The Falklands conflict of 1982 highlighted the necessity for air-to-air refuelling, particularly for the successful prosecution of an air war at long range.
This article aims to discuss the future of UK aerial refuelling needs.
This article was submitted to the UK Defence Journal by Kelvin Curnow. Kelvin’s particular area of interest is naval aircraft and aircraft carriers. He is a keen writer and over the past fifteen years he has had a number of articles published in different journals.
Helicopters and Turboprop Tankers
The exclusivity clause of the AIrTanker contract is particularly relevant when the RAF and RN helicopter fleets are considered. Ordered in 1995 the six Chinook HC2As have a strengthened front fuselage to allow the fitting of an aerial refuelling probe in future. Based on the US Army’s Boeing MH-47E Chinook, the RAF’s eight ‘fat tank’ Chinook Mk5 helicopters can also be equipped with an inflight refuelling probe. Likewise the sixteen CH-47 (extended range) Chinooks approved for sale to the UK by the US State Department in October 2018 are based on the MH-47G and are plumbed for but not equipped with a refuelling probe. Speaking at the IQPC International Military Helicopter 2016 conference, Maj Gen Richard Felton, the then head of Joint Helicopter Command (JHC) indicated that to support the UK’s Special Forces at least some of the RAF’s Chinooks should be modified with flight refuelling probes.
In addition to the Chinooks, after 2023 the RN Commando Helicopter Force (CHF) will operate twenty-five Leonardo HC4/4A Merlins which can also be equipped with a flight refuelling probe. The need for a capability to aerial refuel the RN’s Merlins was identified by Lt Cdr Aaron Cross, operations officer for 846 NAS, at a May 2018 Prague conference. Hence, in the not-to-distant future the UK will possess fifty-five helicopters capable of being refuelled in flight, the largest force outside the US. The RAF also possesses fourteen Lockheed C-130J Hercules, more than any other operator of the type in Europe except Italy, and all potentially capable of providing aerial refuelling to helicopters. The ability of helicopters to self-deploy using air-to-air refuelling and to overfly unfriendly territory over extended ranges without the need for frequent refuelling stops cannot be overstated. This is particularly valuable in operations in the African theatre of operations where distances are vast and airfield facilities are few, and is a practice already employed by the AdI’A and USAF.
To offset the lack of aerial refuelling capability the RAF’s extended range Mk5 Chinooks have been deployed to Mali. Additionally, air refuelled helicopters could theoretically provide Carrier Onboard Delivery (COD) to the Queen Elizabeth Class (QEC) aircraft carriers at longer ranges than currently possible. However despite all this capacity, because of the exclusivity clause in the AirTanker contract the UK would be required to pay compensation to the company should it choose to aerial refuel its helicopters either using its own Hercules or the assets of other air arms.
Finally, the absurdity of the RAF possessing twenty-two Airbus A400M Atlas aircraft which are delivered equipped with fuel lines to attachment points for under-wing refuelling pods and yet not being able to utilise that capability, highlights again the shortcomings of the AirTanker contract. This is illustrated no more so than in the necessity to base both a Voyager and an Atlas in the Falklands to support four Typhoons.
This is a waste of key RAF assets. The Atlas alone could provide air-to-air refuelling for the Typhoons in addition to its current tasks of providing maritime radar reconnaissance and air transport for the forces based on the islands. This is yet another example of the AirTanker contract limiting the efficient use of resources and preventing the growth in the number of aerial tankers available to the RAF.
Reinforcing the absurdity of this situation, an image which appeared in the UKDJ’s Twitter feed on 3 May 2019 portrays four RAF Typhoons practicing refuelling maneuvers with a Luftwaffe A400M. Notably, while the A400M is trailing its hoses, the Typhoons are not plugged in to the drogues.
Combined, the Hercules and Atlas fleets could provide a further thirty-six airframes in addition to the eight Voyagers. Using the fully amortized Hercules and Atlas aircraft, purchasing and fitting refuelling pods would be the only additional cost to the RAF.
The Special Case of the F-35B
A qualitative leap in capability over the Tornado GR4 strike aircraft it replaces, the F-35B is nevertheless deficient in one important aspect, that of range. Operating in stealth mode the F-35B carries no external fuel tanks. In comparison to the Tornado which does carry drop tanks the deficiency is stark. The F-35B has a combat radius of 517 mi (833 km) vs 870 mi (1390 km) for the GR4 and a range of 1035 mi (1667 km) vs 2417 mi (3890 km) for the Tornado. The USMC is addressing this deficiency in two ways, the first of which involves the way in which the aircraft would be employed operationally. Operating initially from Wasp and America class assault ships the USMC’s F-35Bs would then fly missions from land bases once they had been secured after a successful amphibious assault by marines. This methodology was demonstrated on 7 September 2018 when two F-35Bs took off from the USS ESSEX in the Persian Gulf and transited with robust USAF tanker support to Afghanistan where the fighters successfully struck fixed targets.
Post-strike the F-35Bs made a stopover at Kandahar airfield.
Denied land based tanker support or a secure airbase, the second way in which the USMC intends to address the range deficiency is by equipping its Bell-Boeing MV-22 Ospreys with the V-22 Aerial Refueling System (VARS). Palletized, so that it can be rolled on and off the Osprey as necessary, the system features a tank containing 4,535 kg (10,000 pounds) of fuel which can be offloaded by a single hose and drogue trailed through the V-22s open cargo ramp.
When stealth is not a consideration the F-35 the aircraft can carry external fuel tanks. Developed by a subsidiary of Israel’s Elbit company, 425 gal (1608 lit) drop tanks are reportedly also capable of being jettisoned along with their pylons so as not to compromise stealth. Elbit are also developing, in cooperation with Lockheed, conformal fuel tanks. Both of these means of extending the F-35B’s range are feasible when operating the aircraft from land bases. However, when flying from an aircraft carrier where operating weight is always an important consideration, especially when landing vertically in marginal conditions, external fuel tanks may not be an option.
This may be circumvented if Short Rolling Vertical Landing (SRVL) is employed to land on the carrier. Yet another factor to be considered is that the already over-stretched Voyager fleet may not have an aircraft available to follow a QEC class carrier around the globe providing tanker support to the F-35Bs. In addition, such a possibility would require Voyagers to have access to land bases in friendly countries, a reality which does not always exist. Given these factors, integral tanker support for F-35Bs flying from the UK’s carriers through the purchase of V-22 tiltrotors will provide the maximum possible operational flexibility to any commander of the Carrier Air Group.
The future – Where to from here?
In only what could be described as an understatement, in July 2018 A source close to the former Defence Secretary Gavin Williamson, referring to the AirTanker programme, was quoted in The Mail on Sunday as saying ‘Poor historic deals like this are squeezing the defence budget and leaving no room to manoeuvre’. The AirTanker contract could be described as a train wreck. The aircraft were contracted at a bloated price and in their current configuration cannot meet the needs of the RAF or RN, let alone future requirements. There are some relatively easy fixes. As noted, the RAF has stated an interest in fitting the ARBS to its Voyagers. This is a positive initiative, but inevitably the RAF will have to pay even more money to accomplish this.
Modifying its Hercules and Airbus A400 Atlas aircraft for aerial refuelling tasks would provide the RAF with a significant increase in capability but cannot occur because of the AirTanker contract’s exclusivity clause. Ironically, given the small numbers of aircraft in the RAF’s inventory going forward, maximum productivity can only be achieved via inflight refuelling and this in turn requires more, not fewer tankers.
Going into the future there are ways that the RAF can expand its fleet of tanker aircraft, should it be required.
Speaking as a lawyer, it’s difficult to believe there are no options for the MOD to work around or renegotiate the contract. Where there’s a will, there’s a way. Get some decent lawyers – it’ll be expensive but not nearly as expensive as this contract is costing them – unless the MOD insist on endless meetings. I can think of a couple of contractual avenues of attach already, although I must confess I haven’t read the thing.
The more I think about this, the less I can see that a blanket provision requiring the MOD to take all its A2A refueling from Airtanker for 25 years could be 100% enforceable. It goes beyond protection of Airtanker’s legitimate interest and may also be anti-competitive. I would expect that Airtanker would have to show that it is losing out if/when the MOD uses another A2A refueler or does it itself. That shouldn’t be possible if the MOD continues to use Airtanker or it uses another supplier/does it itself and Airtanker can’t or doesn’t offer the service – e.g. where Voyagers are incompatible or for helicopters.
