Key Points to Watch in the Aviation Industry This Year (1) - Maritime Operation Helicopters

Leonardo's AW159 Wildcat

[Monthly Aviation Editor-in-Chief Kim Jae-han] This year’s defense budget is well known for being the largest ever at 50 trillion won, and the most notable part is the aviation projects. Among the 16.6915 trillion won allocated for defense capability enhancement, aviation projects account for the largest share at 6.3804 trillion won. This is more than twice the size of the second largest share, the shipbuilding projects. This means there are many significant projects underway. In particular, this year, these major aviation projects are expected to face important decision-making points, which is a key point to watch.

The “Maritime Operations Helicopter Phase 2 Project” (hereafter Phase 2 Project), which involves the acquisition of 12 new maritime operations helicopters, is expected to select the final model within this year. According to the Defense Acquisition Program Administration (DAPA), the original plan was to select the final model by the end of last year or early this year, but the plan has shifted to conducting testing, evaluation, and negotiations with companies through the first half of this year, with the final model selection scheduled around the third quarter.

The current competing models are Leonardo’s AW159 Wildcat and Lockheed Martin’s MH-60R Seahawk. In 2018, after Leonardo’s sole bid, a failed bid, and a re-bid, the U.S. government proposed the MH-60R through Foreign Military Sales (FMS), establishing the current competitive landscape. Notably, unlike the Phase 1 Project, the MH-60R’s renewed challenge in Phase 2 is drawing significant attention due to its substantially reduced price through the FMS method.

In this regard, last August, the U.S. Defense Security Cooperation Agency (DSCA) under the U.S. Department of Defense announced that the U.S. State Department approved the sale of 12 MH-60Rs along with radar, engines, sonar, navigation systems, sonobuoys, communication equipment, training equipment, and logistics support to South Korea for $800 million (approximately 970 billion won). This price is about $200 million (approximately 180 billion won) lower than the roughly $1 billion (approximately 1.15 trillion won) price set during the Phase 1 Project for 8 MH-60Rs.

The currently known budget for this Phase 2 Project is close to 1 trillion won, about 980 billion won. Considering that the price announced by the DSCA is typically set as the maximum price, it suggests that proposals can be made at prices lower than the current budget range. For the MH-60R, this means improved price competitiveness compared to the Phase 1 Project. Ultimately, the Phase 2 Project is expected to see a fierce contest between the AW159, which holds the advantage of being a single model from the Phase 1 Project with price competitiveness, and the MH-60R, which is re-challenging with improved performance?previously rated higher than the AW159 in Phase 1?and enhanced price competitiveness.

This content was produced with the assistance of AI translation services.