Defence will relocate all its basic flight training from Tamworth in NSW to Sale in Victoria.
Defence company Lockheed Martin has been chosen as preferred tenderer to give new pilot trainees basic flight skills before they move on to advanced aircraft including the new F-35A Lightning and Tiger and MRH-90 helicopters.
The deal is worth around $2 billion over 25 years.
From Sale, RAAF pilots then proceed to RAAF Pearce in Western Australia for more advanced training while Army and Navy pilots go to HMAS Albatross in Nowra, NSW, for advanced helicopter training.
With the new flight training centre at RAAF Base East Sale, comes new flight simulators and 49 new Pilatus PC-21 aircraft to replace the RAAF ageing CT-4 and PC-9 aircraft.
Defence Minister Kevin Andrews said from 2019, RAAF East Sale will take in 165 trainee pilots each year.
Defence will be able to increase the number of graduate pilots from 77 to 105 a year.
Flight training at Tamworth has been provided by Australia's largest defence company BAE Systems Australia and that will continue until the end of 2019. As well as ADF pilots, the school has trained pilots for the Singapore, Brunei and PNG defence forces.
Defence had conducted a thorough evaluation which concluded that Lockheed Martin Australia's tender represented best value for money, Mr Andrews said.
This is bad news for Tamworth but good news for Sale.
An independent analysis provided to Defence indicates an increase in Sale's income base of $17-19 million a year, adding six per cent to the region's economy.
Over the 25-year contract period that will produce economic gains of more than $500 million.
RAAF chief Air Marshal Leo Davies said the new pilot training system would use the latest simulator technology which could be adapted to student needs and different learning styles to allow them to progress faster through training.
"This will create efficiencies for pilot training and allow more flexibility for our student pilots," he said in a statement.
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