US tender wins the day over European rivals, but at what cost? (480 words)

Published: 2/14/2001

The potential upgrade of the Hungarian Air Force's MiG-29s by the EADS and MiG consortium MAPS, appears to have lost out to the heavily-promoted US offer of 24 upgraded F-16s, currently in storage with the US National Air Guard. The MAPS consortium will still get a consolation upgrade of the MiG-29s, to keep them in service until 2004, say the Hungarian authorities. The Hungarian Defence Minister announced the decision following the Hungarian Security Council recommendation to adopt the $558m tender offered by the Americans. For EADS, the decision has come at the end of a long lobbying process. It believes that this reflects the ongoing global competition between the US and European industries, with top-level US support being supplied through the US ambassador to Hungary, Peter Tufo. Tufo has outspoken in his attacks over the viability of the MiG-29 upgrade, suggesting that it has been, both a waste of scarce resources and no enhancement of Hungary's standing as a new NATO member. This is a clear implication that the upgraded aircraft would not meet NATO standards. Given that the MiG-29 is in service with the Luftwaffe (fulfilling a NATO role) and has acquitted itself in Red Flag exercises during the summer of 2000 against US F-15s, the comments are puzzling if not misleading. Queries over the cost of the F-16 contract suggest that the upgraded aircraft would cost more than an upgrade of the MiG-29, which at around $4m per aircraft, would not only be substantially cheaper, but also be carried out locally, for the most part, through Dunai. This would have assisted Hungary with its integration into the larger European aerospace industry. The failure of the Hungarian bid comes at a bad time for the MAPS consortium, given that it has only recently resolved its problems over EADS's (DASA) involvement in the Romanian led M iG-29 upgrade (the Sniper), which did not include MiG. It recently signed an intergovernmental agreement between Germany and Russia, in support of the commercial agreement to cooperate on the upgrade of Russian aircraft in service in Eastern and Central Europe; a market with the potential for 120 aircraft. For MiG and EADS, the Hungarian decision also follows reports that MiG's involvement in replacing Austria's ageing fleet of Drakkens may have also disappeared. MiG proposed 24 MiG-29SMT with 6 MiG-29-UBT, which while regarded as meeting European standards, are reported to have been rejected by the Austrians as cheap to buy but operationally expensive. They have been eliminated from the tender. Russia has offered to clear its debts to Austria (approximately $3 billion) by supplying the aircraft to the Austrian Air Force.The proposal was discussed with the Austrian President, Thomas Klestil, during a visit by President Putin to Vienna, when he apparently stated that the aircraft ought to remain in the tender.

Article ID: 2355