New UK government slams tanker waste

Farnborough Air Show » 2010
July 21, 2010, 7:07 AM

Last week, Vince Cable, the business secretary in the new British government, heavily criticized the supply of 14 A330MRTTs to the Royal Air Force (RAF) as a private finance initiative (PFI). He told The Sunday Times that the Future Strategic Tanker Aircraft (FSTA) is “a massively expensive and unnecessary commitment.”

The £10.5 billion ($16 billion) deal was concluded by the previous Labour government and has already been criticized by the UK official watchdog agency, the National Audit Office (NAO). The first two aircraft are already under conversion by Airbus Military in Madrid.

In a report released last March, the NAO said it was “unable to conclude that the Ministry of Defence has achieved value for money” from the FSTA deal. The MoD concluded what was the UK’s largest-ever PFI to acquire new tankers for the RAF to avoid the capital cost of replacing the entire fleet of ageing VC-10s and Tristars.

Instead, AirTanker, a consortium comprising Cobham, EADS UK, Rolls-Royce, Thales UK and the VT Group (now owned by Babcock), is supplying a “refueling service.” AirTanker will routinely provide nine A330MRTTs to the RAF, with five more to be available for contingencies. In the meantime, Airtanker can lease these five aircraft to commercial airlines in a passenger configuration. The agreed annual minimum usage is 9,000 flying hours. The contract also includes a new hangar plus simulator at RAF Brize Norton, plus training, flight operations and the services of 14 sponsored reserve pilots (the RAF will provide the balance of the flight crew).

But the NAO report revealed that the average cost of the contracted baseline service is approximately $585 million per annum, of which no less than $465 million is for financing, capital cost and profit. Personnel and fuel costs will add a further $90 million. Over the 27 years of the contract, this amounts to £12.3 billion ($18.5 billion), not £10.5 billion.

The RAF must pay for the military reconfiguring of the five “spare” aircraft and the breaking of their leases to third parties. Moreover, the original requirement “did not envisage the aircraft flying directly into high-threat environments such as Afghanistan,” and that modifications to enable this are likely to cost “several hundred million pounds.” They include flight deck armor and fuel-tank inerting. Airtanker confirmed to AIN that the aircraft are being supplied with a basic DASS (Defensive Aids Subsystem). 

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