This paper presents a new conceptual framework for control-oriented system identification and constrained optimization of advanced aircraft from completely automated, real-time implementation perspectives. To identify the unknown parameters, we begin by describing the aircraft longitudinal - lateral dynamics utilizing the available augmented models. The control-oriented system identification is based on the least squares concept. The results, presented in this paper, indicate that the system order limit does not exist when the reported identification approach is applied, and the computational requirements are significantly relaxed. Identification is viewed as a tool to ensure the specified aircraft dynamics by solving the optimization problem. It is obvious that the results depend on the aircraft model used, identification accuracy, and design versatility. To avoid the computational conservatism in constrained optimization of open-loop unstable multivariable systems, we approach the design using a recently found generalized nonquadratic cost. The unknown parameters for an augmented longitudinal and lateral dynamics of an AFTI/F-16 fighter, which is described by ninth-order differential equations, are identified. The importance of this example is that the explored iterative identification-control issues are elaborated for an aircraft in the full conventional flight envelope. This example serves to show the feasibility of an automated control-oriented system identification and optimization framework, and significant improvements of dynamic performance of a fighter are observed.