At the high end of the market, the Hawkeye 2000 provides users with advanced technologies whose capabilities outstrip those of new, more affordable entries.

The last generation
When export sales of the Boeing E-3 Sentry and Northrop Grumman E-2 Hawkeye began in the 1970s, a new market emerged. The initial export E-3s went to equip a joint NATO fleet in the late 1970s. For the following two decades enough medium and large military powers signed up to create a market worth almost $1 billion annually. Maintenance, training, and upgrade expenses more than doubled the value of this market.

The interesting aspect of the market was the very high barriers to entry. The U.K., which had been using Shackleton bombers equipped with surplus Fairey Gannett radars for AEW, wished to avoid a multibillion- dollar acquisition of modern U.S. replacements. The U.K. tried to develop its own system, based on the Comet jetliner. The Nimrod AEW.3 was an unmitigated disaster and inevitably led to a U.K. acquisition of seven E-3s in 1986. This was the only concerted effort to develop an alternative to the two dominant U.S. systems.

Japan’s acquisition of the Sentry system, mounted for the first and last time on Boeing 767s, was the last gasp of this era. This sale, accomplished after considerable political pressure, resulted in some ill feelings. Japan wound up spending over $1.5 billion on four aircraft. Not only will these be "orphan" planes, but they were the last AWACS aircraft built with the E-3’s Northrop Grumman AN/APY-1 radar system. Within a few decades, development work on APY-1 upgrades will probably cease.

Of course, most countries could not afford to buy or operate these high-end AEW systems. Others, for political reasons, could not acquire them. Yet many still needed the capability.

Iraq had its own indigenous AEW design, but it failed miserably. India started an AEW program in 1984, and in 1989 began flying an experimental rotodome above a BAE 748. But it has progressed slowly, and in early 1999 a fatal crash destroyed the prototype.

As for Russia, it is developing an AEW variant of the Ilyushin Il-76, designated the A-50. India is leaning toward a lease arrangement for two of these. China is flying old BAE (GEC-Marconi) APY-92X radars, developed for the doomed Nimrod AEW.3, on an Il-76. In a clever marketing move, this troubled radar has been renamed Argus, but little progress has been made on getting the system running. The Chinese PLA air force still wants four AEW systems and is evaluating Russia’s A-50E Mainstay.

Probably the classic jerry-rigged AEW was the Iranian air force’s Grumman F-14 system. After the revolution, this aircraft’s AWG-9 was the most powerful airborne radar the service possessed, so the F-14s were employed in an AEW role.

If all of these budget AEW options sound a bit grim, consider the Indian and U.K. Royal Navy’s situation. For years, they have been forced to operate helicopters with AEW radars. The U.K. uses Westland Sea Kings, while India has a fleet of four Kamov Ka-31s, with five more ordered early this year. Radars and mission systems aside, helicopters are arguably the worst AEW platforms imaginable.

	Boeing's E-737 proposal uses a 737 business jet airframe with Northrop Grumman's MESA radar.

The new players
In July 1999 Boeing’s E-737 proposal won Australia’s Wedgetail Airborne Early Warning and Control competition. The proposal uses a 737 BBJ (Boeing Business Jet) airframe, with Northrop Grumman’s Multirole Electronically Scanned Array (MESA) radar. Australia will buy seven aircraft, with deliveries beginning in 2004. Initial operating capability is scheduled for 2005.

The Australian order launched a new AWACS system that is not only advanced, but also extremely cost-effective. Unit cost for the Australian buy should be below $200 million, with all seven aircraft valued at $1.32 billion. An inexpensive narrowbody with an agile, electronically scanned array is a vast improvement over a lumbering widebody with a clumsy mechanical rotodome and a $400-million price tag.

Last November, Turkey also announced that the 737 MESA was its preferred choice for meeting its AWACS requirement. The country has made six firm orders (plus one option) worth an estimated $1.5 billion. Deliveries should begin in 2005.

The 737 MESA is not the only new AEW system, but it certainly occupies the best position on the market. The Israel Aircraft Industries (IAI)/Elta electronics phased-array L-band control antenna (Phalcon) is another advanced AEW design, yet it has not made a large impact on the market despite having arrived before the MESA. Phalcon’s initial versions were mounted in used Boeing 707s. Chile ordered the system and received its first aircraft in 1993. South Africa has taken delivery of two "Phalcon Lite" systems, also on 707s.

In October 1998 IAI teamed with Raytheon to develop, produce, and market Phalcon systems, particularly on the Airbus A310-300. Lockheed Martin has also discussed putting Phalcon on a C-130J. Russia offered China the A-50I, an Ilyushin Il-76-based system with Phalcon technology. The U.S. vetoed this sale in 2000.

Israel’s air force also uses Phalcons and has withdrawn its E-2Cs from service. However, Boeing is marketing the 737 MESA to Israel as an alternative to additional Phalcons. If Israel signed for these planes, the move would oust the Phalcon from most high-end markets.

