Besides announcing Project Azm, a blanket initiative to develop next-generation weapon systems for the Pakistan Air Force (PAF), the Government of Pakistan and the PAF set parallel long-term technology and industry goals for the Kamra Aviation City initiative.
These goals include building a strong linkage between industry, academic and armed forces organs; ‘down-streaming’ production work to local industry players; expanding Pakistan’s civil aviation space; and cultivating an environment for the development and production of tomorrow’s aerospace technologies.
In his inauguration speech, the PAF Chief of Air Staff (CAS) Air Chief Marshal Sohail Aman affirmed that the he intended culminating impact of these goals was to strengthen Pakistan’s economy and to localize the supply of military and civil aviation goods.
“I believe that we have stepped onto the path which will … ensure indigenization of aircraft – both military and civil, weapons and avionics,” ACM Sohail Aman stated in his speech. “This is our dream to let Pakistan’s aviation industry grow and thus support the country’s economy. Surely, this is the path of self-reliance, and we are pledged to follow it.”
Pakistan’s Minister of Planning and Development Ahsan Iqbal affirmed ACM Sohail Aman’s statements, adding, “I hope that this … city will not only help us develop capabilities in defence or security domains, but I sincerely believe that this aviation city will also become the birthplace of [the] commercial aviation industry in Pakistan.”
Linking Academic, Industry and Armed Forces Research and Development Organs
The centerpiece of initiating this strategy is by expanding Air University (based in Islamabad) to include a campus in Kamra. Under the current phase of the program, the first cohort for postgraduate (Masters and PhD) engineering programs enrolled in April 2017. In earlier interviews with PTV, the PAF CAS stated that Air University Kamra’s launch programs will be focused on aircraft development and manufacturing.
Although Air University was established by the PAF, it is being geared – at least under the auspices of the Kamra Aviation City program – to be an entry-point for civilian and civilian-led work in Kamra. A significant aspect of the initiative is to stimulate growth in Pakistan’s commercial and civil aviation sector, which Air University – and other institutes – can feed with technical support and skilled talent. Opportunities borne from public and private sector activities could instigate private investment in these institutions – leading to growth of the higher education sector in relevant areas.
However, creating a trilateral linkage between academia, the industry and the armed forces could also foster an environment for bottom-up or grassroots research and development (R&D). With sufficient freedom, these institutions could be a major source for organic innovation, which could be driven in part from R&D funding from the Ministry of Defence and Ministry of Defence Production. This would mirror the dynamic in place in the United States where Department of Defence (DoD) funding drives bottom-up R&D in places such as MIT and others. Pakistani and foreign partnering firms (e.g. TAI) could also invest in these projects, especially as joint-ventures. This would mirror the transnational investment some defence industry players make in overseas markets, such as Rolls-Royce and BAE Systems in the U.S.
The success of this project is contingent on the armed forces fulfilling their commitment to the idea presented as part of the Kamra Aviation City’s inauguration. Besides the risk of corruption and economic distress, it is imperative for the armed forces to balance vertical control over some programs with relative freedom in others, especially for organic R&D. Overarching objectives and aspirations are essential, but strict top-down management can be fatal to the initiative. The armed forces would be wise to learn from the R&D cultures cultivated in the West, where organic R&D is a source for subtle defence innovation, including materials (e.g. composites) and electronics. Flexibility is also vital if Pakistan intends to have Kamra attract overseas talent, be it from Pakistani expatriates or nationals of other countries.
Iqbal hoped that the results generated from defence-driven R&D germinate to the civilian sector “…this is the model we have to learn from [the] United States of America, where all technology and research started in the defence sector, but … did not remain confined in defence and security.” Organic R&D gains can form the nucleus of high-value goods for the economy, which can significantly reduce the strain of imports and provide much needed fuel for exports. Iqbal added, “…engineering in our security sectors … must be leveraged for commercial opportunities and commercial applications so that it becomes a multiplier for national development.”
Generating Workshare for Pakistani Businesses
In his inauguration speech, ACM Sohail Aman said, “…the plan of Aviation City has [the] sponsorship of the Government of Pakistan for including the country’s industry as a downstream body … This is our dream to let Pakistan’s aviation industry grow and thus support the country’s economy.”
The core concept in the CAS’ statement is one of delegating production workshare and responsibilities to the private sector. In an ideal scenario, big-ticket PAF (as well as Army, Navy and Government of Pakistan) acquisitions would spur private investment in subassembly and subsystem production, which would then be steered to fulfilling armed forces and government aircraft acquisitions. However, the reality in Pakistan is different in several core respects, with the dearth of large private sector manufacturers being a factor.
