Airbus bets on MRTT life cost in Indian tanker contest

Life Cycle Cost was not a consideration in the earlier contest, in which the Airbus A-330 MRTT was selected over the IL-78, before the tender was withdrawn. This time the factor is expected to be a key determinant of the acquisition cost of the two aircraft.

A British Royal Air Force Airbus A-330 MRTT at the Singapore Air Show in February 2012.

European aviation company Airbus Military is counting on Life Cycle Cost considerations to help them win the contest for the Indian Air Force (IAF) tender for aerial refuelers. The IAF is looking for six aerial refuelers in a contest between the Airbus A-330 MRTT and the Russian IL-78.

“We know it was technically compliant, we know our friends in the Indian Air Force (IAF) were delighted with it – it was about money. And therefore, what we’re seeking to do this time is to provide some assurances to the customer that it’s not about upfront capital procurement costs when you think about it – it’s whole life costs,” says Air Commodore Ian Elliot, formerly of the British Royal Air Force (RAF), and now Vice President of Defense Capability Market Development at Airbus Military.

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The tender was withdrawn in an earlier instance after the finance ministry raised questions about the selection of the Airbus aircraft, considering the IL-78, already operated by the IAF, was perceived to be cheaper.

“We have to, on this occasion, make the Life Cycle Cost of this capability the heart of our argument. Because our product is a fantastically capable product and the question to some finance guy in the Indian treasury is that are we, India going to pay additional for that additional gold-plated, wonderful capability. But we are very confident that viewed in whole life cost terms that even our more capable products will offer significantly better value for money than a less capable and already in service platform,” says Elliot, who was earlier Air Attache at the British embassy in Washington DC.

Significantly, Life Cycle Cost was not a consideration in the tender the last time. This time, however, as has now become the norm, this factor is expected to be a key determinant of the acquisition cost of the aircraft.

“And that’s where we take great comfort from the fact that in corporate terms we’re the baby brother of the big Airbus commercial world and Life Cycle Costs have historically been a key driver for airlines because they’re out there to save money for their shareholders and make money and so the idea – the philosophy, the design philosophy behind Airbus commercial airliners has now been drawn down into the Airbus Military community,” says the former commander of the RAF’s largest airbase, RAF Brize Norton, home to its strategic air transport and air refueling forces.

“We’re now very confident that the products we market like the 330 MRTT or the A-400M – those products – yes they are reasonably expensive assets to buy but we believe that if you do comparative costs against their competitors, then in terms of Life Cycle Costs, they offer the customer the best value for money,” says Elliot.

So with Life Cycle Cost a factor this time does Airbus Military think they’re in a more comfortable position with respect to their competitor? “Everything we claim is auditable. And with our over 800 Airbus A-330s in the sky everyday so we know what it costs to operate and maintain and support these aeroplanes and we can provide it – empirical data to support the arguments that we’re putting forward to the military,” says Elliot, who wasn’t part of Airbus during the last competition, having retired only last year.

This is something on which Airbus is banking and hopes to persuade India of the value for money that their aircraft would provide, notwithstanding the fact that the cheaper-to-buy IL-78 is already operational in the IAF and would not require any significant additional support infrastructure.

“You need to consider how the Indian Air Force currently does air logistics and how it might do it in the future. Clearly, there’s a transformation happening in India’s airlift world with the C-130J, the C-17 aeroplanes – at the heart of making cost-effective use of those platforms India is going to need to have a pretty sharp tasking mechanism,” he says, adding, “I’ve recently taken my Royal Air Force uniform off and there’s this very strong relationship between the Indian Air Force and the Royal Air Force. And the Royal Air Force – funny old thing – has got C-17, it’s got C-130J, it’s about to get Airbus A-330 MRTT and it’s about to get A-400M. So it’s going to have the full suite of airlift and tanker capability. So I know India is particularly interested to see how that combination works for the Royal Air Force.”

If Airbus wins this contest, it would be the first Airbus aircraft in the IAF. But Elliot doesn’t think ground infrastructure to support these aircraft would be an issue, pointing out that it wouldn’t be the first Airbus in India, per se. Since the MRTT is constructed, first, as a civilian aircraft at Toulouse and only later converted to the military variant at Getafe near Madrid, the ground infrastructure required is largely the same. And since airlines in India fly Airbus aircraft extensively, he says, “Think about 30 years from now and think about an Airbus 330 and IL-78.”

In any case, he points out, Airbus has offered a complete package that includes ground support for the fleet of six aircraft, even allowing for the possibility that all the aircraft might not be based at a single location. For instance, flying a new aircraft (destined for the RAF) for the IAF trials to the fighter base at Gwalior from Spain, they had to hire only basic equipment. “Minimum. Stairs,” he says.

Their aircraft, like the IL-78, conducted three flights with IAF personnel witnessing its performance in environments like Leh. “It also did a flight with a representative selection of Indian receiver aeroplanes like Jaguar, Mirage, Sukhoi – refueling, using the refueling equipment,” says Elliot.

Airbus would have had more to bring to the table with respect to the Russian bid, if the tender were governed by the latest offset policy under the Defense Procurement Procedure of 2011. Elliot agrees, admitting, “Airbus would have had the significant advantage – but we are where are. We have to live with it. Don’t forget we were in the last tender. Offsets didn’t matter.”

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Follow Saurabh Joshi on Twitter @ http://www.twitter.com/saurabhjoshi Saurabh is a journalist based in New Delhi, India who has worked in print, television as well as internet news media. Besides defense and strategy, his past assignments have included reporting from Kashmir, coverage of terror strikes as well as election coverage from all over India. He has a Bachelors degree in Journalism (Honors) as well as a law degree (LLB), both from the University of Delhi.
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