Well said
I’d not bother with the cost of osprey and just buy more F35 instead, only when there is enough F35 to fill the carrier should it be considered
Again I ask, as in the first article. Who are the clowns who signed this? There should be accountability.
@Daniele Mandelli – For the first time I have to disagree with your comment. As presented the writer paints a very negative picture. But then that was the intent. It was not an objective assessment in any way as the positives were not even mentioned. Just what we (allegedly) could NOT do. And most of the ‘cannot dos’ are nothing to do with Air Tanker. Like Helo refuelling?
What the writer could and should have done is a delta comparison datasheet of all the purchase costs, manning, maintenance, new hangars and storage of surge aircraft and all the rest of the hidden costs of ownership vs the Air Tanker costs. But he didn’t and I have to ask why not? The writer misleads you by quoting Aussie purchase costs with RAF lifetime ‘in service’ costs including 5 surge aircraft. That alone is disgraceful.
this contract does not in any way restrict military operations (but I am open to be proved wrong) given we only have one tanker type anyway and we do not refuel helos (yet). Plus do you really think (in the absence of this contract) the purchase of any of these aircraft would have been allowed to go through given the depths of financial hardship this country entered a year after 14 were ordered?
No problems Chris. You make valid points.
With your added perspective it would be interesting to see another article
on this subject.
There is nothing to argue about in this excellent article. It is the same old story. Buy the best but not quite Push off the last part of the expenditure, waste he opportunity of a complete system and then spend three/ four times as much “improviing” the system later. I don’t suppose anybody will ever be pulled up on this, nor will the politician who told them to sign but what a waste.
There’s a great deal to argue
A man of few words? If you want to explain…
@geoffrey Roach – well I argued repeatedly against the content of this article above. So I agree with Dave on this.
The air tanker contract has to be one of the worst contracts ever conceived, the corporate lawyers must have struggled to suppress their laughter when the MoD signed on the dotted line.
Despite identifying the contract’s ludicrous cost as early as 2010 it still has 16 years left to run (until 2035). The passenger service is also appalling as anybody who has flown crab air will know.
kj
The US Navy is developing the MQ-25 drone to refuel its aircraft, so I can a similar need being identified for the USMC and RN. Though such a drone would need VSTOL capabilities for carriers without cats as traps.
I wonder if the AirTanker contract stipulates covers refuelling from drones?…,
And you wonder why the defence budget is so stretched thin….
Surely there must be a buy out/cancellation clause in the contract….
Remember when everyone raved about the airtanker contract and what a bargain it was. Outsourcing or privatising the military will never work the sooner our elected officials realise this the better.
Neither party cares about defence anymore and it’s going to bite soon, but at least a few quid was saved
How can our military have its hands tied like this!? Defies belief. If the companies involved in this deal have the Uk’s Interests at heart they should offer the MOD a reasonable way out. If not, the Mod should play hardball and tell them if they don’t, then future work will be going else where.
I just cannot believe the Mod/government haven’t stipulated a way out, if not, who does that?????
Not to be cynical but the people who sign these often benefit later down the line often being hired by the companies that win the contract. Why they tried to penny pinch by removing the boom from a 25 year capability is beyond me.
@T.S – Please show us where hands are tied to the point of being detrimental. Observing contracts happens every day of the week so observing what a contract states isn’t tying your hands as presumably there is benefit being gained.
And where exactly are Air Tanker not delivering what was contracted for especially given the very high availability rates?
I suspect somewhere there will be an exit clause but why should we give up something that works well, will cost us £ Mns in buyouts, higher risks, higher employment costs and other permanent costs?
If there was political will, (managed to type that with a straight face), we would get Parliament to extend the Unfair Contracts Act to include PFI deals.
Also, bring back the Treason Act, which ought to cover deals which allow private firms to hamper the defence of the realm. A new corporate treason offence.
Too right!!
The PFI deal was an utter travesty. Lock them up! Put them in the tower!
@JohnHartley – can you please quote the Clause or Section in this contract where Air Tanker does in fact ‘hamper the defence of the realm’. Now I can quote far worse PFI deals like the ones now putting NHS Trusts in financial difficulty but this one works and works well. Its a shame people seem to be prepared to jump to exaggeration while not having a clue about the subject matter.
I think you need to have a quiet word with yourself mate …
I think preventing the RAF from buying/operating aircraft to refuel those that need booms, plus slow moving helicopters/turboprops, does indeed hamper the defence of the realm.
I note that the Americans, the home of capitalism, sent the disgraced boss of Enron to prison for 24 years. That would be a suitable term for corporate treason.
@JohnHartley – You just projected a falsehood and even this negative article admitted that if the RAF said fit ARBS they would be fitted. And even you must agree that creating the Helo problem now some 11 years after this contract was forged is a bit disingenuous? Voyagers would struggle to keep the airspeed of a Helo so whether the RAF owned them or not is irrelevant to the discussion. Can the RAF add helos to the Air Tanker contract? I have no idea but if helo refuelling was a critical defence matter I am sure the helos would have been modified years ago. They haven’t so what does that tell you?
It tells me that they cannot afford to, because they would have to pay through the nose to Airtanker to be allowed to do so.
@John Hartley – More diversion. Sorry John answer the question – as no UK helos have been fitted EVER with refuelling probes what does that tell you? OK its rhetorical. The answer is they military have seen no tactical need for them.
And if the RAF owned the Voyagers they STILL would not be able to refuel them due to safe airspeed. Its that simple.
Do you need to declare an interest? Have you a connection to AirTanker?
Please do not twist my words. I never said that Voyager would refuel helicopters. I said in part 1, that the RAF should buy a pair of KC-130J to refuel helicopters (like France & Germany), if the AirTanker deal was not in the way.
You moan I do not give sources, then rubbish the direct quotes from the NAO report.
You say this tanker deal is not a PFI, yet the NAO with access to the official documents, say that it is many times.
You say AirTanker is value for money without any sources to back that statement up, while the NAO report clearly states that had the Treasury not waived the usual rules, the Comparator would have made buying the A330 cheaper than the PFI.
Sadly the usual foot dragging of that period, led to a sub-optimal outcome.
An alternative outcome would have ordered 7x 3 point hose Voyager, 1x airliner Voyager, 1x VIP Voyager (so far the same, now the change) 3x ARBS (boom) Voyager, 2x KC-130J.
Given the cost of converting A330, only to convert them back again for air charter, I doubt my fantasy fleet would have been any dearer (probably cheaper) + give the UK the ability to air refuel more types.
@John Hartley – I am bemused. You misinterpret my words alleging I am misinterpreting yours. Wow …
However …. You do misrepresent my words where you make a classic innuendo I have an interest in Air Tanker. I do not or I would say so quite clearly. Had you READ my words fully it would be obvious I was declaring my interest that we should have demanded Boeing fit Probes & Drogues rather than Boom Receptacle to our new Boeing aircraft. I even gave the Sentry as an example.
My complaint about your lack of sources was concerning your allegation that Air Tanker had to source a loan from the Government. I can find no record of such a loan. I then provided a link to a Reuters article contradicting your statement.
As regards the NAO yes I complain you are very selective in your quotes by taking the 9 year old one that is negative (and this before any aircraft had been delivered) and not the more positive ones AFTER. I actually posted a sample of what the PAC had reported.
Again you misrepresent what is written (and I know why you do this as it diverts attention and it takes me time in rebuttal. So NO I have NOT said ‘Air Tanker is good value’. I have challenged the article here that alleges it is NOT and that there are obstacles to how it functions to the benefit of the RAF and FAA. Worse I had to point out factual errors.
And if you think your fantasy fleet costs less do please knock out a Delta + / _ spreadsheet for us. Just because you say ‘I doubt it would cost more’ means zilch John.
Elsewhere you have rubbished comparisons to RAAF KC-30A. Well if I quote from the EADS CASA SA 2009 guide to KC-30A, it points out that the KC-30A has a UARRSI receptacle, so those tankers can be topped up. None of the UK Voyagers have UARRSI. Just one more example of how the UK taxpayer has paid over the odds for a poorly equipped service.
