Boeing stands to make a comeback at Air Force

Just three years ago, Boeing's proposed midair refueling tanker went down in figurative flames before the first plane was even built. The corruption conviction of Darleen Druyun, a top Air Force procurement officer who became a Boeing executive, tainted every program she had touched -- not just the proposed KC-767 tanker but also Boeing's strong-selling military cargo plane, the C-17 Globemaster.

This year, however, a cleaned-up Boeing stands to hit a double with two crucial contract decisions about those very same programs.

Congress funded an extra 10 C-17s last year when the original Air Force contract for 180 planes was running out, and now key members, including Senate Defense Appropriations Subcommittee Chairman Daniel Inouye, D-Hawaii, are musing aloud about extending the contract yet again -- even, Inouye said, if the C-17 money has to come from cutting the program to modernize an alternative transport, Lockheed Martin's gigantic C-5 Galaxy.

Meanwhile, Air Force procurement officials are preparing to judge between Boeing's KC-767 and Northrop Grumman's rival KC-30 for the first 179-plane, $20-billion-to-$40-billion installment of what could become a 500-plane, $200 billion program.

What's more, Sen. John McCain, R-Ariz., who led the charge against the original, flawed tanker contract, has stayed relatively quiet this time around, said Richard Aboulafia, aviation analyst for the Fairfax, Va.-based Teal Group. "You can't get too aggressive if you're planning a bid for the presidency," Aboulafia said, "and his reformer status has been compromised by tying himself to Bush and the troop surge."

Neither contract is anything like a lock, not yet. But in both cases, Boeing is the betting man's favorite. After being decisively shut out of the fighter-building business in 2001, when it lost the Joint Strike Fighter contract to Lockheed Martin, Boeing now stands to dominate the market for the unglamorous but essential "air mobility" planes that haul heavy equipment, supplies, and fuel around the world.

Traditionally, the military has met its transport needs with three very different kinds of aircraft: ordinary commercial airliners, hired on contract, to carry troops and bulk supplies; purpose-built military "airlifters," such as the C-5 and the C-17, to carry tanks, Humvees, and other outsized cargo; and modified commercial airliners to refuel other aircraft in flight, such as Boeing's KC-767, a derivative of its 767 airliner, or Northrop's KC-30, a derivative of the Airbus A330. (Although the A330 is a European design, at least 50 percent of the KC-30 version would be built in the United States, primarily in Mobile, Ala.)

Boeing is offering aircraft that are highly specialized for the cargo and tanker missions. Consider Boeing's C-17, a rugged plane with heavily reinforced landing gear. The C-17 is unsuitable for commercial freight, as Boeing learned with its proposed civilian version, the BC-17, but it is ideal for delivering military equipment to short, dirt airstrips.

Lockheed's C-5 transport, by contrast, can carry 60 percent more cargo but is restricted to longer, better-paved runways. In a pure cost-per-cargo calculation, the C-5 is more efficient, especially because modernizing each existing C-5 would cost $86 million to $130 million, while building each new C-17 would cost $230 million-plus. In real-world operations, however, the C-17 can get to places that the C-5 cannot.

Similarly, Boeing's KC-767 tanker is essentially a replacement for the Air Force's existing KC-135 Stratotanker. Northrop's rival KC-30 is a dramatically larger plane. Both can carry cargo as well as fuel, but the KC-30 carries much more -- and although exact prices are closely guarded trade secrets, the KC-30 probably delivers more capacity per dollar of cost. With tankers as with transports, however, economic efficiency does not always equal operational effectiveness.

"On any given mission, where you want to take the cargo is not where you need to take the fuel," said Loren Thompson, an analyst at the Lexington Institute, a defense think tank, who is also a Lockheed Martin consultant (although not involved in the aircraft programs discussed in this article). Even the current KC-135 has some cargo capacity, but in practice, demand for tankers is so high that the plane is rarely used as a dry-cargo transport.

Northrop argues that its larger aircraft is a better tanker. The KC-30 carries about 25 percent more fuel than either the rival Boeing KC-767 or the old KC-135. The problem is, no matter how big the tanker, the number of aircraft it can refuel at once stays the same: two at most, using hoses dangling from each wingtip (the Navy method), or more often only one, using a rigid pipe called a "boom" (the Air Force approach).

Either way, the number of tankers in the sky matters more than the capacity of any one plane: The Air Force has 59 big KC-10 tankers for long-range missions, but the mainstay of its tanker fleet is its 500-plus KC-135s, and the average age of that fleet is 45 years.

The history of the KC-135 also shows that even these smaller tankers usually don't use their full refueling capacity. Combat aircraft almost always fly in groups, rarely solo, which means that multiple planes need refueling at the same time; so tankers have to operate in groups as well, with each tanker offloading only a portion of its capacity.

A study by Thompson and colleague Rebecca Grant showed that KC-135s usually returned to base with fuel to spare: The average fuel offloaded per tanker per flight ranged from under 50,000 pounds in the 1991 Persian Gulf War and the 1999 Kosovo conflict -- in which the combat planes' targets were relatively close to their bases -- to 60,000 pounds in the 2003 invasion of Iraq, and 75,000 in the 2001-02 invasion of Afghanistan, where the targets were far from U.S. airfields.

All of these figures are handily within the 200,000 pound capacity of the current KC-135 and Boeing's proposed KC-767, even after accounting for the tanker's own fuel needs. In this context, the Northrop KC-30's 250,000 pounds of fuel just looks like overkill.

"You can't really justify the larger plane purely on the basis of aerial refueling requirements," Thompson said, "so they have pitched it as a versatile aircraft that can do refueling, carry cargo, or carry passengers."

The Air Force's C-17s are overburdened in keeping the force supplied in Afghanistan and Iraq. Northrop argues that its cargo-carrying tanker-transport could take over the job of hauling mundane bulk supplies into Iraqi airports -- for far less, incidentally, than it would cost to buy more specialized, heavy-hauler C-17s from Boeing.

But any runway that is long enough and well-paved enough for a tanker to land on is good enough for a commercial airliner, too: After all, the Northrop KC-30 and the Boeing KC-767 are both modified airliners.

The reason the military does not just hire commercial aircraft for Iraq is the threat from insurgents with shoulder-fired missiles. The new tanker, whatever company makes it, will have built-in countermeasures against such weapons.

But experiments in placing the same anti-missile systems on civilian airliners are under way. Christopher Bolkcom of the Congressional Research Service estimates the current cost of such modifications at $1 million to $3 million per aircraft. Since Northrop's KC-30 will probably cost at least $10 million more than Boeing's KC-767, the Air Force might do well to buy the less-cargo-capable Boeing plane and spend the difference on subsidizing anti-missile defenses for hired commercial planes.

That two-pronged approach would allow the Air Force to do what it has historically preferred: dedicate its tanker aircraft to refueling missions, reserve its specialized airlifters for hauling heavy equipment, and leave bulk supplies and passengers to the commercial planes that do those jobs best.