PNAA: Split buy is only solution for tanker buy

Day 2 of the PNAA conference: Richard Aboulafia, consultant of The Teal Group, said that a split buy is the only way the USAF will be able to procure the KC-X tanker.

Aboulafia said the decision no longer effectively rests with the Air Force, but with Congress. Each political party has the ability to block a sole-source selection, Aboulafia says.

Other thoughts from Aboulafia:

  • He thinks it is not “inconceivable” that first delivery of the 787 could slip to 2012; Boeing says it should be delivered in the third quarter this year;
  • The Bombardier CSeries will be a year late from planned 2013 EIS;
  • The Airbus A350 will be 18 months late fromlanned 2H2013 EIS; and
  • The COMAC C919 will be three years late (from planned 2016 EIS).

Aboulafia believes Airbus made the correct decision to launch the NEO program.

29 Comments on “PNAA: Split buy is only solution for tanker buy

  1. So basically nobody (from governments to military to aircraft manufacturers) can do anything on time any longer?

    Where did it all go wrong?

  2. This was written January 25, 2011 at 7:30 pm | by me

    In my mind there is no failure option, there cannot be, the USAF has to move forward with a new tanker.

    It wouldn’t surprise me if it awards contracts to both companies to build 80 planes each, this would then lay the ground work for the next contract for the reminder of the fleet. The 2 “real” planes out in the field competing in the real world environment of transportation and aerial refuelling for the USAF. Have a delivery time-frame, OIC time, training & operations, should one of the manufactures fail then the other wins.

    Should the both deliver a winning product then the USAF and the tax payers win and it’s a mixed fleet.

    Simple really.

  3. on Aboulafia’s prediction of split buy – if he’s right (I think so), that means the current competition must fail, since it is geared towards awarding a single contract. Trying to hijack this competition and award both a contract (honestly, they were both exactly equal) will be swiftly cut down on the senate floor.
    That leaves only another failure for the USAF and it’s deja vu all over again. Then, maybe – if congress agrees – they can award two contracts and start receiving new tankers.

  4. How is Mr. Aboulafia going to justify buying two airplanes to do the tanker/airlift mission when one will do, to the taxpayers? Has he heard about the $1.3T and $1.2T deficits we ran up over the last two years?

    • He is a thinker, not a doer. He doesn’t have to justify anything.

      Seriously though, if this attempt to procure a tanker fails, I can see much more bipartisan political acceptance of a split buy.

      Look at John Murtha. He was initially totally against a split buy but shortly before his death, he was seriously contemplating it.

      Could be a few more politicos out there will also soon change their songs.

  5. It seems the choice is between two tankers and no tankers. What a nonsense this is!

  6. Pragmatism must win in the end!
    Probably Airbus could deliver the first unit in three years, and Boeing maybe 5/6 years based on recent performance.
    Although more costly than single source, the US taxpayer will win.
    Even with an 80 frame order Airbus is going to create maybe 35/40 thousand new jobs and very possibly an Airbus assembly line for civil A330 aircraft.
    At the same time Boeing MUST at least maintain the current 767 workforce, or possible increase it. When did they last have an 80 airframe 767 backlog?
    Perhaps not very palatable for Boeing, but who can they blame but themselves?

  7. Split buy only if the KC-X and KC-Y are combined for a total of 178 of each type, doubling the replacement rate and cost to the taxpayers.

    Either all of this talk about having to replace the aging “Eisenhower Era” KC-135s are true, or else these aircraft with a fleet average of about half their airframe hours lifetime remaining can soldier on while these two companies protest each other out of business.

    Put refueling probes on Air Force F-35As, equip F-16s with the CFT developed for the India MMRCA contest that has a retractable probe, Develop a similar retractable probe-equipped CFT for the F-15E, and convert commercial pax freighters to drogue only tankers.

    Then the remaining fleet of KC-135s can be reserved for use with the C-5, C-17, B-1, B-2, B-52, and F-22.

  8. The Air Force won’t have enough spare cash to support two tanker programs, and Congress has yet to show any willingness to overturn a winning bid that has passed GAO review.

  9. Richard Aboulafia previously predicted a 2 year delay for the A350, so perhaps things are improving? My Hunch-O-Meter suggests he might be right on the A350 and 787. On the other hand it’s buzzing at the suggestion that the CSeries will only be one year late on an accelerated clean sheet program – shades of the 787 methinks. Same Hunch-O-Meter is struggling with Chinese calibrations and has no idea how late the C919 will be …

    • “so perhaps things are improving”
      It has nothing to do with things ‘improving’. What changed was the wind direction blowing on his wet finger. That’s as far as his scientific methods go.

