This Year's Aviation Business Watchpoints (5) - E-737 Performance Upgrade and Additional Acquisition

[Monthly Aviation Editor-in-Chief Kim Jae-han] This year’s defense budget is well known to be 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 to strengthen military power, aviation projects account for the largest share of 6.3804 trillion won. This is more than twice the size of the second largest share, the naval shipbuilding projects. This means there are many significant projects. In particular, this year, these major aviation projects are expected to face important decision-making points, which is a key point to watch.

One of the Air Force’s core assets, the E-737 Airborne Early Warning and Control (AEW&C) aircraft, is expected to undergo contract signing for Identification Friend or Foe (IFF) and tactical data link (Link-16) performance upgrades this year, along with a feasibility study for additional procurement projects.

Among these, the project to procure two additional AEW&C aircraft is expected to have a feasibility study conducted this year for budget allocation, aiming to start the project in 2021. This project was included in the long-term requirements plan in 2016 (to be pursued five years later) due to increased missions following the expansion of the Korean Air Defense Identification Zone (KADIZ) and the growing importance of intelligence collection missions amid North Korea’s nuclear and missile capabilities enhancement.

The key issue in this additional procurement project is whether to acquire the same model or select a model through competitive bidding. Regarding this, the Defense Acquisition Program Administration (DAPA), which is currently promoting the additional procurement project, reportedly received model information from Boeing, Saab, and IAI early last year, suggesting the possibility of competitive bidding. However, most experts anticipate the additional procurement of the same E-737 model. Maintaining a single model fleet of six aircraft offers more advantages operationally in terms of parts supply, personnel management, and training than having six aircraft of different models. If the project proceeds via competitive bidding, participation from Saab and Elta, as in the first project, is expected.

Meanwhile, if the additional procurement project is decided to be the E-737, it is highly likely to be carried out domestically, similar to the IFF and Link-16 performance upgrade projects. This is the same method as in the first project, where KAI assembled three out of four aircraft domestically. Currently, KAI, which handled the E-737 system assembly, is the most likely candidate, but Daehang Aviation, which has experience in heavy maintenance of Boeing 737 airframes, cannot be completely ruled out.

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