From the onset, the majority of subassembly and subsystem manufacturing is likely slotted for the public sector, specifically the country’s defence industry organs. Pakistan Aeronautical Complex (PAC) will retain its role as the leading aviation manufacturer in Pakistan. The material infrastructure and human resources are already in place, thus, Pakistan will likely channel additional investment towards PAC’s growth.
Variance in consistency of Pakistan’s big-ticket acquisitions (e.g. a relative dearth from 2008-2013 versus a relative spree since 2014) will discourage private sector investment in large entities. In the absence of big-ticket acquisitions, these firms will have sunk costs in large-scale infrastructure and labour. Thus, it is unlikely that a private entity as large as PAC will emerge. That said, Pakistan can still delegate valuable aviation workshare to the private sector, but to local small and medium enterprises (SME).
While PAC (and other existing defence industry firms) can focus on costly and complex manufacturing, a portion of the subassembly manufacturing work can be undertaken by SMEs. The industry framework would be a partnership between the public and private sectors. For example, PAC can source specific parts and subsystems from private sector SMEs, while tuning its own infrastructure to efficiently and competitively supply complex inputs. PAC has begun reaching out in this respect by inviting the private sector to provide ‘non-technical’ inputs, such as rubber, batteries and cables.
‘Downstreaming’ more complex technical work to SMEs is difficult. A similar effort has been underway in Turkey whereby the Turkish Undersecretariat of Defence Industries (SSM) has been eager to push the bulk of manufacturing work from large players – such as Turkish Aerospace Industries (TAI) – to SMEs. While a sound and promising proposition in theory, especially since SMEs can generate organic employment and wealth creation opportunities, developing that organic technical base is a challenge. In contrast to Turkey, Pakistan has a significant deficit in terms of providing quality education to its general populace, leaving a relatively limited pool of capable persons in the industry. Moreover, SMEs need funding to acquire the requisite talent and technology infrastructure to support production (which is a challenge for Turkey).
SME development requires a holistic public policy program. Assuming Air University’s expansion begins building the human resource pool, funding mechanisms – such as loans, grants and investment – need to be available to budding entrepreneurs. Committing a percentage and/or tasks from domestic programs – such as the acquisition of combat aircraft, drones, transports and airliners – may spur investors to back SME development. However, these investors need competent people and essential infrastructure already in place to cultivate before committing. Workshare can involve production in aerostructures, avionics, sensors, integration and testing, customization work and maintenance, repair and overhaul (MRO) tasks.
Growth and activity in these realms, especially in the context of civil aviation, could potentially draw high-value foreign direct investment (FDI) as well. Assuming results start coming to fruition, Pakistan could look to fostering partnerships with Turkish, South African, Brazilian and Ukrainian (among other) companies to build a presence in Kamra, which could provide transfer-of-technology in the aforementioned areas. For example, marquee programs such as the Aviation Design Institute’s (AvDI) 5th-generation fighter could provide a case to invest in Pakistan’s aerostructures and electronics base.
While exports are an objective, the fuel for SME development will be faithfully executing upon domestic requirements and in building the underlying talent and material infrastructure. These are all contingent on consistent and healthy funding over the long-term, which in Pakistan’s case is uncertain. Sharp economic downturns, which was the case as recently as 2008-2013, would impact defence and civil aviation acquisitions alike, and will stress private sector activity to rely upon exports. While this should be taken for granted, generating foreign market access is upon Islamabad to proactively court large countries and market Pakistani goods and services accordingly.
As one might imagine, there is no single source for success in the economic growth aspirations of the PAF or the Ministry of Planning and Development. The Aviation City’s success requires a coordinated policy plan involving Foreign Affairs, Trade, the Ministry of Defence Production, Education, the armed forces and the private sector. SME development – i.e. human resources, high-technology infrastructure and organic R&D – is an essential piece to bringing the economic aspect to fruition. Partial implementation will, at best, result in partial results, and the failing areas could erode the transformative aspects of the initiative.
Near-term Execution Strategies
Long-term aspirations aside, several big-ticket programs could materialize and form the nucleus of activity under the Kamra Aviation City initiative. There is already the JF-17 Thunder, which has PAC manufacturing 58% of the fighter’s content under a workshare agreement with the Aviation Industry Corporation of China (AVIC). However, a crucial aspect of the Kamra Aviation City is to draw all major defence and civil aviation programs through the initiative, so as to provide maximum possible leverage and scale for activity.
The Pakistan Army Aviation Corps’ (PAA) forthcoming ‘plus-one’ attack helicopter program could provide that early investment in PAC and the Aviation City. In June, Alan Warnes reported that Pakistan will enter talks with TAI for 30 T129 attack helicopters, which it aims to finalize by early 2018. Warnes’ had also reported that the T129 deal could accompany a parts manufacturing work at PAC.