      “Same Hunch-O-Meter is struggling with Chinese calibrations”
      Why not try ‘Finger In The Air Method’ by Dick Aboulafia.

    • Wed Dec 17, 2008 7:44pm GMT

      WASHINGTON (Reuters) – Boeing and Airbus could see up to 70 percent of the planes in their order book pushed back by struggling airlines as the global economic crisis puts a stranglehold on the recently booming travel industry, a leading analyst told Reuters this week.

      That could be a serious blow to the world’s two biggest aircraft makers, which are counting on six years or so of work in their backlog to keep them busy during the downturn.

      “In terms of orders suddenly turning out to be firm as jello, that could be anywhere between 30 percent and 70 percent (of the backlog),” Richard Aboulafia, an analyst at Teal Group, told the Reuters Aerospace and Defense Summit in Washington. “We are seriously in uncharted territory.”

      http://uk.reuters.com/article/2008/12/17/us-aero-arms-summit-commercial-idUKTRE4BG6NN20081217

      At current production levels, that would support at least six years of work, but analysts now expect plane production to level off or slow, to take account of deferred orders.

      “Production cuts are inevitable after 2010,” said Aboulafia, as it will not be possible for airlines to put into service the thousands of new planes scheduled to be delivered, in the face of falling traffic numbers.

      Others in the industry — who have a vested interest in the health of the airplane production business — have a more optimistic outlook.

      “Most pundits talk about a tougher year next year, with air traffic flat to down a little bit, calling into question some deliveries,” Stephen Finger, president of jet engine maker Pratt & Whitney, told the summit. “I don’t think the delivery issue is as pronounced as some people worry it might be.

      Airlines could bounce back from the downturn quicker than some expect, said Finger, keeping demand for new planes relatively strong.

      Aboulafia’s forecast obviously didn’t materialise. Anybody got the success rate in his predictions? 😉

  10. In consideration that the AF selection is based on it’s own exhaustive type by type analysis it seems incomprehensible that politicians should hold sway over any tanker selection on the basis of maintaining domesticl employment or that they prefer a home grown product, whether it be inferior or not.

    • Agreed. But politics by definition is incomprehensible.

      If they were at all practical, they would just suck it up, accept the outcome of this competition and craft new laws forbidding the purchase of foreign products!!

      That would sort everything out nicely, now wouldn’t it?

      Once they manage to define what foreign is, of course.

  11. I like reading Aboulafia’s comments, as they are written in a very attractive and provocative way. However, given that he rarely demonstrates a deep understanding of the involved technologies and challenges, and – as it seems to me – does not have the deep network into the Boeing factory floor as for example Scott regularly demonstrates, his predictions appear more a guesstimate.
    He never predicted a 3 year delay on the B787 (I think hardly anyone did – even the most pessimistic people I know at Airbus didn’t), so how can he be more accurate on the other programs?
    I think predicting delays is somehow a safe shot these days, and you win some attention if you predict the highest delay.

    The A350 will surely experience delays, but if these are 6, 18 or 36 month is rather hard to say as external analyst. A better approach in my eyes would be to be careful on any numbers and rather stay quiet. Possibly that costs some attention, but it demonstrates credibility.

    Having said that, I continue to value this page as one of the best news analysis available in the public domain.

  12. I like Richard Aboulafia’s commentary. It’s witty and he has interesting things to say. Guessing delivery dates is all part of the fun.

    The sad thing is that Aboulafia’s “wet finger in the air” manages to be less wrong about the dates than Boeing’s own schedules. And they are supposed to know.

    Who believes Jim McNerney’s latest assertion that Boeing will be shipping 10 787’s a month in 2013 or that the 787-9 will not be affected by the recent extra delay in the program? Anyone want to put their hand up and shout out, “ME!” ?

  13. Correct. Sometimes me thinks that laying off the entire middle management and writing a project plan that states “it takes the time it needs” may be better. It is like flying aircraft: when you are to far behind the power curve, all conventional wisdom is lost.

  14. To be fair to Dick, he did forecast a one year delay in EIS of the 787 at the Paris Air Show in 2005:

    http://www.leeham.net/filelib/ScottsColumn62805.pdf

    Operating economics, performance goals, production and development costs, and, of course, schedule. This is tough to execute, especially with broader corporate uncertainties (leadership, defense contract execution). Our forecast calls for a slip of about a year.</blockquote)

    • It is interesting to review these predictions and relate them to what
      happened in the real world. Some assertions are hilarious others
      still hit the mark.
      OT: the (non)pensions as Airbus subsidy is an interesting item.
      What do Americans think worker pension in the EU come from?

