* Lockheed buoyed by Japan, Dassault by India
* Boeing, partners in Eurofighter also looking for wins
* Opportunities eyed elsewhere in Asia, Middle East
* Hunger for deals comes as Western defense budgets trimmed
By Rhys Jones and Tim Hepher
Feb 3 Big decisions on warplane purchases
by Japan and India have intensified competition in the
multi-billion-dollar global market, with Western defense firms
scrambling for orders in Asia and the Middle East as their
home-country budgets shrivel.
Growing international unease over China's military build-up
and ongoing tensions between Iran and Western allies in the
Gulf, coupled with the deep pockets of nations basking in high
commodity prices, have sparked a surge of interest in air power.
"There is a strong emphasis on... combat aircraft and things
that belong to them: missiles, bombs, support aircraft, airborne
early warning systems, air tankers and that kind of stuff," said
Siemon Wezeman, senior researcher on arms transfers at the
Stockholm International Peace Research Institute (SIPRI).
Lockheed Martin, the Pentagon's biggest arms
contractor, and France's Dassault Aviation are the
major winners in a pair of widely watched procurement decisions
in the past month, dealing a blow to competitors such as the
four-nation Eurofighter Typhoon and Boeing Co's F/A-18
Super Hornet, defense industry experts say.
Lockheed was buoyed by Japan's $7 billion decision to buy 42
F-35 stealth fighter jets in December, providing a shot in the
arm for a project under fire over costs and struggling to hold
together a coalition of foreign partners.
Japan's selection means South Korea is very likely to follow
suit, analysts said. Seoul last week invited Lockheed,
Eurofighter and Boeing to bid in a $7 billion contest for what
is expected to be an order for 60 advanced fighter jets.
Companies are also eyeing opportunities in Malaysia,
Singapore, Australia, the United Arab Emirates and Kuwait.
India rescued French hopes of an elusive first export deal
for its front-line jet by agreeing this week to enter exclusive
negotiations to buy 126 Dassault-built Rafales after narrowing
the field to an all-European contest with Typhoon.
The Rafale has lost a series of contests to U.S. competition
and has held so far fruitless talks with Brazil and UAE.
"A victory in India would bring the Rafale right back into
the running. Whether this guarantees contracts elsewhere is less
certain, but if it didn't win it was guaranteed not to get
anything else," said Francis Tusa, editor of Defence Analysis.
With most NATO nations cutting back on defense procurement
projects, the imminent award of fighter jet contracts comes at a
good time for military contractors desperate for deals.
Richard Aboulafia of the Teal Group consultancy projects
$178 billion in worldwide fighter deliveries through 2021.
Critics say such sales can provoke rather than prevent
Western defence firms saw their market values tumble last
year after the impact of spending cuts started to filter
Britain's BAE Systems, a partner in the Typhoon
alongside EADS and Finmeccanica, has seen its
market value drop by almost a fifth in the last two years.
China's military build-up, illustrated by the maiden flight
of its J-20 stealth fighter a year ago, is fueling arms sales
across Asia for fighter jets.
China has denied its acquisition of stealth should be viewed
as a threat. Across the region, however, Singapore, Malaysia and
Australia are among those seeking to expand their capabilities.
China's expansion may be the reason India is now considering
another purchase of over 80 jets in a move that could benefit
the F-35, said U.S.-based defense analyst Loren Thompson.
"They'll have to buy something else because a Rafale will
not be able to cope with Chinese fighters 20 years from now."
Lockheed's F-35 fighter is aggressively bidding for
additional overseas sales to offset slower production at home.
It hopes to finalize a 19-jet deal with Israel soon, and to
secure an agreement with Singapore for the stealthy F-35.
Mindful of India's long procurement process and its decision
to cancel past orders for air tankers and helicopters, French
officials have taken pains to say the Rafale deal is not final.
But with the Rafale facing a production halt in 2021 without
exports, India's decision has galvanized the world's third
largest arms exporter and raised its profile in other campaigns.
France's La Tribune newspaper reported on Friday that the
United Arab Emirates had revived an on-off deal to buy 60
Dassault was expected to seal the $10 billion deal last year
but faced a rare public rebuke from Abu Dhabi for making
"unworkable" proposals, throwing a lifeline to Eurofighter and
Boeing, both of whom have been talking to the UAE military.
Gulf tensions are running high due to international concerns
about Iran's nuclear activities. Those concerns helped spur
along a massive sale of Boeing F-15s to Saudi Arabia at the end
of 2011, as well as a big missile defense sale to UAE.
Now, the region may hold the key for India's losing bidders.
"The India deal is a major win for France, and a major loss
for the UK. This leaves Oman and UAE as the largest potential
markets for the Eurofighter, both of which are significantly
smaller than India and less certain to move forward," said Endre
Lunde, a consultant at Aerospace & Defence Consulting.
BAE Systems is expected to supply Oman with 12 Typhoons.
Defence sources say it is in preliminary talks to sell a further
48 to Saudi Arabia. BAE and Eurofighter declined comment.
Abu Dhabi's decision alone has hefty commercial stakes.
French Defence Minister Gerard Longuet has suggested the
UAE's decision could create a domino effect of sales in Qatar
and Kuwait, both of which are eager to renew aerial firepower.