18 December 2007

The Death Of A Billion Dollar Idea

Aviation Technology Group, a Colorado based aircraft manufacturer, is on the brink. It has just ten employees out of a hundred at its peak left, and if it can't find financing it will die, according to the Denver Post.

It has been developing a two-seat, $3 million aircraft that is targeted at wealthy pilots but has not yet received Federal Aviation Administration. The plane can also be configured for military use.

I am hardly surprised that ATG is floundering in the general aviation area, although it does have 100 order with $25,000 deposits. If an expensive toy for wealthy adrenaline freaks doesn't get built, so be it.

The Rocky Mountain West aircraft manufacturing industry also seems secure. The Denver Post also reported that Adam Aircraft, another start up general aviation aircraft company, also headquartered at the metropolitan Denver Centennial Airport, is expanding its production facilities in Utah and has manufacturing operations in Pueblo.

But, what ATG has that is in the nation interest is a billion dollar idea; not an idea that would make ATG a billion dollars in profits, but an idea that would save U.S. taxpayers several billion dollars.

The idea is its "Homeland Defense Interceptor" version of its planes. You see, right now, in the continental United States if we have another 9-11 type event where non-military aircraft are co-opted for hostile purpose, we have to scramble F-15s or F-16s to contain them, and if necessary, shoot them out of the sky. There are scores of jet fighters in the United States Air Force, Air Force Reserves and Air National Guard inventory that are tasked with this interceptor mission, including squadrons tasked to major cities like Washington D.C. and New York City.

The F-22 is replacing the F-15, and the F-35A is replacing the F-16. The average cost of an F-22 is in excess of $300 million and the marginal cost in well in excess of $100 million. The F-35A, originally expected to be a steal at $35 million a plane is now expected to cost more than $110 million a plane. These planes are also very expensive to operate.

The genius of the Homeland Defense Interceptor concept is to recognize that a lot of very expensive features of the F-15, F-16, F-22 and F-35A are necessary in a plane whose mission is to guard the skies of major U.S. cities. There are essentially no military aircraft in private ownership that pose any threat to any U.S. target anywhere in North America, or for that matter, almost anywhere in the world. Any invading military aircraft would be detected on radar long before entering U.S. airspace, from across the Atlantic Ocean, Pacific Ocean or Caribbean Sea. No one seriously worries about a military aircraft strike on the United States from Canada or Mexico or Greenland.

A plane securing the skies over the United States doesn't need stealth technology, it doesn't need to be able to cruise at supersonic speeds. It doesn't need phenomena thrust to weight ratios to allow it to out maneuver top of the line Russian jet fighters. It doesn't need to have any bomb dropping capability. It doesn't need a big payload of air to air missiles. And, so on. Even without those bells and whistles, you can build a jet fighter that is devastatingly superior to even the most canny pilot in any plane one would ever encounter in U.S. airspace.

The result is that a homeland defense interceptor could be build for something on the order of 10% of the price of an F-35A, and replaced scores of F-35As that will be tasked to that mission, and it will also have far lower operating costs. One could buy 100 Homeland Defense Interceptors in lieu of F-35As for the price of 10 F-35As. This would generate perhaps $1 billion of sales and perhaps $200 million of profits for ATG. But, it would save U.S. taxpayers perhaps $9 billion.

This wouldn't at all replace either the F-22 or the F-35A. But it would save U.S. taxpayers several billion dollars by lowering the number of the more capable planes that the combined U.S. military would require. It could also be designed, because it has fewer capabilities, to be easier to operate, which would be helpful if this mission were assigned to Air National Guard pilots with a less intense training regime. And, in my view, the Air National Guard is where this mission should be placed, because these pilots, many of whom are pilots at their day jobs as well, are best equipped to understand the context situations they face from experience, before they have to make a critical life and death decision about whether to shoot down a civilian aircraft or not. Someone who has spent years flying a 737 is more likely to be able to distinguish between a true threat and a confused pilot than someone who has never flown from anything but a military aircraft.

More prosaically, ATG's plane was also a serious contender for a next generation training aircraft for U.S. pilots.

In the same vein, while this is not ATG's product, the U.S. could save even more billions of dollars by developing less expensive planes for air to ground missions and close air support generally, when U.S. and U.S. allied forces have attained air superiority. The planes are inexpensive primarily because the features desirable for air to air combat, such as stealth and supersonic flight capability, aren't particularly helpful in the close air support role. Indeed, there is the additional concern that close air support planes need better protection from small arms fire because they often lack the luxury of other aircraft to drop bombs from altitudes out of range of small arms. The A-10 Warthog fills this role now, but it is getting old, despite the fact that the A-10 fleet is being upgraded with modern avionics to an A-10C configuration.

This is particularly applicable when U.S. forces are engaged in the counterinsurgency missions that the military swore off after Vietnam, but U.S. Presidents continued to show an interest in participating in.

Again, this isn't to say that there isn't a role for a versatile, multi-purpose fighter like the F-35A in the U.S. military. Most of the time, most military aircraft are needed someplace with far more threats than the continental United States. Important air force missions call for bombing runs to be conducted before air superiority can be secured. But, the all your eggs in one basket concept that the F-35 is the embodiment of, in the interest of reducing development costs associated with multiple classes of military aircraft, and reducing the variety of parts that are needed in the supply chain to maintain aircraft, has turned out to have produced a higher unit costs due to mission bloat than was anticipated by planners when this joint program was conceived.

Also, given the fact that the United States has one of the two or three largest Air Force fleets in the world, concerns about economies of scale are less important to the United States than to most military forces in the world.

The trouble is that the lobby to save taxpayers billions of dollars by making less expensive purchases, isn't nearly as loud as the lobby to have U.S. taxpayers spend large sums on money on huge programs like super-expensive, super-capable planes.

The military brass, likewise, isn't attuned to the notion that a maximally capable weapons platform isn't always best. Money saved by buying only what is necessary for homeland defense or close air support missions frees up money that can be devoted to other resource scarce priorities.

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