I repeat, which bank or banks had £2 billion to spare during the 2007-2011 panic period? They would only have lent it, if they first got it from the government, either from the Treasury or via BoE.
@John Hartley – It is getting rather tedious correcting your projected misrepresentations John. Please argue your case on facts.
1. I have never ever ‘rubbished’ anything about the KC-30s or comparisons thereof. I challenged the writer of the article’s comparator that the additional KC-30s were cheaper than the Air Tanker unit costs. I pointed out that these were purchase and not through life or indeed operational costs. I then asked that if indeed these were cheaper because core costs had already been paid then what were the costs of the original KC-30s WITH those core costs. So far we have had no reply.
2. You can quote Airbus specs. all day long but it means diddley to the discussion. But by all means chuck in some diversions right? We have never had ARBS / Boom equipped tankers. So why in 2008 would we order Voyagers with ARBS let alone fit them with ARBS receptors? And forgive me but why would the RAF send a tanker to tank another tanker (that will take a long time and jeopardise two aircraft) when it could simply replace it on station complete with fresh aircrew. How the Aussies operate is up to them but the question remains.
3. Your pointless mention of this has no relationship to the value or otherwise of the Air Tanker deal. Had the RAF wanted such a capability in 2008 then it would have been fitted but in Probe & Drogue form. As we have with the A400M.
4. The problem in 2008 / 09 was not a lack of funds in the system. It was a lack of confidence between banks and why QE was the key answer. But that is not the point (yet again) is it John? Clearly banks DID have the cash because according to Reuters and other financial sources the loans were arranged. Saying ‘well it MUST be true’ does not cut it John. Are you really saying Blue Chip FTSE100 companies with a Government contract were unable to raise finance? And I have to prove nothing. It is YOU who stated the Government lent money to Air Tanker. SO it is for YOU to validate that statement. However I have provided a reliable source to disprove it.
So lets have less of the projecting misrepresentations and more of a factual discussion.
You have your opinion, I have mine. Let us be civil & agree to disagree.
@John Hartley – I always try to be civil John so no worries ..
An excellent analysis of this issue by Kelvin (and thank you for this great piece of work) with many succinct and damning comments from our posters. The frustrating thing is, do we know if this getting back to the MoD? Can we get answers from the bean counters and those responsible for this downright fiasco and monstrous waste of public money?
George – any chance of getting anyone to listen? Send it to Penny, for instance?
@Crabfat – Sadly this was not the excellent analysis you make out for the reasons I give above. So what is wrong with only paying by the hour used? And where does this contract stop UK Typhoons or F-35s refuelling off German A400s? We have one set of tankers – Voyagers. So whether or not Air Tanker was involved the only UK tanker the RAF and FAA could ever use is …. Voyagers.!
I’ll venture that the relative cost and ease at which some or all of the AirTanker Voyager fleet can be upgraded to include a boom refuelling capability will be a test of the maturity of the PFI contractual relationship, as there must be considerable growing pressure on the RAF to consider its options on how to support the growing fleet of aircraft in its inventory who require this type of refuelling connection.
I’m sure they could refuel off the German A400’s…. however, would the MOD not need to pay twice for the fuel…once to the Germans, then to satisfy the exclusive element of the contract, the same payment to Air Tanker?
@ Andrew – Long answer short Andrew – No.
Apart from the failures highlighted in the article there is of course the fact that we are buying assets such as the c17 globemaster shortly the P8 ASW, the rivet joint and now looking like the 737 wedge tail that require flying boom refuelling which the RAF cannot support. As I understand it either the voyager assets in the surge fleet currently in civilian operation or the existing voyagers could easily be converted but the air Tanker contract will not allow it.
Well not for the first time I appear to be in a minority of one. But I feel obliged to make some observations on what was a clear hatchet job on the tanker programme. So many points with which to argue and I will try and keep it succinct but I do have to start by pointing out the simplest of errors. That German A400M could have refuelled those Typhoons all day long and there is nothing in the Air Tanker deal to stop such refuelling. Likewise the RAF and FAA can refuel off any foreign tanker as required. So is the writer also suggesting Voyagers cannot refuel foreign aircraft? If so lawyers will be serving papers pretty soon because they regularly refuel F-18s off US carriers over Iraq / Syria.
Now given when the contract was put together in 2008 no one was shouting about helo refuelling I think its a bit disingenuous to flag it up as a fault now. And forgive me if they aren’t fitted with probes how can any tanker refuel them? Add probes and they can be refuelled. If the refuelling air speed of the helos is too slow and therefore dangerous for a Voyager then they can use a C-130 / A400M (if equipped) or another helo. Nothing to stop that happening. But as for the A400Ms being tankers the same argument applies. An A400M isn’t going to refuel a Typhoon any time soon so why bother especially as they are far better used on the freight duties for which they were designed. Likewise C-130s?
People with short memories should be reminded that when this was all floated in 2008 the country was heading into the biggest post war financial crisis and recession. One that a year later had us in a £150 Bn ANNUAL deficit. And yet 14 new tankers were still delivered on time and on budget with civilian pilots who also serve as Reservists and just change uniforms. Had we been buying them they would never have been delivered. Just ponder that before slagging this operation off.
As for operating costs not only did the UK Government save £ Mns on purchase costs, maintenance, infrastructure (yes Air Tanker built the hangars) and personnel pay it only pays for flight hours used with Air Tanker covering all the fixed and variable costs and the risks. The saving in RAF management time alone runs to £ Mns. And of course it has a strategic reserve tanking built in at no extra cost. Purchased these extra aircraft would either be rotting in a hangar or would never have been purchased at all. Then you would have had something to gripe about. So for the writer to compare purchase prices of Australian A330s and the Air Tanker costs is fatuous at best and misleading at worst. The UK costs are the lifetime costs including spare aircraft, hangar builds, personnel and maintenance but the Aussie lifetime costs are not published. But I bet they aren’t any less.
I shouldn’t have to point this out but in times of war the RAF and FAA aircraft can be refuelled by any tanker at any time.
I need no better way to indicate how this was and remains a worthwhile and valuable programme for the UK when compared to the debacle of the US purchased Boeing KC-46 that is $ Bns over budget, does not work and the US Taxpayer is now paying for the privilege. Plus the USAF are struggling on with 45 year old tankers. Had the Voyagers NOT worked as expected the RAF could have refused them until they did at no extra cost. What price risk? Comes to something when little old UK can do something better than the mighty USA and yet as always someone finds something to whinge about. Just because it IS British…..
Forgive my pause for a #FacePalm
I am reading these comments with interest as I know very little about this subject but I like the concept of the PFIs. In theory they seem to offer so many advantages and could be used in many areas across all 3 services (3rd line maintenance, some logistics, all areas that over lap with civil needs maybe?) Are there lessons to be learned from this PFI that could be integrated into future contracts to try and create a win win situation for the military and industry?
I am genuinely curious as the theory of PFI seems great.
Mike It’s like most things in theory they seem great but in reality ………PFI contracts are generally accepted now as being poor value for money and are in most cases no longer used by gov .Big Phil has never signed off on one (so he claims) it was Mr Brown who ramped up their limited use over the previous Major era government. Just look at the deals the NHS got and you’ll soon come to the conclusion they are a bad bad idea. Think of it like a giant Ponzi scheme as the collapse of Carillion highlighted.
Bottom line the issue is cost ,cost to the taxpayer and in the case of the Voyager air tanker contract is it draining precious funds from the defence budget? I find it hard to believe this particular contract is any way unique in that it’s good value or different to the ones that are causing many nhs trusts so much financial pain at the moment as remember this is the MOD we are talking about here.
But who really knows?
@ Los Pollos – It is always to group things under one name and condemn them all simply because they have the same name. Yes the NHS trust ones are a calamity but then others have worked well. We all know it was a political sleight of hand by one Gordon Brown who deployed PFIs and still ran up huge deficits. All cars are not bad: Some are good, some are awful….
However to your last comment about Air Tanker. Top call it a PFI is actually misleading but opponents love to apply the tag. That does not of itself make it bad. You write:
“in the case of the Voyager air tanker contract is it draining precious funds from the defence budget?”
