Why Has the Cost of Fixed-Wing Aircraft Risen?

A Macroscopic Examination of the Trends in U.S. Military Aircraft Costs over the Past Several Decades

by Mark V. Arena, Obaid Younossi, Kevin Brancato, Irv Blickstein, Clifford A. Grammich

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This report explores why, in recent decades, military fixed-wing aircraft costs have escalated beyond the rates of commonly used inflation indices, examining both economy-driven factors that the Services cannot control and customer-driven ones that they can. The authors found that this trend of cost increases is true for all types of aircraft — patrol, cargo, trainer, bomber, attack, fighter, and electronic warfare. Economy-driven variables examined include costs for labor, equipment, and material. Customer-driven ones include the costs of providing the performance characteristics that the Services want in their aircraft. The study found several reasons for cost escalation: the increased demand for greater aircraft stealth, the requirement for reduced aircraft weight, and government regulations designed to protect American industry and technology, the environment, and occupational health. Several options to reduce cost escalation are examined, including encouraging international competition for aircraft manufacture, stabilizing procurement rates, and incorporating “lessons learned” from prior development programs. Until this cost trend is curbed, the government will be able to afford fewer, increasingly expensive aircraft, especially if long-term defense investment spending remains relatively constant.

Table of Contents

  • Chapter One

    The Escalation of Aircraft Costs

  • Chapter Two

    Data and Price Trends

  • Chapter Three

    Economy-Driven Factors

  • Chapter Four

    Customer-Driven Factors

  • Chapter Five

    Pairwise Comparisons

  • Chapter Six

    Industry Views on Military Fixed-Wing Aircraft Cost Escalation

  • Chapter Seven

    Options for the Air Force and the Navy to Reduce Fixed-Wing Aircraft Costs

  • Chapter Eight

    Conclusion

  • Appendix A

    Aircraft Included in the Analysis

  • Appendix B

    Survey of Industry

The research was conducted within the Acquisition and Technology Policy Center of the RAND National Defense Research Institute (NDRI) and the Resource Management Program of RAND Project AIR FORCE (PAF). Both NDRI and PAF are federally funded research and development centers sponsored by the Office of the Secretary of Defense, the Joint Staff, the Unified Combatant Commands, the Department of the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community.

This report is part of the RAND Corporation monograph series. RAND monographs present major research findings that address the challenges facing the public and private sectors. All RAND monographs undergo rigorous peer review to ensure high standards for research quality and objectivity.

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