going to buy any more of this white elephant for the American forces.

why there is no debate on this purchase or for the matter this FMS route purchases from America? I am sure Boeing is a good host to journos.

Lament, lament mother India. We are going to fund the gifts of F16/F18 Terrorist army of pakistan is going to get from Americans. This is our 'jaziya'

I doubt that you will publish it but i had to write it.

Anonymous said...

we are not united states to over spend in any systems.(see the results now eg:recession,dept)if IAF needs this planes just reduce the numbers from 10 to 2 and divert the balance fund to get any other best ,value for money planes with TOT.i like to know as a citizen of india is there any way to show our protest? ,to GOI, seniors pls guide,we are paying tax not the politicians.

basha said...

we are not united states to over spend in any systems.(see the results now eg:recession,dept)if IAF needs this planes just reduce the numbers from 10 to 2 and divert the balance fund to get any other best ,value for money planes with TOT.i like to know as a citizen of india is there any way to show our protest? ,to GOI, seniors pls guide,we are paying tax not the politicians.

A Taxpayer said...

Sir,

Despite what Boeing and the US Air Force like people such as yourself to believe and to publish for them, the C-17 has never landed in such places as as Chushul, Fuk Che, Daulat Beg Oldi and the dozen other airstrips and advanced landing grounds that you referred to with any kind of heavy payload.

You accuse me of not thinking. I accuse you of publishing what you are told without doing any prior research. That is not journalism. It is publicity.

You believe, because your were told by Boeing, that the C-17 can LAND at high altitude unpaved airstrips of 1000 meters in length with a 75 tonnes of payload? You are dead wrong!

I could quote you many official US Government documents that prove you wrong, but to save your time, I will quote just this one:

EVALUATING THE C-17 SEMI-PREPARED RUNWAY CAPABILITY – AN OFF-ROAD MAP

The truth is that the only time in C-17 history that a C-17 was used operationally on an unstabilized unpaved runway was at Camp Rhino's 7000 foot runway in Afghanistan. 7000 feet is far from "short". Then the runway required extensive repairs after 8 C-17s had landed. There are no other cases of any C-17s ever landing operationally on any unpaved runway that had not been built or upgraded specifically for the C-17. NOT ONE. But all you journalist sing in choir the same line that Boeing feeds you: "the C-17 can routinely land with a 170,000 payload in a 3500 foot unpaved runway". I'm afraid it's just not true.

Why don't you ask them to name you ONE single runway where they did that and show you the video ?

Vivek said...

Taxpayer,

The IAF doesn't purchase any product on basis of the brochure. Like every other weapon system the C-17 is to fly to India for a round for rigorous testing and if the C-17 can't perform what Boeing advertises, the IAF/MoD retains the right to cancel the order.

Jet Planes said...

It's very good to read specially the paragraph "the US Congress was notified on 23rd April that India wanted to buy ten C-17 Globemaster III aircraft directly from the US government (under the Foreign Military Sale, or FMS, programme) for an estimated US $580 million per aircraft. In contrast, the IL-76, can be bought for less than one-tenth that price: about US $50 million per aircraft."

Indian Pakistani peace talks said...

Well if we can trust the yanks we may get a repainted C17 that has seen action in Afghanistan,and yet the costs are manifold,so what are the hidden or escalated costs for?

niranjan said...

I don't think $580 million for each craft is a reasonable price. [It's a big Scam]



The problem with US is, It is not allowing their companies to sell their products directly, these are sold in FMS program [On No Technology Transfer Condition].


So in any case if we've to go for war with Pakistan againest to US's interest, US will stop supplying Spare parts. Then all the Bollion $'s spent will become a Piece of shit [US has banned INDIA in buying any Defence equipement when we've conducted Nuclear Tests].

Russia is helping us for past 35-40 years in building our own Military Infrastructure with Technology Transfers. Neglecting Russians help will be like cheating our own family.

US is just hiking all the Prices and filling their Pockets with Billions of Dollars.

May be C-17 is having vey good Technology, But once if loose it in combat $580 millions is waste. Because Military Transport, Oil Tankers will be travelling at close to 900 km/hr. They'll be an easy targets for enemies though there is a cover of Multi-Role jets.

The brainless Indian Politicians shuold re-consider their decisions.

Recent Indian-US Military Deals

Boeing C-17 Globemaster III - 10 Aircrafts @ $5.8 Billion dollars [Priced 100% more than the Original Price]

Lockheed Martin C-130J - 10 Aircrafts @ $964 and another 6 Aircrafts @ $ 1.2 bollion [Which is again 50-100% more than the original Price]

Boeing AH-64 Apache - 22 Helicopters @ $1.4 billion [Which is again Piced at higher then it's original price]

Boeing P-8I Neptune Poseidon - 8 Aircraft @ $ 2.1375 billions [Which is again Priced higher then at what Boeing has sold to US]

Like this all the deals with US companies is priced at atleast 30-100% more than their original prices.

INDIA should have to re-consider it's deals with US and be wise in selecting the Defence Partner.

Ravi said...

The C-17 is a tactical military aircraft - no comparison with Airbus 380 and Il-124 etc which are civilian cargo lifters. C-17 operates with very little equipment required in forward area, not so for civilian aircraft which must have the full monty. The price includes several years of spares and other stuff. In military equipment 10% inflation/year is quite common. IAF forward airfields in Ladakh average, AFAIK, 4000 to 6000 feet. C-130 is not a substitute because with aircraft you almost invariably run out volume space before you run out of tonnage. Life cycle cost of C-17 is quite different from life-cycle cost of Il-76: saving money buying upgraded Il-76 will end up costing more over lifecycle.

In FMS there is no greasing of palms. Anyone who thinks the Russians of today are like the Soviets of yore is mistaken. The Soviets used to cheat in all kinds of little ways; they had political not commercial intent, so while they tried to make money, that was not the main purpose; the Russians are out and out looters. Please see carrier contract.

India has bought C-17s (BTW more are to come in future contracts)for global reach, not just for China front.

I dont doubt what the commentator says about Camp Rhino dirt airfield being torn up after 6-7 sorties, this happens when any aircraft uses a dirt field (assuming its capable of operating off one) but just FYI the IAF forward bases that will take C-17 will not be dirt strips.

As for P-8, please to keep in mind this is a very-high tech platform even in the "lower" version we are getting. If your sub-hunter cannot detect enemy subs in the first place, the cheap price will not matter.

Like Col. Shukla, I am against buying foreign if we can make the same, even if it gives 0.7 or 0.8 performance of foreign. Col. Shukla has pointed out IN warships, Arjun, and Tejas. But specialized equipment you do have to buy from overseas - even the advanced countries do that. Australia for example flies US F-18s, AEWCS, C-17, and CH-47.

Personally I'd rather the almost $6-billion to be spent on C-17s was spent on upgrading border roads and railroads, but you know how that program is going (badly) and in any case China front is only one theatre for C-17s. Still, if it was upto me I would forgo the other benefits to get the border road/railroads built. Just my two paisa.