Really? So do please quote the delta + / – cost of Air Tanker over the costs that would be incurred by the RAF by buying these 14 aircraft and using them for 27 years in:
Senior management time
Purchases costs
Depreciation
Upgrades
Lifetime maintenance
Senior and maintenance personnel
Training
Aircrew costs
Fuel
New hangars
New equipment
Maintenance of that equipment
HR, tax and employment costs
Its OK I am quite adept at Excel.
And can you please guarantee that a) had the RAF bought these they would have gone into service on time and to budget? and b) given the 2008 / 09 economic crash these aircraft would still have been purchased despite the UK running a £150 Bn annual deficit? I just know you can’t. For those reasons alone this Air Tanker deal justifies itself let alone all the other reasons. Despite that 2008 catastrophe we now have 14 state of the art tankers that make the Yanks look rather dumb with their KC-46 boondoggle. That was purchased of course …
Chris , I’m not disagreeing or agreeing on whether on balance it is good or bad . That’s why I put a question mark I honestly don’t know enough about the ins and outs of it other than it’s been bad for the nhs.You seem to know a fair bit and I must admit your arguments for in this specific instance seem logical and persuasive. All I’m saying is somewhere somebody has to make money and there has been a track record of piss poor financial decision making by the MOD in the past that’s why I’m sceptical about it that’s all.
@Los Pollos – Oh I agree we must all be sceptical about those in power. The problem we have with this particular ‘PFI’ is that no one actually knows what is in the contract although some things can be deduced (like we do tank Typhoons off US AF tankers for example).
My issue is that the article seeks to condemn but adds no factual support for that argument and so I just ask questions and challenge the statements. Call me sceptical …Lol
Chris H, as always your knowledge and insight on many subjects is great to have on this site and long may it continue. However, do you think maybe when espousing your knowledge and take on things it could be delivered in a less confrontational way? Rather than calling people out in such a brusque manner you could just deliver your insight in an educational way. You have been involved in many an argument on this site due to this and it’s really not necessary. I will be the first to admit I lack deep knowledge or understanding on many military matters and rely on the information provided in these sort of articles. It is only when reading the comments section that you can build a more rounded understanding/opinion and early rants get superseded by reasoned understanding. In my earlier post I was merely expressing frustration that potentially we have signed up to deal that gives us no option to change or expand our tanker options to meet operational requirements or demand. If a way to get out if needed has been added then great, but the article appears to be eluding to the fact that there isn’t, and the whole subject would not be an issue and require an article such as this. Whilst you have now made me look at this from other angles and there are good things in this deal to take, I personally don’t think something as important as our defence should ever be allowed to be dictated to on how we provide stuff to our people on the front line. It is the inability to provide tanking from other sources that angers me and cannot understand why we would have allowed it. We may have another 15 years with our hands tied and may have to increase the size of our military greatly in that time.
Confrontational? More like robust argument. The problem with these sorts of issues is that the gaps in our knowledge are often filled by speculation. After a time, these become truths. Perhaps the Defence Secretary could clarify the issues around the PFI deal. I have a feeling that questions have been asked in the House about the tanker PFI. I believe it was Lord Adonis that brokered the deal for Labour….perhaps someone should contact him for further enlightenment?
@ T.S – i am sorry you see straightforward comments and questions as ‘confrontational’. But if it is so then it is because I ‘confront’ the issue being discussed not the person making the point. Of course you are free to quote where I have in any way made personally disrespectful comments to you or anyone else here.
As to your main point:
” It is the inability to provide tanking from other sources that angers me and cannot understand why we would have allowed it.”
UK aircraft can tank off any other nation’s tankers at any time anywhere as required. What Air Tanker has exclusivity on is UK sourced tanking. Now I will repeat my point that given we have one fleet of tankers (Voyagers) who owns and maintains them is irrelevant. That fleet is our sole source of tanking. And even this article shows that if ARBS was a requirement it could be added as it has already been discussed.
One of the other aspects this article threw up was the issue of helo refuelling. Now given no UK owned helo can refuel in flight I think the article was being at best disingenuous. If Helo refuelling was critical to our defence every Helo would have been fitted from new. None are. So its a Non Sequitur in the discussion.
Yes, but when the credit crunch hit, Airtanker could not raise the cash from banks as they were broke/strapped, so the UK Gov stepped in to lend that money to Airtanker. That is when the rational for PFI broke down. Gordon loved PFI as it let him spend without the debt going on the public debt balance sheet. So you saved the cash now, for higher payments later. By lending the upfront costs to Airtanker, the taxpayer had high upfront costs + higher payments later.
I think that when the UK Gov needed to lend Airtanker upfront money, was the point when anyone rational would have abandoned PFI & bought these tankers outright. Remember this was the time the Bank of England printed £375 billion out of thin air. You would have only needed £2 billion of that for these tankers.
@John Hartley – I noted your opening comment and went into research mode but I can find no confirmation of this anywhere. So I would be interested to see some sources and links please. The only change to original funding was that they resorted to commercial bank loans rather than the original Bond Issues. As reported by Reuters at the time:
“It caps years of negotiations over the funding and was clinched in the midst of a global financial market crisis which saw plans for a bond to finance the plans collapse, forcing banks to cobble together a 2.2 billion pound replacement loan”
https://uk.reuters.com/article/uk-britain-tankers/britain-signs-air-tanker-deal-idUKL2718243520080327
If indeed the Government did lend money then presumably it also made a profit on the interest? And of course I do hope you are not intimating that any money lent (if it was) was the same as buying the aircraft together with the associated training, infrastructure, personnel and maintenance costs. That seems to be the basis for your argument.
Now what everyone, including the author of this article, has failed to mention is that Hammond ordered a VFM revue nad it was placed under “close scrutiny” by its head of procurement and maintenance Bernard Gray who gave it a clean bill of health. Even the NAO while being critical of aspects reported that:
“all the follow-on milestones have been achieved on or ahead schedule, and in particular the delivery of each of the fourteen aircraft. The FSTA Program has been the first UK aircraft program delivering on schedule and on budget since the WWII.”
The PAC criticised the fact the Voyagers were not adequately protected at contract for Afghanistan operations (forgetting of course the Afghanistan conflict started after the contract was signed) and intimated there would be serious delays. In the event FSTA aircraft were quickly modified to fulfill the adequate protection, and the FSTA started operations into Afghanistan in December 2013, as well as earlier in all other locations and duties”
So we have seen two major modifications to these aircraft with a third (ARBS) discussed as an option. I really do not see where people think this is a bad deal. It was all delivered on time (early even) and on budget. Maybe lessons ought to be learned rather than castigate a successful operation and peddling innuendo and smears to justify we return to buying everything. And hasn’t that idea worked out well for us?
It was reported in the financial pages of national newspapers at the time.
So I went & looked up the NAO report, 30 March 2010.
Under finding 18
“. the selection of a PFI solution was made without a sound evaluation of alternative procurement routes to justify why the PFI route offered the best value for money.
. timescales more than doubled. After a five-year competition the Department was unable to close a deal and subsequently it took four years of non-competitive negotiation to agree an acceptable deal with AirTanker. Over this period the Department incurred additional costs both in conducting the procurement and running on the existing aircraft fleets.
. during the procurement the discount factor for assessing the Public Sector Comparator changed but the Treasury granted FSTA an exemption. If the revised rate had been applied the PFI solution would not have represented value for money against a Comparator using an A330 aircraft.”
Point b Lessons from the procurement of FSTA
“The Department was forced to narrow the field to one bidder while a number of significant issues remained.”
Point c
” The Department had access to AirTanker and AirTanker Services cost data but never gained visibility of sub-contractor costs and margins for designing and modifying the aircraft. Neither did the Department undertake any “should-cost” modelling”.
2nd part of point d is perhaps relevant to todays wish for changes.
“. if changes to the requirements are necessary, establish a robust and transparent mechanism to take into account the cost and timescale implications of proposed changes, as the project has implemented for the operational phase”.
@John Hartley – So you are using 9 year old NAO negative reports and not the later positive ones? And this report criticises the MoD for the way it conducted the sourcing, design and RPP process. And yet you use this to justify your thoughts that the MoD would have made a good fist of buying 14 aircraft? Or not given the lack of cash in 2008 / 09. Maybe you would prefer to not have these 14 tankers John?
