Between fiscal years 1996 and 2011, Air Force expenditures on aircraft operating and support (O&S) costs grew at above-inflation rates, despite reductions in the overall size of the Air Force fleet. This executive summary describes key findings from previous RAND analyses of O&S cost trends, discusses recent Air Force efforts to address O&S costs, and recommends additional actions for Air Force leadership consideration.

Managing U.S. Air Force Aircraft Operating and Support Costs

Insights from Recent RAND Analysis and Opportunities for the Future

Michael Boito, Thomas Light, Patrick Mills, Laura H. Baldwin

ResearchPublished May 6, 2016

Between fiscal years 1996 and 2011, Air Force expenditures on aircraft operating and support (O&S) costs grew at above-inflation rates, despite reductions in the overall size of the Air Force fleet. To understand why, in fiscal years (FYs) 2012 and 2013 the Air Force commissioned RAND analyses of O&S cost trends. This executive summary describes key findings from the FY 2012–2013 analyses; discusses recent Air Force efforts to mitigate, and hopefully reduce, the largest categories of O&S costs; and recommends additional actions for Air Force leadership consideration.

Key Takeaways

Drivers of Aircraft Operating and Support (O&S) Cost Growth

  • Case studies of the KC-135R/T and C-130H fleets identified four categories of operating and support (O&S) cost growth: Fuel costs drove 31 percent of overall O&S cost growth, unit-level personnel costs 30 percent, weapon system sustainment costs 27 percent, and modifications and other costs 12 percent.
  • Many drivers of cost growth fall outside the Air Force's control.

Reducing Aircraft O&S Costs

  • Various fuel-efficiency initiatives can help reduce fuel costs, as can efforts to reduce total flying hours.
  • Unit personnel costs might be reduced by consolidating many maintenance activities within a global network of maintenance facilities and by increasing the size of operation squadrons.
  • The root causes of weapons system sustainment costs are war-related effects and aging effects; while the former will diminish with the end of overseas contingency operations, the latter are more difficult to mitigate.
  • The Air Force's Cost of Logistics and Cost Effective Readiness efforts seek to help address O&S costs through better understanding of the interactions between readiness requirements and the costs they drive.

Recommendations

  • Where analysis supports, move to implement policies that maintain current readiness levels at lower operating and support cost.
  • For weapon system sustainment costs, raise the profile of cost in decisions throughout the weapon system life cycle and develop a cost-conscious culture throughout the Air Force.
  • Continue conducting rigorous analysis, carefully linking resources to readiness so that senior leaders understand the potential risks in capabilities that are being contemplated. In such analyses, consider a range of potential readiness impacts, potential near-term and long-term savings, recovery timelines, and recovery cost.

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Boito, Michael, Thomas Light, Patrick Mills, and Laura H. Baldwin, Managing U.S. Air Force Aircraft Operating and Support Costs: Insights from Recent RAND Analysis and Opportunities for the Future. Santa Monica, CA: RAND Corporation, 2016. https://www.rand.org/pubs/research_reports/RR1077.html.
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