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Qatar Eurofighter Typhoon deal: BAE sale should not distract from harsh reality of lost markets

Posted on 12 December 2017 by Christopher Leyman-Nicholls0 comments

The decision of the Qatari government to buy 24 Eurofighter jet aircraft built by BAE is useful but should not disguise a stark reality: at present the jet is losing out badly to the French made Rafale, especially in what were formerly highly productive markets in the Arabian Gulf. The danger in placing too much faith, or emphasis, in attempting to turn around sales is that very few nations have the available resources to buy in the numbers BAE would ideally like.

The current geopolitical problems in the Gulf suggest BAE has secured second prize, having lost out on Saudi Arabia to the Rafale. Attempting to persuade Saudi Arabia to buy the Eurofighter could be significantly harder now Qatar will have the Eurofighter in a few years. Whilst the deal will help to keep production lines moving for several years after the original 2020 end-date, further orders will be needed to keep going from 2025 onwards.

Losing Gulf markets to the Rafale is a very serious problem for BAE. Outside of the four countries involved in the creation of the Eurofighter, only one – Austria – is not a Gulf state. The other four – Saudi Arabia, Kuwait, Qatar and Oman – share similarities in that they all invest in defense but have no indigenous defense industry. Such countries are relatively rare, and BAE needs them to keep production lines moving.

Without involvement in the next European jet, and a domestic government unwilling to plough in the level of resources required for a solo development effort, BAE should ensure the company is at the vanguard of new unmanned aircraft to maintain relevance in fast fighter jets.

Although three European nations are examining, or are about to examine, the Eurofighter as a potential long-term option, none are ever likely to order in the numbers leading Gulf nations habitually do. Without major alternative markets to which BAE can sell the Eurofighter, the company should ensure it is at the vanguard of technological progress.

Here, substantial involvement in the F-35 joint-strike fighter will come in useful. Last year approximately 40% of BAE business was done in the United States in a wide-range of fields, including aircraft technology. One such technology is unmanned flight. Get ahead in this segment of defense and the markets lost to the Rafale could be won back. Given that the Qatar deal is most likely the largest BAE will be able to conclude for quite some time, the reality of the modern marketplace for fighter aircraft should not be ignored.

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