Once the contract was signed the contractors delivered everything on time and to budget. Early in some cases allowing earlier withdrawal of Tristars from Afghanistan routes and early retirement altogether. Not sure the contractors should be criticised for events before they signed a contract. The delay and obfuscation pre 2008 was and remains typical of MoD purchasing. The Type 26, Type 31, FSS are all current examples.
@JohnHartley – OK. So why can’t I find any reference to it anywhere or those financial pages or national newspapers? And I do use search engines other than Google. Of course you will have those links and sources for us John?
Think back to that time. The banks either had no money, or those that did were too scared to lend it. You may be right that the gov used the banks to lend the money to AirTanker, but the banks would have had to get that money from the Treasury, or via the Bank of England with Treasury approval. The indirect way gave the government a fig leaf ( & probably fat fees for their banker mates).
Where are your links & sources to prove I am wrong? Why is it that people who demand these, never provide them either?
My quotes from the NAO report have an interesting nugget. The suggestion of ” a robust and transparent mechanism to take into account the cost and timescale implications of proposed changes, as the project has implemented for the operational phase”.
Does anyone know if that is happening? Clearly the transparent bit isn’t, or there would not be so much hot air on this thread.
If there was a public, costed proposal saying boom or helicopter operations can be added to AirTanker at X cost. Then there could be an informed debate on whether it was excessive or value for money. At the moment, we are whistling in the dark.
@John Hartley – You ask where my links are? Well 8 hours ago I gave you this:
https://uk.reuters.com/article/uk-britain-tankers/britain-signs-air-tanker-deal-idUKL2718243520080327
Now all we have had from you is nothing (regarding the allegation you made about the Government ‘giving a loan’. I will go with Reuters at the time OK?
So if you can’t be arsed to read what is submitted there is not a lot of point in discussing further John.
Oh and thank you for misrepresenting what I had written earlier. I said I had to declare an interest because I think we should actually have Probe & Drogues fitted and not Boom receptacles in the new Boeing aircraft. Again had you bothered to read it in full you would have understood I have no interests in anything to do with Air Tanker. Nice innuendo though..
This is the Chris I love, this is the Chris this site massively missed, sharp, combative and backed up with factual counter argument.
Reading this article and all these comments has been brilliant, it’s a subject I know very little about and the insight I have learned from these comments I could not get reading 50 mainstream media articles.
This particular set of comments is why the comments section on UKDJ is a must see daily read for me.
@SoleSurvivor – A belated and apologetic thank you Sir … No more please I am running out of cheques ..
Chris H. I much appreciate the calm analysis you provide. Initially I was appalled by the description of the present situation of the R.A.F.’s in flight refuelling. On the face of it this looked like staggering incompetence. Your comments have shone a light on some of the article’s key contentions to good effect and I welcome them.
@Barry Larking – Thank you for your kind words but please analyse what I write as much as everyone else’s comments. I just try to question when something either looks wrong or I know from my own experiences it may well be wrong. We all may not agree but when you have detailed and quality posts from people like ‘the_marquis’ and then add in my bits and pieces I hope we all benefit.
given that the UK has been a key sponsor of Airbus’ military offerings, and also given the problems said company has had with the A400. I suspect we could renegotiate to buy the aircraft – possibly by purchasing addiitional A400’s.
What I think is required is for us to get more capability for the same or similar price as these companies have dealt in good faith (it is not their fault HMG have been incompetent in this case).
So what does this set of manufacturers want from the MOD that we can use to leverage us out of this contract, or to improve it so it becomes a win / win.
What we should not do is renege on this contract as many of us rightly point out that HMG do this with Navy contracts. For some reason that does not seem to be the case with the RAF, but that is not necessarily a bad thing.
Is the contract for the PFI publically available?
Do we know what clauses are actually in there for future adjustments etc?
In theory it looks like someone in the MOD really messed up, in the aim of cutting short term expenditure but it is possible the contract isn’t as bad as we are led to believe.
Thank you to all who have written comments in response to my article.
In response to some of the comments made I should like to make the following observations:
1. Concerning the Lufwaffe refuelling RAF Typhoons. It is true that this could have occurred but not without the RAF paying a penalty to AirTanker for doing so. This has previously been covered by the UKDJ.
https://ukdefencejournal.org.uk/mod-rule-out-a400m-atlas-being-given-in-flight-refuelling-capability-due-to-airtanker-contract/
2. Indeed, RAF aircraft cannot refuel from other providers, either military or commercial without paying a financial penalty to AirTanker. However, Voyagers can refuel military aircraft of other nations and nowhere did I imply they cannot.
3. With respect to air-to-air refuelling of helicopters. The Chinook HC2As were delivered with reinforced front fuselages specifically for the fitting of refuelling probes. These were ordered in 1995, well before the 2008 Airtanker contract was signed. Hence inflight refuelling of helicopters had been considered some thirteen years before the PFI deal. It is not correct, therefore, to suggest that the possibility of aerial refuelling of helicopters had not been considered.
4. Because of the exclusivity clause in the AirTanker contract neither RAF A400Ms nor Hercules can refuel other RAF or FAA aircraft. See above, point 1.
5. The issue over value for money, whether or not the UK government should have opted for a PFI or outright purchase is discussed at length in the National Audit Office assessment of the AirTanker contract. The NAO determined that not only was the contract not value for money, but outright purchase of the aircraft would have been cheaper in the long run. The report answers concerns raised by those who have made comments. It can be found here:
https://www.nao.org.uk/wp-content/uploads/2010/03/0910433.pdf
6. Not included in the AirTanker contract, the MoD expects to spend a further £60 million per annum on personnel, fuel and other related costs, resulting in a total cost over the life of the project of £12.3 billion.
7. With respect to the cost of the two additional KC-30As for the RAAF. This expenditure is total cost, including modification. The infrastructure is already in place for the previously purchased KC-30As.
8. At the time they were taken into service the Voyagers were not equipped with defensive aids and could not be used on the Afghanistan airbridge. The RAF, not AirTanker paid to have them fitted.
https://publications.parliament.uk/pa/cm201011/cmselect/cmpubacc/425/42507.htm
Kelvin, are you able to say if there are any viable ways to get out of the contract or is it airtight?
Thanks for the question. I would refer you to the NAO report. In 2004 The FTSA project team recommended that the project be cancelled. This was rejected on the grounds that cancellation would have ‘unsettled the market’ and increased the cost of any other PFI deal (p.5). There is also the matter of sovereign risk. The contract could in theory be cancelled but any such action would incur heavy financial penalties. The government could pass an Act of Parliament to declare the contract null and void. However, the probability of any company bidding for MoD PFI contracts would probably fall to zero in that instance. Going forward there are only two apparent suitable solutions to address what is otherwise a disastrous situation. First, utilise the Airtanker contract to its maximum potential (see NAO report pp.10, 35.) Second it may be possible to negotiate with AirTanker a modification to the contract which would guarantee an equivalent profit while allowing the UK to access to refuelling assets which lie outside the exclusivity clause.
@Kelvin C – when you use comments like ‘its a train wreck’ and here like ‘a disastrous situation’ you are just inflaming what should be a cold analytical discussion. Yes we get that you are an opponent. And because you are so opposed we are entitled to ask why exactly. Because nothing in your article shows a clear and demonstrable reason that is has failed. Indeed you conflate one scenario (UK A400Ms) to justify a false statement regarding German A400Ms.
Whether you like it or not Air Tanker has delivered everything demanded of it without fail and to contract. Most of the critiques you identify are either old history (like some NAO report from 2004!), are Non Sequiturs (like the fact Voyagers cannot refuel Helos) or are plain misleading (like the Afghan. protection kit). The only aircraft that cannot be refueled by Voyagers (and indeed never could have been by RAF tankers from early days) are US Boom spec aircraft like C-17s, RC-135 etc. When the contract was put together we had no boom spec aircraft. Our ‘Sentry’ and C-130 aircraft had Probe & Drogue and have worked for decades. Now with a growing fleet of these aircraft we need ARBS and this can be fitted. And if the RAF have to pay well they would have paid if they owned them. But I understand that modification can be wound in within the contract. Please correct me on this by all means.
Here I do have to declare an interest in that I believe we, as customers, should tell Boeing to fit Probe & Drogue (a la Sentry) to the Poseidens and Wedgetails as the other Boom aircraft (C-17, RC-135) are long range anyway and are few in number. But that is another discussion.
