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

Insights from Recent RAND Analysis and Opportunities for the Future

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

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Research Questions

  1. What are the primary drivers of growth in Air Force aircraft operating and support (O&S) costs?
  2. How can the Air Force reduce aircraft O&S costs?

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 Findings

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.

Research conducted by

The research described in this report was conducted within the Resource Management Program of RAND Project AIR FORCE.

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