      • It’s also interesting to look at the shadow appraisal report which forecasted 72 A380 deliveries through 2010 (actual number: 41). However, one should, of course, remember that these predictions were made long before any of the significant program delays were announced. If I remember correctly, the “shadow” report forecasted only about 12-15 deliveries per year over the duration of the program. This means that two years from now, Airbus should have delivered about the same number of A380s as the cumlative number of deliveries forecasted in the report (through 2012/ early 2013).

  15. America is in deep financial straights. Everyone posting here seems to ignore that fact. We can’t afford a massive new system like the KC-X. Bottom line, we really don’t need the KC-X. Yes, we need to create jobs, lots of manufacturing jobs if America is ever to recover. We need new jobs to manufacture products that can be sold in foreign markets to improve our dismal Balance-of-Payments with China. Our best defence, right now, is a stronger economy, not more tankers. What we don’t need are new jobs in the defense sector. The only logical, intelligent way forward is to cancel the KC-X entirely. SPACE DESIGNS, Los Angeles, sample.daniel@gmail.com

    • he he,
      that should be a decissive point.

      But my understanding is that this is the least significant
      deciding point in this endeveaur.

      The US is a MIL Toy addict. They will spend some more
      money borrowed from China before they will (have to) go
      cold turkey on “defence” spending.
      ( that imho is actually a very real anger more of EADS than
      for Boeing though.)

    • IMHU, America doesn’t need the JSF. If anything is ruinously expensive, this is it. The KC-X is child’s play in comparison, both cost and perfromance wise. Drop the Osprey as well, which btw is more costly than the KC-X as well.

      Come to think about it, retire the entire United States Marine Corps as well. The days of Iwo Jima and Inchon are long gone. Amphibious operations are more of an anachronism in todays world than it was back then. Of course, the USMC could go after the “bad guys” in “hijacking land”, but that’s about it. The sorry saga of the JSF is partly due to the USMC requirements.

      I would argue that the KC-X is needed as the KC-135 is old flying junk — with all due respect to KC-135TopBoom 😉 — but perhaps not in the numbers envisaged. Drop the KC-Y and KC-Z. One KC-A330MRTT would replace 1.90 KC-135 and one KC-767AT (the one Boeing offered last time around) would replace 1.79 Stratotankers. So, IMHO 300 KC-X tanker aircraft should be more than enough; and yes, I’m perfectly aware of those who’re crying for more “booms in the air”.

      Also, the Pentagon should drop the “requirement” to fight two major regional wars at any given time. By doing that, a couple of carrier battle groups could probably be retired as well. In short, America needs a leaner, meaner and affordable armed forces. That means real downsizing is required, and not just superficial cost cutting.

      • Addendum:

        IMHO, America doesn’t need the JSF. If anything is ruinously expensive, this is it. The KC-X is child’s play in comparison, both cost and perfromance wise. Drop the Osprey as well, which btw is more costly than the KC-X as well.

      • Downsize the military is a risky call, once they are gone you don’t get them back right away when you need them.

        Ships, Aircraft & Tanks all take time to develop and build in large numbers.

        The savings you make today, will be paid for in the loss of personnel and equipment tomorrow, also the perceived losses of influence globally.

        A strong Military complex keeps the “bad guys” guessing.

      • Somewhat off-topic, but please do note that the US accounts for more than 40 percent of global military spending. Does that make sense?

        The reason America is nearly bankrupt is partly due to the fact that it is spending more than $1 trillion every year on defense, when discretionary spending is included. In fact, about 58 percent of all discretionary funding is defense related.

        It seems to me that the policy makers haven’t noticed that the Soviet Union doesn’t exist anymore, since defense spending is equal to, or higher, than at most times during the cold war, when the “evil” Soviet Empire had tens of thousands of nuclear missiles pointed in the direction of the US, and not this group of pathetic, underfunded, incompetent jihadists who are at “war” with America mainly, it seems, because of the US government’s long history of propping up dictator after dictator throughout the Muslim world.

        Of all the enemies to public liberty war is, perhaps, the most to be dreaded because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes … known instruments for bringing the many under the domination of the few.… No nation could preserve its freedom in the midst of continual warfare.

        James Madison, Political Observations, 1795

      • Addendum:

        “when the “evil” Soviet Empire had tens of thousands of nuclear missiles pointed in the direction of the US.”>/i>

        Should be: Tens of thousands of warheads (on thousands of missiles).

  16. Do some “innovative” financial things like “sale & lease back”.
    I think KC-X is the best value purchase the USAF made for a long time.
    These aircraft will save huge maintenance costs as the KC-135 will virtually falling into pieces in a few years.

    Fun fact: The B-52 will survive its tanker.

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