Price vs. Performance: The Value of Next Generation Fighter Aircraft
Master's Thesis Oct 2005-Mar 2007
AIR FORCE INST OF TECH WRIGHT-PATTERSON AFB OH SCHOOL OF ENGINEERING AND MANAGEMENT
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The United States Department of Defense DoD is currently recapitalizing its aging fighter aircraft inventory with the F-22A and F-35. While the DoD may consider cost and performance issues, it does not use a quantitative model that effectively measures the tradeoffs between the two. This thesis constructs a hedonic model of the fighter aircraft market to measure the implicit price on fighter performance characteristics and specifically applies it to next-generation aircraft. Data from 50 aircraft from 1949-present were used to construct two models one based on procurement costs and one based on research, design, test, and evaluation RDTE costs. The models, based on a linear Box-Cox transformation, demonstrated that the unique F-22 trait, the ability to super-cruise, has the highest per-unit implicit price 68.5M, followed by the stealth technology 58.7M and large-scale integrated circuitry 55.3M. The high marginal value for the super-cruise trait implies that, depending on how super-cruise is used operationally, the F-35A may be a more effective purchase in terms of resource allocation than the F-22A.
- Attack and Fighter Aircraft
- Economics and Cost Analysis