While modest, it is a credible start that pushes PAC into the field of helicopter production work. Aselsan and Roketsan, which supply the electronics – including electro-optical and infrared (EO/IR) sensor pod – and munitions, respectively, could also delegate work to local firms. In fact, Aselsan’s EO/IR sensor pod and Roketsan’s munitions can be extended to the AvDI drone program and other defence programs.
Returning to the holistic policy discussion earlier, Pakistan’s defence planners may need to consider tying future aviation purchases to Kamra Aviation City. The main incentive to do so would be to instigate short-term activity and use those programs to save or recover foreign currency.
However, potential drawbacks to this strategy relate to the reality that Pakistan’s technical base is still relatively limited. Thus, offsets will remain modest in scope (e.g. parts manufacturing and assembly) until the national technical base is expanded to absorb more complex tasks. These offset agreements may help to an extent, they will not decisively propel PAC and other companies towards the originally set goals.
Pakistan has the option of investing in near-term programs, but that course may escalate costs to unsustainable levels. Unless a program has a long-term scope – spanning several decades, many aircraft orders and/or several domestic users – Pakistan is unlikely to incur that expense. The K-8 Karakorum basic and intermediate jet trainer was a victim of this issue. When the PAF reduced its orders in the 1990s, PAC was unable to raise a final assembly plant (though it continued manufacturing 18% of the airframe).
If the Pakistan Army decides to use the PAA as its principal close air support (CAS) arm, then the T129 (or plus-one) attack helicopter purchase could expand to include dozens of aircraft. This might spur spending in creating a robust local supply channel for the helicopter, which could involve depot-level maintenance, spare parts manufacturing and potentially even supplying aerostructures parts and/or dynamic parts.
There are several other possible avenues (e.g. possible Puma utility helicopter successor or replacement for the T-37 Tweet basic jet trainer), but it is not known if Pakistan will seek to develop original platforms or to embrace an existing program as a partner. If new acquisitions are slotted for the near-term, then the latter avenue is the likelier outcome, but to varying levels of local engagement.
Though it does not elicit as much attention as defence aviation, civil aviation does constitute a noticeable portion of public sector and private sector expenses. Pakistan International Airlines (PIA)’s infamous follies notwithstanding, the prospect of recapitalizing its domestic, regional and transcontinental fleet presents a major cost challenge. If PIA’s business side operations can be rectified, the airline can – theoretically – comfortably repay its acquisition overhead. However, it appears that the Pakistani government does not want to see PIA’s fleet-side activities and civil aviation as a whole overshoot domestic industry activity. In fact, the local industry would also be an option for privately owned Pakistani airlines, providing a possibly lower cost and more accessible market for acquisition and after-sale support and MRO services.
As far as Pakistan is concerned, civil aviation may also be a bigger market than defence, opening Pakistan to engage for businesses from foreign airlines. Granted, this market is also flush with more competitors and options, but comparatively marginal inroads could yield relatively valuable results for Pakistan. In fact, growth in this realm may be an easier draw for FDI and SME development, especially for SMEs that rise to also service defence needs. If there is a remote chance of a large and privately-owned aviation vendor to rise in Pakistan, it would occur on the back of private and public sector civil aviation activity. Technology sensitivity and security are not significant factors on either side of the equation, and investment in this realm can (theoretically) survive on healthy private sector activity.
Ahsan Iqbal stated, “I am hopeful … that this aviation industry will give us not only the next-generation fighter aircraft, but … in the years to come, we will also have jetliners rolling out of Kamra … which will give Pakistan great pride in the international aviation industry.”
Civil aviation programs can the form of airliners and commuter aircraft, helicopters and lightweight utility aircraft. The only demand Pakistan can assuredly leverage are those borne from public sector, state and armed forces requirements. In some respects, the three realms could be amalgamated to expand scale, but unique operational requirements (especially when high-altitude or maritime elements are introduced) may limit the extent to which Pakistan can rely on standardization. But there are opportunities for inter-services alignment, especially in the realm of commuter aircraft and, to a lesser extent, helicopters.
PAC is already a parts supplier to Boeing, which had agreed to an offset deal as part of its sale of 777 jets to PIA. However, the Pakistani government’s goal is to eventually see a jet airliner roll-out from Kamra. In this respect, supply channel deals – while helpful – are not a direct path to the objective. Broadly speaking, Pakistan’s best opportunities to assume large-scale supply channel work will rest in emerging – but risky – programs. In other words, Pakistan will not get as much (with its limited upfront scale) from established OEM designs (e.g. Boeing 737) than it would from smaller OEMs with new designs (e.g. Embraer E190).