To deal with this difficult market situation, IAI is considering scaling back its Phalcon ambitions. It is researching smaller, tactical versions with less capability and smaller price tags. Raytheon may be involved in this initiative, and could cooperate on a new Phalcon version that would use business jets such as the Gulfstream V or Bombardier’s Global Express.

Meanwhile, the E-2 system is still available. But because very few customers need or want the carrier-borne E-2 platform, Lockheed Martin and Northrop Grumman have also marketed the former company’s C-130J transport with the E-2C’s APS-145 and other avionics. This is a remarkably cost-effective, if unlaunched, option. Sadly, the 737 MESA—which offers newer, more capable technology at only a slightly higher price—could doom the system.

However, a few customers might still prefer the E-2 option for interoperability with Navy systems. To satisfy customers looking for a jetliner-mounted system, Northrop Grumman is reconsidering its choice of platform, and is now looking at Fairchild Dornier’s 928JET.

Despite the continued presence of the Phalcon and E-2 systems on the market, there is little question that the 737 MESA represents the new high-end standard. The system’s relatively low price should enable this segment of the market to grow.

	High-end AEW export sales, E-2, E-3, E-767, E-737

Satisfying the low-cost segment
Just as the 737 MESA is expanding the high end of the market, a new inexpensive system is bringing improved capabilities to the low end. Ericsson Microwave Systems’ PS-890 Erieye radar offers a basic AEW capability on a low-cost regional aircraft.

The system was launched by the Swedish air force, which ordered it on Saab’s 340 turboprop. The service ordered the 340AEW, designated S 100B Argus, in February 1993 and took options on five additional aircraft, which were firmed up in early 1994. A prototype flew in mid-1994. The first aircraft was delivered in 1996, and the Swedish air force took delivery of the first functioning Argus system in late 1997.

The Erieye system received a boost when Brazil selected it for its SIVAM surveillance system, managed by Raytheon. For this application, the Erieye is mounted on Embraer’s ERJ-145 regional jet (R-99 in Brazilian air force service). The first one was rolled out in May 1999.

Embraer and Ericsson are also promoting this variant abroad, and in December 1998 Greece ordered four aircraft. The Greek planes will use a more advanced system, with avionics from France’s Thales (Thomson-CSF). Ericsson is talking with Lockheed Martin about an Erieye/C-130J combination.

The Erieye system, which costs about half as much as the E-2 system, has unquestionably revolutionized the AEW market. After all, before it arrived, countries such as Brazil and Mexico had almost no hope of deploying an adequate AEW system. Yet Erieye also represents an inappropriate compromise for countries that have the money—an example of the good system being the worst enemy of the best system.

Greece’s selection of Erieye certainly illustrates this. The country is getting an adequate AEW system at a very reasonable price. But the Greek military cannot be said to have a robust AEW capability, whereas its rival, Turkey, will. Similarly, South Korea, which is looking at both the 737 MESA and Erieye, aspires to regional power status. An Erieye selection would jeopardize that ambition. Clearly, there is a risk of compromising in an area that is a bad place for compromise.

	Erieye

The future of the market
Again, any country seeking to establish itself as a military power will eventually need to acquire an AEW/AWACS system. To crudely establish the future market for these systems, one must compile a list of large and medium military powers. If those that are AEW/ AWACS users are then removed from the list, the remaining countries are the market.

After the Australian and Turkish orders, South Korea is obviously the best example of a military power without AEW, and its requirement is probably the most pressing. Despite the Erieye’s low costs, the 737 MESA system has an excellent chance.

Malaysia also has an AEW requirement. Given the country’s finances and military infrastructure, the Erieye offers an ideal choice, although several other competitors are in the running. A decision could be made in 2003.

Italy, one of the few major NATO powers without an intrinsic AEW capability, is looking at those two systems plus the E-2 option. The competition has been postponed until 2007, but it could be moved forward.

Even as the market for AEW grows and capabilities improve, there are signs that a new standard for the high end might be emerging. Intelligence, Surveillance, Reconnaissance (ISR) is the Air Force’s long-term vision for merging the AWACS mission with other special mission applications, including JSTARS (Joint Surveillance Target Attack Radar System) and Rivet Joint (Signals Intelligence).

ISR will use a single platform. Plans are sketchy right now, but the Air Force will probably decide to base the new creation around Boeing’s 767. This would cooperate with space-based assets and unmanned aerial vehicles.

The program could begin in FY04, but funding for ISR remains a big question mark. Yet if it goes ahead, ISR would give its users an incredible wealth of integrated knowledge about any adversary.

In short, the market is expected to return to that of the 1970s, when a single superpower and its allies possessed a unique capability, one that served as a tremendous force multiplier. Other countries will only be able to wait until this technology becomes affordable and trickles down to them.

AEW/AWACS Capabilities

Robust

Australia*
Egypt
France
Israel
Japan
NATO (registered in Luxembourg)
Singapore
Taiwan
Turkey*
U.K.
U.S.