So are you suggesting that Air Tanker is a failure because the Voyagers (chosen by the RAF to their specification) cannot refuel helos? Well they still couldn’t even if the RAF owned them. Not that any helos are so fitted anyway – presumably because the RAF and FAA saw no need for it. Straw man argument right there. So we then get to the idea we should use high value A400M advanced freighters to refuel helos. And you complain about wasted money?
Forgive my challenging your argument but I am afraid having waited until this 2nd part your arguments simply do not stand scrutiny from people who disagree. Others may share your views and are entitled so to do. I do not Sir.
I believe your item 8 also answers why the RAF would need to pay to have any boom refuelling rigs added to the Voyagers. It suggests that the RAF signed-off on a configuration of the Voyagers they thought was going to be sufficient from the outset – though if that is the case, over a 30 years timeframe, that would seem quite short-sighted (and is acknowledged as such).
@Kelvin C – I have made my criticisms of just some of your article and I will not add further here.
In item 1. You deliberately confuse two distinct matters and then provide a UKDJ link to somehow support your own statement. You allege in your article and now repeat it here that a Typhoon refuelling off a German A400M would cause a penalty payment. I disagree strongly. So I do ask you to provide proof here. Where in that Air Tanker contract does it say that refuelling by other nation’s tankers incurs a penalty payment? Sources and links please.
This is crucially important and my contacts tell me that just as we can tank other nation’s aircraft we can tank off theirs. This is normal military operation and no contract would stand in the way of that. That UKDJ article discussed UK, not German, A400Ms providing fuel to UK aircraft. So you prove nothing there.
In item 6 you say the 27 year cost of this for 14 aircraft and their maintenance and operational support is some £12.3 Bn. My maths tells me that is some £32.6 Mn a year per aircraft per year all up service costs less any revenues earned by ‘Surge’ aircraft being leased out or indeed any being sub contracted to other countries for air tanking. Not in any way unreasonable.
As to Item 7 if the Aussie additions are cheaper because the infrastructure is already in place what were the original all up costs for those Aussie A330s so we can have some like for like comparisons?
As to point 8 you link to the same PAC I just referred to elsewhere here. And the timeframes it was quoting were far too negative and as it turned out the required defences were fitted quickly (my information is that it was done by Air Tanker) and this did indeed allow the early retirement of Tristars from Afghanistan operations. And by the way your link does not confirm it was the RAF that funded the change.
The range comparison of the GR4 Tonja and F35B is inaccurate and misleading. The radius of F35B is as given as it’s a clean aircraft and will only vary depending on attack speed or altitude profiles chosen. The longer range quoted with GR4 is for a fully ranked aircraft with no weapons load. A similarly armed GR4 as can be fitted in F35B stealth mode had a significantly lower RoA than the 35B.
I noted in the the article that the figure for the F-35B was for an aircraft in clean condition. I also noted that the figure for the Tornado was for an aircraft carrying external fuel tanks. Hence, my comparison is neither misleading or inaccurate. At this point no figures are available for an F-35B carrying either drop tanks or conformal tanks, and no model of the F-35 has been so equipped because both are still under development by Elbit.
There’s an FOI response on “whatdotheyknow” that confirms the MoD is liable to penalties if it buys AAR from another supplier, other than Air Tanker Services:
https://www.whatdotheyknow.com/request/427117/response/1056648/attach/html/4/20171020%20FOI2017%2009062%20Air%20Tanker%20FOI.pdf.html
The FOI response does state that there are exclusions that allow for MoD aircraft to receive AAR from other vendors supporting “current operations and joint exercises”.
The FOI response also confirms that the Air Tanker contract was a consideration among other concerns when the MoD decided not to use the RAF A400M fleet for AAR work.
In terms of the cost of the Air Tanker deal, the £12.3bn is not a final price, but is based on assumed usage. The NAO report also makes clear that there is a minimum spend built into the contract, therefore the MoD has to pay a certain amount before it begins to pay per hour, regardless of how much it uses the Voyager fleet.
Also, although the MoD has priority of use over the surge aircraft, if these aircraft are leased out to 3rd party customers and the MoD then requires to use them, the MoD is liable to pay compensation to the 3rd party that had already leased the aircraft, as well as the costs of transferring the aircraft to the military register and reconfiguring them for military use. It is therefore in the MoD’s best financial interests to never use the surge aircraft.
Presumably then, the quoted £12.3bn contract price is based on only operating the 9 full time, military registered Voyager airframes now serving with the RAF, as it would be difficult to quantify the operating and maintenance cost of the 5 surge airframes the RAF will not ordinarily use, and the use of which would incur financial penalties for the MoD. Therefore, the MoD is paying £450m per year to purchase, maintain and operate a fleet of 9 aircraft. According to the NAO, the cost of operating 24 VC10s and Tristars cost the MoD £222m in 2009, for airframes that were well past their sell by date.
The MoD didn’t know how much it would cost to buy the aircraft outright at the time of signing the Air Tanker contract because Airbus wouldn’t tell them (this shouldn’t be a surprise, given Airbus is a part of the Air Tanker consortium). However, in a BBC Newsnight report from 2012, Air Tanker claimed the cost of purchasing the A330 MRTT from Airbus was £150m (the Newsnight report went so far as to claim military standard airframes could be purchased for the paltry sum of £50m).
Taking Air Tanker at their word, this would work out at around €187m at the exchange rate of the time. In 2014, the French signed a contract with Airbus to purchase 12 A330 MRTTs equipped to French military standards and including Airbus technical support for 5 years, for a cost of €3bn. If, then, the airframes were worth €187m as per the claims of Air Tanker just 2 years before the French A330 MRTT contract was signed, then 12 airframes would cost €2.25bn to purchase, leaving Airbus’ 5 year support package for the entire French A330 MRTT fleet priced at a very reasonable €755m, or €151m per year. This equates to €12.5m per year, per airframe. Extrapolated across the same 27 year period, the French would therefore pay €6.25bn to purchase and operate 12 A330 MRTTs, without any restrictions. At the exchange rate of the time, this would have been around £5bn – £7bn less than the estimated cost of the UK MoD deal to operate 9 Voyagers for 27 years.
This is, of course, assuming the French paid the same price per airframe as the UK MoD, however this has not been confirmed publicly. However, the cost of operating the UK Voyagers has been published in the NAO report: £80m maintenance costs for Air Tanker and £60m for the MoD – a total of £140m per annum for 9 airframes, or £16m per airframe, per year. Extrapolated out to the French fleet of 12 airframes at the 2014 forex rate, this would give a fleet maintenance cost of €234m per annum, or €1.17bn for the duration of the 5 year contract the French signed with Airbus. Deducting this amount from the headline figure of €3bn would imply the cost of buying the French fleet was €1.83bn, or €152m per airframe. This equates to £122m in 2014 Sterling prices.
At this cost, the UK MoD could have bought outright 9 military standard A330 MRTT airframes and operated them for 27 years for £4.9bn, a saving of over £7bn against the projected cost of the Air Tanker deal.
In light of this, I would say it is fair to argue the Air Tanker deal as signed was not best value for money, which is what the NAO laid out. It does also restrict the MoD from acquiring another AAR platform for 27 years, which puts the MoD in a corner in terms of contingency planning. This presumably means that the MoD will not be able purchase a carrier based AAR platform to support F35 operations on board the Queen Elizabeth class carriers. No doubt F35s that use buddy refueling tanks to support combat missions will be exempt from this contract stipulation, but any training exercises featuring buddy refueling that would be needed to train aircrew to use the system in the first place might well be considered a violation of the contract.
While the onset of the financial crisis and the MoD’s failure to prepare an alternative to the Air Tanker deal may well have meant the MoD had no choice but to continue with the Air Tanker deal in 2007/2008, it does not mean that it has been a good deal for the UK taxpayer. Ultimately, the onset of the financial crisis only became a factor in greenlighting the project because there was such a delay in the contract being agreed in the first place – as noted in the NAO report.