The latter field will likely require Pakistan to commit to some of the development costs, but the payoff is the opportunity to supply significant portions of the aircraft. A comparable situation would be that of the Czech aircraft company Aero Vodochody and the Embraer KC-390 from Brazil. As a result of its risk-sharing partnership with Embraer in the KC-390, Aero Vodochody is responsible for supplying the KC-390’s rear fuselage. However, Embraer is still pining for overseas sales, so Aero Vodochody has yet to assuredly see a period of lucrative work, hence the risk element. There is also the risk of ultimately acquiring a costlier platform (in comparison to the competition) due to insufficient scale, technical issues, fewer MRO service suppliers and/or expensive subsystems.
In June, the Russian Minister for Industry and Trade Denis Manturov had reportedly offered Pakistan an opportunity to invest in the Sukhoi SuperJet 100 narrow-body twin-engine regional jet airliner. Alternate avenues for comparable aircraft, which could form the mainstay of the PIA and Pakistan’s privately-owned airlines, include those from Comac (C919), Embraer (E-Jets), Bombardier (CSeries) and Antonov (An-158). For a jetliner program to be successful, Pakistan will have to generate the right incentives for its private sector airlines. These incentives would include having a locally supported aircraft with sufficiently low acquisition, after-sale support and maintenance costs. In turn, the Pakistani market would need to demonstrate strong growth in air travel – specifically domestic and regional – to spur demand for regional jetliners. Pakistan will also need to secure overseas markets for sales of its jetliner, so as to ensure continual production work. This aspect will likely push any Pakistani initiative to merge with a program managed by an OEM with relatively large and diverse market prospects and government backing.
The jet airliner realm is complex and fraught with considerable risk. It is not something Pakistan will pursue in the near-term. However, Pakistan may have lower-risk opportunities that could help it build concrete steps towards that eventuality. In the beginning of July TAI and PT Dirgantara Indonesia (PTDI) agreed to collaborate on PTDI’s N245 turboprop commuter aircraft program. The N245 will be based on the CN235 prop-powered light utility transport aircraft, but with a commercial focus. With the N245, PTDI hopes to have lower acquisition and life-cycle costs than the CN235. Pakistan may benefit from considering the N245 as a gateway to civil aviation production as well as future mainstay commuter aircraft.
Foreign Industry Opportunities at PAC Kamra
As part of AvDI’s medium-altitude long-endurance (MALE) drone and 5th-generation fighter programs, PAC may begin a process of infrastructure development. While SME growth is ideal, assured development can only occur through PAC as it is an existing vendor – Pakistan’s first priority will be to expand it. Machining OEMs and experts in aerostructures and other material sciences may find opportunities in this regard.
New Technologies at AvDI
As per the Ministry of Defence Production (MoDP), AvDI was established “to spearhead design and development activity … [of] state of the art next generation (sic) aerospace vehicles.” While this in obvious reference to the 5th-generation fighter program, AvDI could potentially be steered to explore other programs as well. For example, AvDI could consider building upon its MALE unmanned aerial vehicle (UAV) program to stealthy ‘attritable’ UAVs analogous to the Kratos Valkyrie in development in the U.S.
The Kratos XQ-222 Valkyrie is essentially an amalgamation of attack UAV, loitering munition drone and air launched cruise missile (ALCM) technologies to create a low-cost unmanned combat aerial vehicle (UCAV). It has an internal payload (of 226 kg) and one-way range of up to 4,700 nautical miles. Its proponents cite the XQ-222’s low-cost (under $5 million a unit) and scalability as advantages, which will enable end-users to saturate enemy air defence systems, carry out high-risk strikes and serve as decoys for manned fighters.
Considering Pakistan’s threat scenario, it need not match the Kratos Valkyrie’s range, but by binding the Ra’ad II ALCM and AvDI MALE UAV programs, Pakistan could seek to develop a low-cost attritable UCAV. Such a project could also be the gateway to AvDI’s endeavours in low radar cross-section design, which could feed into the 5th-generation fighter program. Rocket-assisted launching could also enable the Pakistan Army to deploy an airborne attack element without the need of runways or bases.
The MoDP’s recent yearbook also listed the development of a “multi warhead bomb” and “anti soft-avionics bomb” for the PAF. It is not clear what these munitions refer to, but they at least hint towards new sub-munitions and electronics neutralization efforts. Although structurally limited in its options, the PAF appears to be orienting its efforts towards acquiring future-oriented asymmetrical weapons, and its domestic organs are to play a central role in fulfilling those requirements.
Pakistan’s governance challenges and structural economic uncertainty is a perennial problem, and it will serve as a potential dampener to the Kamra Aviation City initiative and the projects conducted under its scope. Holistic policy implementation, especially on the economic side, is integral to providing the Aviation City initiative its best chance of success. That said, the PAF appears to value this program as strategically vital to its future operational requirements, which could see certain elements, such as AvDI and the 5th-generation fighter, UAV and air-launched munition programs, benefit from relatively healthy support. But the ambitions and aspirations presented at the inauguration ceremony will require policy continuity and commitment spanning decades to have a chance at coming to fruition.