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Home / Washington Business - November/December 2003 / 767 Leasing Program: More Planes for the Air Force, Economic Relief for Washington |
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767 Leasing Program: More Planes for the Air Force, Economic Relief for Washington |
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Written On: November/December 2003 |
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Written By: By Shawn Sullivan |
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America’s military is increasingly known for its ultra-modern equipment. Nevertheless, the U.S. Air Force still uses a fleet of 500 KC-135E air-refueling tankers that are more than 40 years old.
The Air Force does not have the up-front money, estimated to be $14.1 billion over the span of six years, to begin replacing these aircraft through a traditional procurement approach, according to Major General William Hodges, director of the Global Reach Program within the Office of Assistant Secretary of the Air Force for Acquisition.
“The real message here is the fact that these airplanes are over 42 to 43 years old, depending on the model,” Hodges stated. “The KC-135 E model includes 544 aircraft, which make up 90 percent of our current refueling fleet. If we hit any kind of fleet wide grounding incident, or any other kind of major problem that diminishes our war fighter capabilities, we are out of business. We have to start this now or it will take another thirty to forty years to replace these airplanes. The leasing program provides timing, opportunity and an affordable way to get going on this problem now.”
The Air Force has been in negotiations with the Boeing Company to rectify this problem. Boeing and the Air Force are working together in an attempt to launch a leasing program for Boeing’s 767 aircraft. The commercial aircraft would be retrofitted to serve as the primary tankers for the Air Force.
If the leasing program between Boeing and the Department of Defense is established, Washington’s business community would be positively affected. The military would save over $5.5 billion in maintenance and upgrade costs, and Boeing would hire approximately 2,400 new employees by 2004.
“When the KC-135s start going in for program maintenance, or what we call depot maintenance, they spend a significant amount of time being worked on,” Hodges said. “They will average between 260 to 400 days in depot maintenance each time they go in. That is on a five-year cycle, but on the interim they have to be sent to the depot other modifications and other upgrades to a lot of their equipment.”
The Air Force looked into other possible ways to replace their refueling tankers, but the leasing program was the only option that did not interfere with other spending programs. If the Air Force attempted to buy the 767s from Boeing, not only would they have to cut almost 60 percent of their other programs, but they would also only be able to purchase only one plane per year. The leasing program offers the Air Force the luxury of replacing 40-year-old equipment 15 years ahead of the purchasing schedule.
“In a dollar-to-dollar comparison of leasing versus a traditional annual procurement, purchasing the aircraft might save the taxpayers one percent,” said Jim Albaugh, president and CEO of Boeing’s integrated defense business. “However, the difference in price is eclipsed by the $5 billion taxpayers would save by not having to pay maintenance costs associated with the 100 oldest KC-135s in service today.”
The Boeing 767 leasing program is currently under review in the Senate Armed Services Committee, according to Senator Patty Murray.
“The 767 line at Everett currently has a small order backlog and faces an uncertain future without the tanker lease deal,” Murray observed. “Phil Condit has indicated that the tanker deal will likely keep the 767 line busy for 15 to 20 years. The lease deal is tremendously important to the Spokane area economy as Fairchild will house the first KC-767’s to be deployed. Additionally, Fairchild will need some $200 million in military construction projects to accommodate the new KC-767’s, which will provide good paying construction jobs.”
The KC-767 will be the world’s newest and most advanced tanker. It can offload 20 percent more gas than the KC-135E and unlike the E-model,can itself be refueled in flight. It will also have the capability to refuel Air Force, Navy, Marine and Allied aircraft on every mission. At maximum takeoff weight, the KC-767A requires 4,000 feet less runway than the KC-135E. Besides its role as a tanker, the KC-767A will be configured as a convertible freighter and can carry 200 passengers or 19 pallets of cargo.
If the Senate Armed Services proceeds with its projected approval, Washington will see the first order of four aircraft built in fiscal year 2006. Many of Washington’s smaller suppliers need this program just as much as Boeing. Washington may finally have some potential security in its future.
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