Ultimately, the MoD would have saved even more money had it planned in the 1990s to replace all existing civil airliner derived aircraft in its inventory with one brand new twin engine, wide body ETOPs rated airframe, such as the Boeing 777 or Airbus A330 MRTT. Such a plan would see replacements provided for the VC10 and Tristar AAR/transport fleets, the Nimrod maritime patrol and Elint fleets, the E-3 Sentry AWACS fleets come from one airframe, which could also serve as the basis for the RAF’s then future ISTAR platform, which eventually became the Bombardier based Sentinel R1. Such a plan, while ambitious, would have seen massive economies of scale in terms of aircrew and ground crew training, aircraft maintenance and spare parts sourcing, as well as guaranteeing a large amount of regular work spread out over decades for UK defence equipment suppliers who would be tasked with adapting the civil airliner airframes to the RAF’s needs. What is more, the RAF would have been able receive the aircraft it needs, in the numbers it needs, when it needs them.
Instead we have been constantly re-inventing the wheel by treating the procurement of replacements for the existing models of civil airliner derived aircraft in RAF service as standalone procurement projects. The Voyager procurement was originally conducted in parallel to the Sentinel and Nimrod MRA4 acquisitions, and was followed by the procurement decisions for the cancelled Nimrod fleet’s own replacements, the Poseidon and Rivet Joint/Airseeker projects. No sooner had these deals been done before the MoD opened the procurement programme for the E-3 Sentry’s successor, the E-7 Wedgetail. The RAF is consequently expected to operate 4 different civil airliner airframes adapted for military use for many years to come: the 737 (Poseidon and Wedgetail); the A330 (Voyager); 707/C135 (Airseeker); and Bombardier Global Express (Sentinel). Such an approach has no doubt slowed procurement and added cost due to the effort invested in setting the parameters of a new procurement programme for each aircraft.
Fascinating post. Thank you.
@the_Marquis – An excellent post there Sir and given the depth I will most certainly explore that FOI before commenting further. However I can respond to one aspect you quoted:
” The NAO report also makes clear that there is a minimum spend built into the contract, therefore the MoD has to pay a certain amount before it begins to pay per hour, regardless of how much it uses the Voyager fleet”
Your interpretation of ‘minimum spend’ is not quite accurate. Basically it means the RAF has to use a minimum number of HOURS not pay a ‘fee’ and THEN start paying by the hour. That is quite an important difference. And surely paying by the hour of use which is a known figure is a better concept than having capital tied up and having unknown variable costs added as and when? And why does increased use above ‘assumed usage’ cost more under Air Tanker but not by implication if the RAF owned them? The corollary must be equal surely?
My final response before I read up on that FOI is that I feel you have just removed the the 5 surge aircraft while retaining the total cost of 14 which inflates the unit costs but ignores the benefits. And the implication of THAT is if the RAF had bought 9 instead of the 14 assessed as necessary we would by definition be 5 (or 55%) short of the required fleet. If you argue that only 9 are necessary under purchase than you must surely reduce pro rata the 14 under the Air Tanker deal. Both sides must be on a pro rata basis surely?
Last point I would add is that Air Tanker is a civilian registered and operated airline of its own accord. The 5 surge aircraft are contracted out by Air Tanker, they are maintained to CAA as well as MAA standards and indeed any attached (and paid for) RAF maintainers had to be trained, then qualify and certified for an individual Part 145 licence and have now completed their two year industry and classroom based course to qualify as civilian licensed engineers. That would never happen if we owned them and ais a tangable benefit to the RAF as it uses more and more civilian based aircraft. And to clarify the fleet which I think you slightly misrepresented: The ‘core’ 9 aircraft are made up of 7 x KC3 3 pointers and 2 x KC2 2 pointers. The ‘surge’ 5 aircraft are all KC2 configuration even when in civilian use (By Thompsons for example). The RAF can switch or add configuration as required at no extra cost.
I now have more reading to do ….
@the_Marquis – well that FOI reply consisting of 2 paragraphs didn’t take long to digest and I have to say I feel you have slightly stretched two meanings:
1. The FOI confirms as you write that the RAF is free to tank from other Nation’s assets as I have said all along and which is contrary to the allegations made by the writer of the article. But you forgot to mention that while penalties are in theory payable none had actually been paid.
2. It is slightly misleading to infer that the Air Tanker contract was the sole reason we didn’t take AAR capability on the A400Ms. The reply actually says:
“After assessing all factors, including the AirTanker Contract and the AAR
capability provided by the Voyager aircraft, it was determined that there is no current RAF requirement for the A400M Atlas to be used in the AAR role”
Note ‘ALL factors’ and “there is no current RAF requirement”. So that includes the benefits and assets derived under the Air Tanker deal and which was my point earlier in the wider discussion: Why add A400M tanking to an advanced freighter and take it off the work for which it was designed when we have more than adequate tanking capability for RAF requirements in the Voyagers?
I am sure it was not intentional but the inference was also that the rest of your comments derived from the FOI when they certainly don’t. And I have already pointed up some anomaly in your argument. Like comparing the costs of 14 under Air Tanker and then arguing 9 purchased ones would be cheaper or that the RAF are paying for 14 and using 9 when they clearly are not other than the ability to deploy 14 at short notice.
And lastly I can find no source in the FOI or elsewhere to justify your assertion that the MoD would be liable for any removal of surge aircraft from civilian service and therefore have to pay penalties. Air Tanker as a registered and certified airline in its own right is free to lease out or use those 5 surge aircraft as it can. If it has to call them in due to RAF demand that is a civilian matter and I am sure Air Tanker will have that covered in their sub lease contracts. There is precedent here: In 1982 the ships taken up from trade (STUFT) were on charge to the MoD and fees were paid to the owners. But the MoD was not liable for any loss of civilian trade by those owners or cancellations fees thereof. Its part of the deal of flying the Red Duster.
There is also no on cost to switching from CAR to MAR as they are already dual registered, maintained to both standards and flown by the same crews albeit wearing different uniforms. THAT is the best part of this deal. Total and instant flexibility at little extra cost.
I won’t get into the rest of the detail but I think I have flagged up some serious concerns as to accuracy. Just as I did with the writer of the article. But you argued your points well even if we do disagree Sir.
Hi ChrisH, thanks for your reply. Just to clarify, no inference was intended that the Air Tanker deal was the sole reason for the A400Ms in RAF service not to be kitted out for the AAR role. I merely wanted to draw attention to the FOI for the record.
I agree with you, while the Air Tanker deal was a consideration, even without it the A400M would most likely not be fitted out to be used as a tanker in RAF service as there wasn’t a pressing need for it, and MoD policy has consistently been to only fit the optional extras is they are expected to be used routinely from point of entry. Rightly or wrongly, a lot of platforms are ordered to be fitted for but not with certain systems, presumably on the concept that if the optional extras were needed on operations, they could be ordered as necessary under a UOR order, keeping the cost off the Department’s annual budget sheet.
As regards the source for my assertion that the MoD would be liable for any removal of the surge fleet from commercial service, I can confirm this came from the NAO report, p37, section 3.16:
“it is important that the Department does not call on the reserve fleet unnecessarily. Doing so could incur significant costs including breaking third party leases, transferring aircraft to the military register and reconfiguring aircraft.”
(https://www.nao.org.uk/wp-content/uploads/2010/03/0910433.pdf)
You also queried my reference of “minimum spend” built into the contract. I raised this point as some people had previously commented that one of the benefits of the Air Tanker PFI contract was it allowed the RAF to only pay for the aircraft they use when they are using them, on a “per-hour” basis. I find this assertion to be inaccurate as there is an agreed minimum usage expected that is connected with the base amount of money the MoD will pay each year, regardless of how many or how few flights were actually flown. Therfore, in the highly unlikely situation that the RAF flew no Voyager missions in one year as part of some kind of ultra-austerity drive, the MoD would still have to pay the base amount.
Presumably the minimum number of flights stipulated in the contract has been calculated to be what the RAF would expect to undertake in any given year using the core fleet. I’m not against this clause in the contract, it’s necessary for both the RAF and Air Tanker to get a fair deal out of quantifying what is otherwise an unknown future risk factor. However, I would point out that Air Tanker reserves the right to change its fees if actual RAF usage deviates “from these pre-defined amounts”, as mentioned in the NAO report, p.36, fig.13:
“If over any 12-month period, FSTA military air transport or air-to-air refuelling usage reduces or increases by pre-defined amounts from the expected rates because of a strategic change in Departmental policy, the contract allows AirTanker to review the service charges payable by the Department”
Regarding my cost analysis to deduce the purchase price of the A330 MRTT airframes, this was not derived from the FOI and it was not my intention to give that impression. The cost analysis was derived from the NAO report, BBC News and Newsnight reporting around the Voyager deal in 2012 and a number of industry articles from 2014 covering the French purchase of A330 MRTTs.
