Fate of Huge Tanker Program Could Hinge on Cargo Role

Issue Brief

After years of delay, the Air Force’s effort to replace Eisenhower-era aerial refueling tankers has shifted into high gear. In mid-November, Air Force Secretary Michael Wynne decided to kill a proposal that would have kept competing teams led by Boeing and Northrop Grumman under contract until 2009, opting instead to make a winner-take-all award for the first 179 planes next July. Wynne denied any such proposal existed when it was first reported by the Wall Street Journal in September, but delaying an award was an active option until recently. Now that idea is dead. This week the Pentagon’s Joint Requirements Oversight Council will meet to firm up terms of a final “request for proposals,” which will be released in December or early January.

With wide-body commercial jets selling for over $100 million each and the Air Force in the market for 500-600 of them during the next several decades, the tanker replacement program could end up being the biggest military acquisition program of this generation. Reports that the program will ultimately be worth $200 billion may be exaggerated, but once you count the cost of modifying the planes into tankers and buying initial spare parts, a price-tag above $100 billion is easily imaginable. At an annual production rate of 15-20 planes, the program could keep the Boeing 767 or Airbus A330 (Northrop’s entry) in production for another 30 years. Whoever loses will face closure of their line, since both of the competing planes have been overtaken by newer offerings in the commercial marketplace.

The case for beginning modernization is compelling, because the 533 KC-135 tankers that make up 90% of the aerial refueling fleet average 46 years of age — nearly four times the age of the commercial airliner fleet. A “class failure” of the planes due to metal fatigue, corrosion or parts obsolescence could leave the joint force unable to support operations in remote places such as Afghanistan, because most planes require in-flight refueling to reach those places. At the rate the Air Force can afford to replace aging tankers, some of today’s KC-135’s may still be flying in 2030 — assuming they aren’t grounded by then due to safety concerns.

Ironically, though, the issue that decides when tanker replacement gets started could turn out to be cargo-carrying capacity rather than aerial-refueling capability. Both the head of the joint U.S. Transportation Command and the head of the Air Force’s Air Mobility Command have stressed the need to buy a tanker capable of carrying cargo, passengers and aero-medical evacuation litters in addition to fuel. That need was underscored when the Air Force decided to terminate production of the only jet cargo plane currently being built, the C-17, to free up money for tankers. With a relatively small fleet of cargo planes, the joint force may need to rely on tankers to deliver critical supplies in future wars. But the military hasn’t stated clearly how much cargo tankers should be able to carry.

The basic tradeoffs in buying tankers are not hard to grasp. Smaller planes such as the 767 carry less fuel and cargo, but can land more places and are cheaper to buy and operate. Bigger planes such as the A330 carry more fuel and cargo, but they can land fewer places and cost more money to buy and operate. The outcome of the competition thus could be decided by whether the Air Force wants a larger fleet of smaller planes or a smaller fleet of larger planes (it says it can’t afford to buy both types). The wild card is cargo-carrying capacity, because if the request for proposals sets a modest goal, that will tend to favor the 767, and if it sets an ambitious goal that will tend to favor the A330. With cargo thresholds potentially driving the competitive outcome, Congress will be watching closely for any sign of bias. If it doesn’t like what is sees, tanker modernization could be delayed yet again.