By Xavier Kong
Malaysia has made the decision to lease fighter jets, rather than go into a procurement agreement to own the jets, according to journal Defense News. This follows the Malaysian government freezing its multi-role combat aircraft programme last year.
Five companies are either about to, or have already submitted leasing proposals, “in the hope of making a deal palatable,” according to the report. Defense News noted that leasing civil airliners is big business, but in the fighter world, it is a rare event.
“The Malaysian government are mindful of the need for an affordable solution, so we understand that all the competitors are putting offers on the table for leasing. The program has become very much about affordability,” said Alan Garwood, BAE’s group business development director.
Until recently, the Royal Malaysian Air Force had been looking for a straight purchase of a new jet to replace 18 ageing MiG-29 fighters, due to leave service next year.
According to the report, a Malaysian representative commented that timing is very difficult, as the choice to invest in defence equipment is weighed against the rising cost of living following the measures taken in the 2014 national Budget announced last year.
The representative had also noted that “higher up in government, do they care about the problem? The MiG-29s are due to go out of service, but they could hang on for a couple more years. That’s an Air Force problem, but they won’t be driving the replacement timelines on this.”
“Everybody thinks that whatever Malaysia leases will eventually become the long-term solution because the Air Force will have already invested in infrastructure items like bases, spares and training,” Garwood said.
Boeing and Saab have been slated as the favourites by the industry to cinch the lease agreement.
According to news reports, the 18 jets were purchased in June 1994, during the time when prime minister Najib Razak was the defence minister. at a price of US$380 million, or RM1.3 billion then, which was a “cut-rate price”.
Two more were purchased in 2006, and two of the total 20 had been lost to accidents. As of 2009, news reports noted that it costs US$5 million per aircraft a year in terms of maintenance, and costs about US$29 million per unit.
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