Sometime back, the Indian car company, Maruti Suzuki, ran a series of advertisements wherein onlookers were asked to behold, variously, a yatch, spacecraft and a globe-hopping aircraft piloted by an Amelia Earhart-type figure. They all ended up asking in Hindi, “Kitna deti hai?” It literally means, “How much does she give?”
But for those not familiar with colloquial street Hindi, this phrase is used in a particular context. The question being asked here, and often between friends discussing the merits of new car models, is, “How much mileage does the car deliver?” Frequency of servicing, repairs, maintenance and spares and the incumbent costs are also implied in this question.
The point of the advertisement is the concern most Indians have for mileage and other running costs and how the car company claims to deliver the best performance. This is not necessarily something that has traditionally concerned, say, car owners in the US as much (although in recent years things have changed), and so it has seen the manufacture of lifestyle-driven behemoths for the road, oblivious to concepts like fuel economy.
India has great familiarity with scarcity, and economy of every kind has generally been considered a virtue. Not only mileage, but other recurring costs as well, like those for servicing, repairs and spare parts are also taken into account before settling on a new vehicle. The Tata Nano could only have been dreamt up and launched in a country like India.
As shown below, in one version of the advertisement, Maruti plays upon the military imperative as well. Do watch. The look on the Russian general’s face is particularly priceless.
In a perfect world, this would happen every time, at the end of the Powerpoint presentation and after the brochures have been passed around.
And so it is with the Indian Air Force (IAF) tender for 126 Medium Multi Role Combat Aircraft (MMRCA), ostensibly on its way to fruition now. When the evaluation of the six competing aircraft for the tender process first began, one of the things the IAF took into account was the issue of life-cycle cost, which could be loosely understood to mean cost of ownership over the period of operation of the aircraft. This was because it was felt that the true cost of owning a fleet of aircraft was not reflected in the purchase price alone, especially after the experience with older Russian aircraft. In fact, the advertisement above could well reflect the Russian general’s bewilderment as well as discomfort at the question.
It is not that India wants the cheapest aircraft of the lot (although the IAF picked the apparently lowest bidding vendor considered technically qualified), but that the IAF wishes a decision on qualifying any aircraft, technically, to be based on the best possible judgment of the merits of the various aircraft.
The IHS Jane’s study, which StratPost reported in July, said, “While the initial purchase costs of advanced systems such as aircraft have grown significantly, the cost to support and operate such platforms accounts for a significant proportion of an annual defense budget,” adding, “Though the ‘headline figure’ of an aircraft unit cost remains important, lower through-life and CPFH (Cost Per Flight Hour) allows savings over multiple years and may therefore offer better value than an equivalent aircraft with a lower unit cost.”
This is the first time that life-cycle cost is being considered as a factor in deciding a defense acquisition. Having a good idea of how much each aircraft would cost to operate, service and repair, would allow the IAF to come to a better judgment about how much utility they can derive out of each aircraft. The IAF would be able to factor this cost into their prospective budgets, and be able to arrive close to a reliable figure of the average cost of each exercise and operation, even a sortie. Knowing this cost, with respect to the operational capabilities of each aircraft would inform the IAF of the relative value for money offered by their purchase.
Further, the economies and efficiencies of operating a particular platform also have a trickle-down effect on deterrence capability, with the rate of availability of the aircraft.
The hard part is determining that value. Manufacturers differ on the heads that should be considered for determining the cost per flight hour. Even armed forces of the same nation differ on what goes into accounting for that cost.
The IHS Janes study attempted to standardize exactly that, by researching the common factors that go into operating individual aircraft and modeled fuel consumption for the types being studied.
The report clarified that the ‘dollar value of an aircraft’s CPFH represents the opportunity cost of the maintenance personnel’s time as well as use of the limited stocks of spare parts, both large and small, in addition to aviation fuel’, adding, “These items are of concern as part of the logistical organization of an air force and become of critical importance when operating in a wartime environment and/or overseas’, in times of high requirement of availability of platform.”
These costs should then ‘be considered not simply in terms of a percentage of an air force’s budget, but also in terms of the time and effort required by personnel to generate sorties’. “While a more expensive aircraft with a higher CPFH might offer greater capability, it is also likely to prove a higher consumer of non-reusable items such as time, spares and fuel,” it says.
“In this study, IHS Jane’s has found the Saab Gripen and Lockheed Martin F-16 to offer the lowest CPFH which suggests that – everything else being equal – both types will therefore offer the highest serviceability and most economical cost per mission,” said the report, adding, “While the larger Rafale, EuroFighter and F-18 E/Fs are generally considered to offer high performance and capability (to say nothing of the 5th generation F-35), the types of operations flown by Western nations over the last decade have not shown the smaller F-16 or Gripen to be at a significant disadvantage compared to the larger, twin-engined types.”
IHS Jane’s observed there to be a ‘significant argument’ that ‘lower CPFH and through-life cost deserve to given greater consideration when evaluating aircraft if the average sortie does not necessitate a platform of completely unmatched capability but merely one that is capable of exceeding requirements’.
“The high cost of sustaining fighter aircraft through a campaign compared to the relatively low CPFH – yet competitive capabilities – of a Gripen or F-16 in the face of most threats are a significant mark in favor of these smaller yet capable aircraft,” said the study.
For those considering these aircraft for naval aviation, it also pointed out that while it has not ‘looked specifically at the impact of aircraft navalisation on CPFH’, ‘anecdotal evidence suggests that this would rise owing to the more harmful environment and stressful elements of each sortie. This should be borne in mind when considering use of the F-35 B/C or F-18 E/F or Rafale from aircraft carriers’.
In selecting the Rafale, the IAF has presumably scrutinized the issue of operating costs carefully, conducting at least as stringent a study as IHS Jane’s. And asked the question, “Kitna deti hai?”