August 9, 2006: One thing about the F-22 that generates the most controversy is its price - cited by some as high as $361 million per plane. Yet in recent articles, the U.S. Air Force, in seeking to get more F-22s, has said that the plane can be had for as few as $117 million per plane - less than a third of the cited cost. Who is right?
The answer is complicated. Some of the media have focused on the cost per plane of the initial production run - and this often includes the research and development costs and setting up the production line. Setting up the production line can be expensive. But once that production line is in motion, it will be cheaper to simply build more planes. Hence, the first F-22s run over $360 million per plane, but now, the F-22 will only cost $117 million per plane if the Air Force commits to buying 100 more planes. When F-22s are proving themselves capable of taking on planes like the Su-27 Flanker ($45 million per plane), F-15 ($50 million per plane), and others at eight-to-one odds and emerging victorious, the economics become very apparent. When one $137 million F-22 could take easily take out $270 million worth of Flankers or $300 million worth of F-15s, the economics start to favor the F-22.
This is also why, when the Defense Department cut the planned buy for the F-35, the price jumped. This is because the larger production run spread out the R&D costs. Now, the F-35 is going as high as $61 million per plane (for the carrier-capable F-35C). When a production line stops, it is even harder to get it started again, so the planes from a restarted line will cost more than had the line been kept active. This is why Congress wants to keep buying C-17s and C-130Js - if the DOD stops buying planes, and Boeing and Lockheed cannot get export orders, the line could shuts down. Besides jobs for the lads, the C-17s and C-130s do help meet the Pentagon's airlift needs. It's pork,
Which price is cited often depends on what the person citing it wants. Critics of the F-22 will cite the $361 million price tag, and compare it to the F-35's. Proponents will cite the "fly-away" cost of $117 million - and point out that the R&D is already paid for. They also have exercise evidence to point to. The "fly away" price of $117-137 million will also make the F-22 far more competitive to potential export clients like Australia (which is worried about delays to the F-35) and Japan (whose F-15Js may need replacement soon).
So, who tells the truth about how much an F-22 costs? How can you reconcile the nearly $250 million per plane difference between the low-end estimate and the high-end estimate? Simple, just remember that commercial firms have the same accounting situation. It costs billions of dollars to develop new commercial aircraft, and those costs must be paid for. They are, by including the development costs in the price paid for the aircraft. But the Pentagon does not "buy" warplanes the same way airlines pay for airliners. The Pentagon pays for development, then it pays for production. Airliners pay for both when they buy their aircraft. If you want the real cost of a warplane, you have to include a portion of the development cost to the production cost - Harold C. Hutchison ([email protected])