Combat Aircraft: The Mighty Dollar: USAF Tanker Choice Came Down to Price, Efficiency


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It took three tries over 10 years, but the U.S. Air Force has finally awarded a contract for new jet-powered aerial tankers. On Feb. 24, Deputy Defense Secretary William Lynn announced that Chicago-based Boeing had beat European rival EADS in the competition to build 179 new tankers to replace 1960s-era KC-135s. “Boeing was the better offer,” Lynn told reporters.

The $3.5-billion Engineering and Manufacturing Development contract calls for Boeing to produce four prototypes. The company is required to deliver the first 18 operational tankers by 2017. The new refueler will be designated “KC-46″ in Air Force service.

The Pentagon launched the current KC-X competition in September 2009, following years of botched attempts. A deal to lease 100 Boeing tankers based on the 767 airframe fell apart in December 2003 after it was discovered that Deputy Undersecretary of the Air Force for Acquisition Darleen Druyun had inflated the contract price in exchange for jobs at Boeing for herself and family members.

The second attempt to buy tankers fell afoul of a successful legal protest. In February 2008, the Pentagon chose EADS’ A330-based tanker over the Boeing plane, but Boeing protested on grounds that the Air Force had not made clear its apparent preference for a larger airframe than the 767.

On March 4, EADS said it would not challenge the Pentagon’s February decision. “We believe there’s no basis for a protest,” EADS North America Chairman Ralph Crosby, Jr. said. Crosby’s statement shed light on the major criterion of the competition — and illustrated how the Air Force’s priorities have changed over the years. “The outcome was decided by price, and Boeing’s offer was at a lower price than ours,” Crosby said, adding that Boeing’s bid for 179 tankers was 10 percent below EADS’ $22.6-billion bid.

But the development and purchase cost were arguably less important to the Air Force than the projected cost of flying the 179 tankers over their potentially 50-year service lives. Moreover, how the Air Force apparently plans to use the KC-46 places a premium on fuel efficiency while downplaying range and total fuel load.

Simply put, in 2008 the Air Force wanted a bigger tanker carrying more payload per plane per sortie and didn’t mind paying a higher price to get it. Three years later, times had changed and so had the Air Force’s expectations. Now the Air Force wanted a smaller tanker and a cheaper one — and didn’t mind the reduction in payload per plane per sortie.

Different Tankers, Different Missions
Most of the world’s major air forces possess aerial tankers. Which tankers they use, and how they use them, depend on a mix of factors including airplane purchase cost, operating costs, strategic needs, geography, frequency of foreign deployment and the nature of the receiving aircraft.

As the world’s largest and arguably busiest air force — and one that’s largely home-based at great distance from war zones — the U.S. Air Force understandably has the most diverse and extreme tanker needs. For that reason, the Air Force possesses three major tanker types, each emphasizing a different mission set.

For tanker support of forward-deployed fighters and bombers, the Air Force uses the probe-equipped, jet-powered KC-135 — at 416 examples, the most numerous U.S. tanker. The KC-135s, which can also be fitted with drogues, also undertake a large proportion of the Pentagon’s aeromedical evacuation sorties plus limited airlift missions. As it accounts for the majority of tanker flights, the KC-135 must be cost-efficient, or it could easily make operations unaffordable.

Replacing the KC-135, rather than the KC-10 or C-130-based tankers, has always been the express intent of the KC-X program. As long as the Air Force remained commited to its existing concept of operations, it stood to reason that the KC-X program would favor a tanker broadly similar to the KC-135. That is to say, an efficient, medium-sized tanker.

Boeing’s 767 was always the closest match to the KC-135. On a typical mission, a 767 tanker variant might carry as much as 100,000 pounds of fuel for offload — slightly more than a KC-135. The A330-based tanker would carry 150,000 pounds. That’s half again as much as a KC-135 and closer to a KC-10′s roughly 200,000-pound offload.

The benefits of a light load are clear. “The average 767-300ER in U.S. airline service burns about 1,550 gallons per block hour,” analyst Richard Aboulafia explained. “The average A330 in U.S. airline service … burns about 1,900 gallons per block hour.”

With Boeing, the Air Force would get the more cost-efficient plane and the one most closely matching the KC-135. Leaving aside Druyun’s corruption, that helps explain why the Air Force expected to lease 767 tankers nearly a decade ago.

Past Thinking
Why then, did the Air Force opt for the larger, less efficient A330 tanker in the doomed 2008 selection? It’s apparent that, three years ago, the Air Force anticipated altering its operational concepts to favor larger tankers undertaking a greater proportion of airlift missions. The new concepts could justify spending more on tanker purchases and operations.

Apparently assuming that it would get no more C-17s — and that the 190 C-17s would continue flying at elevated rates — the Air Force saw the new tanker as a means of reinforcing its cargo fleet. While today’s KC-135s and KC-10s do undertake some airlift missions, in 2008 the Air Force envisioned that future tankers would do even more cargo-hauling — to the extent that the new tanker would be an airlifter as much as a refueler. “I am looking for versatility; single-mission aircraft don’t give that,” Air Force Chief of Staff Gen. Norton Schwartz said.

“The next-generation tanker promises to further break down barriers between the airlift and air-refueling communities and reinforce the mobility mind-set,” Northrop Grumman analyst Michael Isherwood wrote. “Military officials can draw upon the KC-X’s airlift capacity and task it solely to transport passengers, cargo, or both, as mission requirements dictate.”

Isherwood projected that the EADS-Northrop A330 tanker, being larger, would carry standard cargo pallets over long range at just half the cost, per pallet, of the smaller, 767-based tanker. The Air Force apparently agreed with this analysis, and that year awarded the tanker contract to EADS. “The KC-45A is the tanker of the future,” Lichte crowed. “It will enable us to carry more fuel and cargo.”

In its subsequent legal protest, Boeing pointed out that the Air Force had not clearly expressed its preference for a large, quasi-airlifter tanker in its formal Request for Proposals. And as the second KC-X competition faltered, the conditions that favored EADS’ tanker began to change.

Congress ultimately funded another 33 C-17s. Service officials began taking a more realistic view of the C-17′s structural life, which is likely twice what Lichte had stated. Lockeed Martin started installing new engines on at least 50 C-5s, significantly boosting their reliability. These moves plus reduced demand for airlift in Iraq eased the strain on the C-17 fleet. In this environment, EADS’ tanker lost its edge against Boeing’s.

Read the full story in Combat Aircraft.


One Response to “Combat Aircraft: The Mighty Dollar: USAF Tanker Choice Came Down to Price, Efficiency”

  1. Don says:

    “For tanker support of forward-deployed fighters and bombers, the Air Force uses the probe-equipped, jet-powered KC-135″

    I think you mean boom equipped.

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