For decades, the Arab Gulf countries have been a very strong market for Western combat aircraft manufacturers. The Mideast is the largest single export fighter market, accounting for 29%, or $38 billion, of Teal Group’s $130.5 billion 2015-2024 export fighter forecast. This excludes tens of billions of dollars in weapons, support, and upgrade work. But over the past year, there have been profound political changes and diplomatic shifts in the region. A very brief list of these changes includes: The region’s fighter market will be strongly impacted by these changes, in ways that are best addressed on a product-specific basis: Probable winner: Dassault Rafale. February’s 24-aircraft Egypt sale, financed in large part by Gulf Arab states, was the type’s first export order after 25 years of trying. It was also Egypt’s first purchase of non-US fighters in over 30 years. In April, the UAE returned to the negotiating table with Dassault too, for a possible purchase of 60 Rafales. US-Arab political tensions are clearly incentivizing the Arab countries to seek a second source of combat aircraft. France sells fighters with very few political conditions. Arab countries purchasing European fighters, particularly Rafales, would face no serious risk of a spares and support embargo. Another key factor is France’s increasingly muscular foreign policy, as seen in the Libya and Syria conflicts. Weapons purchasers often decide which product to buy on the basis of a strategic relationship; France is increasingly viewed as an active partner in the region. Possible winner: BAE Systems /Airbus/ Finmeccanica Eurofighter. A year ago, the proposed deal to sell a second tranche of Eurofighters to Saudi Arabia (48 planes on top of the previous 72), along with another 12 for Bahrain, looked dead. After all, the country seems to have its combat aircraft needs satisfied for the next decade at least. In addition to the 72 Eurofighters, Saudi Arabia is taking delivery of 84 new F-15SAs while upgrading 70 earlier model F-15Ss to F-15SA standard. It also has older legacy Tornado and F-15C/D fleets. But here again, a desire to keep a second-source European weapons provider going may prevail, particularly since the Eurofighter production line will probably close in 2018 if it doesn’t get this order. The only negative is that unlike France, the UK has been moving towards a more isolationist foreign policy over the past year. If the UK is seen as a less active strategic partner, Eurofighter’s competitiveness would suffer. Possible winner: Lockheed Martin F-35 JSF. For many reasons (US fears of losing valuable technology in the event of regime change, Israeli concerns, lack of strategic relevance, etc) the Arab Gulf is the only major fighter market in the world where the F-35 has not been a player. But from an Gulf state perspective, an Iranian S-300 missile system purchase would suddenly make the F-35 more relevant and useful. From the US perspective, approving F-35 sales may be the only card left to play to keep this market, particularly the UAE but also Saudi Arabia, from buying mostly European fighters over the next few years. Meanwhile, tensions between the Obama and Netanyahu governments might limit Israel’s ability to prevent an F-35 sale to the region. Possible winner: Boeing F-15. Another possible big exception to the regional shift towards European fighters. While Qatar has looked at the Rafale (and to a lesser extent Eurofighter), the country tends to buy top-of-the-line equipment. And in terms of range, payload, and other metrics, nothing beats an F-15. A Qatari buy of as many as 72 fighters could keep the F-15 line open into the next decade, a remarkable achievement for a plane that entered service in 1976. Meanwhile, Boeing’s F/A-18E/F still has one notable hope in the region: Kuwait. But this requirement has been around for some time, with no clear signs of an imminent order. Likely loser: Lockheed Martin F-16. The UAE’s planned follow-on purchase of 30 F-16E/F Block 61s, announced in January 2014, seems to have stalled, with the country now more likely to go European. Recent events (the temporary US arms embargo, the Rafale purchase) mean Egypt probably won’t place any final F-16C/D orders. Iraq is unlikely to stabilize fast enough to permit another order beyond the current 36 F-16C/Ds, many of which have already been built. Since there are no likely customers elsewhere, the F-16 line will probably close in 2017. In all, there’s the strong likelihood of orders for about 200 high end fighters from Mideast customers over the next two years. Political and military tensions may change the competitive position of suppliers, but those same tensions are driving the fighter market in this region to new highs.
For decades, the Arab Gulf countries have been important customers for Western combat aircraft manufacturers. The Mideast is the single largest export fighter market, accounting for 29% of $38bn of Teal Group’s $130.5bn export fighter forecast for 2015-2024, excluding weapons, support and upgrade work. Saudi Arabia has also become a major customer in recent years, with its purchase of 36 F-15 fighters from Lockheed Martin last year.