By Clay Dillow
FORTUNE -- There used to be one way to build a brand new, state-of-the-art fighter jet from scratch. Backed by millions (if not billions) of taxpayer dollars, a military would debate the potential jets' cutting-edge technology requirements, entertain bids from various aerospace contractors, perform multiple design reviews, award a development contract, and then hope that delays in the prototyping and production phases didn't pile tens of millions more in costs atop the hundreds of millions (if not billions) already spent. See: F-35 Joint Strike Fighter.
But Cessna parent company Textron (TXT) is betting big on a second way: Look at the immediate needs of air forces around the world, build a far less expensive jet aircraft from off-the-shelf components, and offer this pared-down, low-cost fighter to cash-strapped militaries on the cheap.
Last week a joint venture between Textron and AirLand Enterprises (an investor group made up largely of retired defense officials) unveiled a dual-engine jet fighter designed specifically to be less sophisticated, less technologically complex, and -- most importantly -- less expensive to buy and fly than any modern jet fighter in service today. "Capable of performing lower-threat battlefield and homeland security missions," Textron chairman and chief executive Scott Donnelly says of the clean-sheet fighter design known as the Scorpion, it's "the world's most affordable tactical jet aircraft."
"The Scorpion is designed to accommodate the increasingly stringent budget constraints of the U.S. Department of Defense and U.S. partner nations," Textron said in a statement prior to the official unveiling of the aircraft last week at the Air Force Association's annual Air & Space Conference in National Harbor, Md., but that's not all it accommodates. The two-seat light attack plane addresses a key gap in the combat jet marketplace, one situated between the world's best-performing turboprops and its sophisticated fighter jets and one that has gone underserved by the world's fighter-manufacturing military powers for decades.
While sophisticated, supersonic stealth fighters like the American F-22 Raptor and the upcoming F-35 Joint Strike Fighter are crucial for penetrating enemy airspace or engaging in strikes against a technologically sophisticated foe, most air forces -- including the U.S. Air Force and Air National Guard -- spend most of their flight hours performing more mundane tasks. Routine air patrols, training flights, ISR missions (that's intelligence, surveillance, and reconnaissance), and air intercept (defense of restricted airspace and the like) are far more common than combat sorties.
Currently, the U.S. and other well-heeled military powers use their high-end fighter jets to fly these routine missions. Less affluent militaries often buy high-end turboprop aircraft to conduct ISR and other flights, and many eschew owning a fleet of expensive jet fighters altogether.
But in tight fiscal times neither of these scenarios is a truly economical solution. Turboprops aren't well-suited to the heavy ISR payloads necessary to conduct modern surveillance and recon missions, and the F-15s and F-16s the Air Force uses (or their foreign counterparts) are highly sophisticated aerial defense platforms -- overkill for these kinds of routine tasks. F-16s cost roughly $25,000 per flight hour to operate whether in a combat role or in a routine airspace patrol, and the F-35s of the future fleet could cost significantly more.
That's where Textron sees value in an aircraft like the Scorpion that's more capable than a turboprop and less costly than a top-of-the-line fighter jet model. With an estimated cost-per-flight-hour of roughly $3,000, the jet would consume a fraction of the operating cost of an F-16 for routine missions. And while Textron-AirLand hasn't released pricing information yet, the per-unit cost is expected to be "multiple times less per copy" than a traditional jet, says Textron spokesman David Sylvestre.
Textron can get away with this by building the Scorpion to its own specs rather than the DoD's, taking guidance from those more routine missions that eat up most of a military air wing's flight hours. The U.S. Department of Defense has not asked for a less-expensive tactical fighter jet; nor has any foreign air force, but recognizing this need for a less-expensive alternative to top-of-the-line fighters Textron has leveraged the extensive jet aircraft engineering know-how in its Cessna division to create an aircraft that is mil-spec where it needs to be -- in the airframe, in the cockpit instruments, in the ejector seat and glass canopy -- and that employs commercial off-the-shelf technologies elsewhere.
The result (on paper anyhow) is a pretty capable little jet that tops 500 miles per hour at the high end and can stay aloft for five hours at a time on a range of low-intensity missions ranging from ISR to light combat or strike. Honeywell (HON) jet engines provide the thrust (as well as ample power for a 3,000-pound ISR or weapons payload), and avionics stalwart Cobham will provide tried and tested cockpit technology.
So while Scorpion is a brand new, clean-sheet aircraft design, Textron isn't trying to reinvent most of the critical components of the aircraft. That's not only allowed the company to save tremendously on development and manufacturing costs, but to produce a wholly new fighter jet in just two years and without any government funding -- a tacit impossibility under the Pentagon's traditional aircraft procurement process.
But will the U.S. Air Force and DoD be interested in purchasing a less-capable fighter jet that it didn't ask for in the first place? That remains to be seen, but in his remarks opening the AFA confab in National Harbor last week, Acting Secretary of the Air Force Eric Fanning spoke of the need to focus on what's "affordable and sustainable" in the coming years as forces draw down from a decade of overseas conflict.
And anyhow, the U.S. Department of Defense is just one customer in a world full of militaries looking for technology on the cheap. "There's been very steady traffic in the Scorpion exhibit over the past few days," says Textron's Sylvestre, speaking from the Air Force Association convention on Tuesday, "AFA isn't just for the U.S. Air Force, there are Air Forces from all over the world here, and several have stopped by to talk about it."
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