The Economic Times on Sunday FEBRUARY 5-11, 2012

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corporate

How a French Company Flew High in India

9 factors that may have helped Dassault sell its Rafale fighter this week
:: Bennett Voyles

any global arms industry observers were surprised this week when the Indian Air Force announced that it had chosen French firm Dassault Aviation as its preferred bidder for a roughly $11-billion deal to supply India with 126 jet fighters. After all, despite 12 years of heavy sales bombardments all over the world that sometimes even included the president, only the French air force has ever actually bought the Rafale. The deal isnt done yet the French have just won the right to an exclusive negotiation but it is close enough that shares in Dassault shot up by 20% the day of the announcement. So how did Dassault finally pull it off? And not just any deal, but what some say is the biggest cross-border military aviation contract of all time? Of course, the Indian government said it went to the low bidder, but that seems unlikely particularly since the final price hasnt been set, and no one picks up jet planes just because theyre on sale. With billions on the table, and the national security at stake, the French plane must have edged out the multi-national Eurofighter for a number of reasons. Nine possibilities:

hanging out in Bordeaux, home of the Dassault assembly line, instead of Halbergmoos, Germany, couldnt have hurt. On the one hand, youre in the heart of the French wine country, in a rich and sunny part of France. On the other, youre in cold, grey Bavaria, facing a few years of sausages, sauerkraut, and beer served in mugs the size of small aquariums.

newspaper (Le Figaro) and even serves as a French senator (where he is vice-finance chairman), the government had recently announced plans to cease production in 2021 if outside buyers could not be found.

#1

A Better Lunch
Of course, nobody makes an important decision for the food, but the prospect of

Dassault has failed to sell the Rafale abroad since 2000. Although its Mirage planes were popular in the 1970s, Dassault hasnt had a similar success with the Rafale line. Deals with the United Arab Emirates, Morocco and Brazil all fell through. To top it off, President Nicolas Sarkozy is very unpopular and faces an uphill election campaign. After all the economic troubles under his tenure, bringing home a little jambon would be seen as a positive particularly as France has reportedly sunk more than $50 billion on the Rafales development, a lot of money for a country that spends around $60 billion a year on defence. Despite the fact that chairman and chief executive officer Serge Dassault is a member of Sarkozys political party, owns the leading French conservative

#2

Dassault was Hungry

LOreal, the French cosmetics company, made a fortune selling its more-expensive home hair dye with ads that showed some sultry blonde saying shed chosen LOreal, because Im worth it. Now that India has become a much wealthier country, it can afford the best for its pilots and Rafale is arguably the best. They kind of went for the fun to fly factor rather than the best value factor, says S Amer Latif, a visiting fellow in US-India policy studies at the Center for Strategic and International Studies (CSIS) in Washington, DC. If you ask me which plane is better, Id answer Rafale is a more mature and already multi-role plane, says David Cenicotti, an Italian military aviation blogger. The Eurofighter is a younger technology, believed to be cheaper and to have a more political clout because it is built by four European countries. However, this can also be a flaw in times when financial crisis has seen the same four countries much distant from one another on the strategy to save eurozone.

#3

Because Im Worth it