Dassault Aviation ramps up Rafale production amid rising global demand

Between 2000 and 2023, French defence manufacturer Dassault Aviation delivered 164 Rafale fighters to the French Air Force and exported an additional 102 units. This translates to an average of about 11 aircraft a year, with a minimum of 11 aircraft per year needed for the production line to remain profitable. Dassault has announced plans to ramp up its fighter production by the end of this year to levels usually associated with aviation powerhouses like the US or China.

Following the announcement by CEO Eric Trappier that production would increase to three aircraft per month, there were concerns over whether the final assembly plant in Mérignac could keep up with such a production rate. In response, Dassault's management stated that if needed, the factory could push production to four or even five fighters per month.

Although the production increase is a positive development, it presents a challenge not only for Dassault, Thales, and Safran but especially for the roughly 500 subcontractors. Post-COVID-19 pandemic challenges, inflation, and other economic factors have led to supply chain volatility. As a result, only 13 out of the 15 aircraft planned were delivered to customers in 2023.

While large companies may not struggle with the increase in production and the investments it entails, the scenario is different for the numerous small and medium-sized enterprises within the supply chain. Many lack the funds for necessary investments, and finding and training additional labor will pose a significant challenge, particularly for those companies that have been optimized for supplying parts for 11-16 aircraft annually over the past two decades.

Dassault is expanding its production facilities to prepare for any potential crises in Europe that would require deploying a larger number of combat aircraft. Additionally, given the rise in international tensions, the company expects more export orders and aims to be ready to meet them. Currently, for many clients, short delivery times are crucial, sometimes even more so than price or combat capabilities.

Presently, Dassault has orders for 164 Rafales. By increasing the average production rate to 36 aircraft a year, all orders could be fulfilled by 2030, four years ahead of the previous schedule. Eric Trappier anticipates additional orders for 100-150 fighters in the coming years, some from abroad and others from France as it begins replacing the oldest fighters in its fleet with the next-generation NGF aircraft developed under the FCAS program.

Assuming the Franco-German NGF program proceeds as planned, production could start between 2035 and 2040. Additionally, as NATO countries expand their defence capabilities, an increase in the French Air Force's aircraft needs is anticipated.

Regarding export orders, Dassault is in negotiations with Colombia, Serbia, Saudi Arabia, Egypt, and India. The latter two are already Rafale operators and are considering additional purchases due to their satisfaction with the aircraft. French fighters have seen high demand internationally as France is more flexible in its arms sales ethics, selling to almost any paying country without imposing usage restrictions.

The expansion in production capabilities is partly in preparation for the launch of a new fighter version – the Rafale F5 – by 2030. Despite lacking stealth capabilities, this aircraft will be comparable to other fifth-generation fighters in terms of equipment. Rafale F5s will either be newly built aircraft or upgraded from the F4.2 standard models, whose production is set to begin in 2026. Older models can be upgraded but won't fully match the F5 version's capabilities.

Existing Rafale operators may consider selling older aircraft on the second-hand market to replace them with the latest versions. Given the global situation and the fact that many countries still use military aircraft from the 1970s, there appears to be a significant market for used Rafales. A key condition for ordering the new versions is a short delivery time, something Dassault can leverage by increasing its production capacity.

Additionally, the plan to increase fighter production is influenced by the upcoming introduction of combat unmanned flying systems at the start of the next decade. Based on the nEuron technology demonstrator, these sizable drones are primarily intended for dangerous tasks, such as neutralizing enemy air defenses, and their capabilities are expected to match those of modern small single-engine fighters. This move aims to efficiently manage current orders while freeing up capacity for combat drone production.