I provided two cost breakdowns: the first used the £150m unit price Air Tanker and the MoD gave to BBC Newsnight in 2012 (and, also, I believe, to the Defence Select Committee that year) to work out an estimate of the maintenance cost the French were paying, and from that extrapolate a price for purchasing the RAF’s Voyager fleet outright and operating it for 27 years, as a comparison with the cost of the Air Tanker agreement, quoted by the NAO report as being approximately £12.3bn.
The second cost breakdown focused on the per year maintenance costs for the RAF Voyager fleet given in the NAO report. I based these maintenance costs on the 9 core aircraft instead of the whole fleet of 14 as I didn’t think the MoD would sign a contract where they were responsible for the maintenance and upkeep of aircraft they neither owned nor had any intention of using except in a time of war. But, I suppose you could argue that Air Tanker would have put it to the MoD that for them to be able to call on those aircraft whenever they needed them, they would have to pay for their upkeep, regardless of whether they ever used them. In which case, the question would be whether this applies just to the £80m Air Tanker maintenance costs mentioned in the NAO report, or also the £60m RAF costs which cover “personnel, fuel and related costs”. Personally, I don’t think this latter figure should apply to all 14 aircraft in the Voyager fleet, as I can’t believe the RAF should be paying the personnel and fuel costs for aircraft it doesn’t use.
In both cases, I based my hypothetical RAF purchase numbers on 9 airframes because, while I would personally like to see the RAF operate at least twelve and ideally the full 17 Voyager aircraft they originally planned to order, I reluctantly accept that the MoD would most likely only order the minimum number of airframes they can get away with, even in the event they would be saving a great deal of money by purchasing the aircraft outright against the PFI deal. The fact that the core fleet of Voyagers currently in use with the RAF is a mere 9 airframes suggests to me that someone in the MoD has worked out this is the bare minimum they need for routine operations and therefore would have ended up ordering only 9 anyway.
That being said, I’m happy to recalculate my hypothetical prices for buying the airframes outright because, in actual fact, saying the operating costs are for the entire fleet brings the per airframe maintenance cost down further, and means that the unit purchase price is even more expensive via the Air Tanker deal.
If we say then, that the Air Tanker maintenance costs are for 14 aircraft, and the MoD costs are for the 9 in RAF use, that would break down as £5.7m and £6.6m per airframe, per year, respectively, or £12.3m combined. Applying this to the terms of the French contract, this would mean the French airframe purchase price was £138m. Therefore, if the RAF Voyager fleet had been purchased on these terms, the price of purchasing and operating the entire 14 aircraft RAF Voyager fleet outright for 27 years would be a total of £6.58bn.
If, however, the RAF Voyager fleet’s £140m per year maintenance costs quoted by the NAO Report applied to all 14 airframes, regardless of whether the RAF used them or not, that would account for £10m per airframe per year. This would mean the French would be paying €751m for the 5 years of maintenance support as reported to be included in their A330 MRTT contract, leaving the cost of purchasing the French airframes at €2.249bn for 12 or £149.6m per unit, which tallies with what Air Tanker/the MoD claimed was the case on the BBC Newsnight report. This means that had the MoD bought A330 MRTTs outright, they could have bought and operated the 14 airframe strong fleet over 27 years for £5.88bn.
While both of these are higher than my initial estimates of £4.9bn and £5bn, they are still much cheaper than the current value of the Air Tanker deal.
It is possible to argue that the Air Tanker PFI contract was beneficial as it helped to limit large capital spending and avoid increasing the national debt at a time of financial uncertainty ahead of the global financial crisis. However, I would argue that it still would have been better to purchase the aircraft outright, as the cost of servicing the national debt is much cheaper than the cost of financing the Air Tanker contract.
According to the NAO Report, the MoD is paying £310m per year to fund the purchase of the 14 RAF Voyager airframes by the Air Tanker consortium, or £8.37bn over the course of the contract. With a per unit cost of £150m, the price for buying all 14 aircraft direct from Airbus is £2.1bn. It is therefore costing the MoD £6.27bn to finance the purchase of the 14 Voyager airframes, or 300% of the value of the aircraft.
While the PFI contract kept the initial purchase cost of £2.1bn off the balance sheet at the time of purchase, money which otherwise would have had to have come from other procurement projects in the mid 2000s, it does mean that the MoD is still having to pay £310m for the Voyagers out of its budget every year until the end of the contract, some time in the mid 2030s. This is money that could presumably be used to offset the wider £4.7bn-£21bnfunding gap for the MoD’s 10 year procurement plan the NAO has recently warned about.
I don’t blame the MoD for this, it seems like they were placed in a corner by the Treasury, and are almost encouraged by the Treasury to sign contracts that keep the per year expenditure flat, rather than having large outlays for new kit every couple of years. But this actually ends up costing the taxpayer far more in the long run.
Ultimately, my main gripe is the relentless focus on short term targets, which I believe contributes to procurement projects costing more and taking longer to fulfill, as the Treasury is opposed to large capital outlay, even when this would save money in the long term.
@the_Marquis – Once again an excellently crafted and detailed response from you Sir. I won’t go into detail in reply as we both (and others) know the core issues we are discussing. So let me briefly comment on each topic if I may?
1. I am glad we are in general agreement about A400M tankers. This was one of my main ‘beefs’ with the writer of the article and how he substantiated what was an error.
2. As regards the NAO of 2012 and the use of the surge fleet if it is out in sub lease. The NAO failed to understand that such sub leases will be with Air Tanker as a commercial airline in its own right and such sub leases are arranged every week by airlines and they have extraction clauses. Even if there were penalties (which I doubt and my sources know of none) they would be agreed by ‘Air Tanker Airline’ and payable by them. The MoD / RAF would not be, and legally could not be, a party to such sub leases as they do not own the aircraft concerned. Sadly the NAO are rather vague when they should be prescriptive. They do not make sub leasing an issue in later reports of course. As to transferring and reconfiguring these KC2 aircraft they are already dual registered and maintained to BOTH CAA and MAA standards by dual qualified maintainers both RAF and Air Tanker staff. They are already configured but probably minus the wing pylons which are fitted to what were the outboard engine mounting of the A340 from which these wings were taken. Adding these cost nothing. However I am more than happy to agree to disagree with your good self on this point.
3. We now seem to be agreed that there is no ‘minimum fee’ BEFORE the pay-by-hour system kicks in and that it is as I suggested a ‘minimum hours’ clause and to me that is important. Again it shows the writer of the article was not totally accurate. Of course the RAF will have worked out a number of hours it will always fly, take a bit off and then sign up for that. And yes of course (and I didn’t argue this point) should the RAF for whatever reason just not use these aircraft it would still have to pay for those ‘minimum hours’. And rightly so. Just as it would have to pay for the storag, maintenance, aircrew and maintainer costs if it owned them. Like for like surely?
4. Your last major point is where I still have an issue with how you (and the writer of the article) are presenting numbers. You focus on extrapolated purchase costs under Air Tanker (which no one knows and is actually irrelevant) and compare that against French purchase costs (which no one knows) and so they cannot in any way be comparable. You quote some alleged purchase cost from the French but have no idea how much the French will spend on added management, operational, infrastructure, maintainer, storage, fuel, aircrew and upgrading costs over 27 years. Just as the writer failed to mention the through life costs of the Aussie KC-30s. I suspect it is a pointless exercise as no country will admit its own costs for security reasons and if they did they would be ‘reduced’ for political reasons. Hardly good grounds for discussion? So on this I fear there remains a gap between us.
However (hooray) I do agree that the disrupting factor in Defence procurement is the UK Treasury. Indeed they disrupt most of the UK Government actually operating efficiently. I totally agree that if the Treasury got away from avoiding any and all spending regardless of the added on-cost we would a) get better deals off industry who currently hedge the risks and b) we could establish steady state manufacturing with all the benefits that delivers. In the words of Jeremy Clarkson ‘Some people say’ that the RAF has entered into just such a ‘steady state’ deal with Air Tanker. I of course would not possibly comment would I?
I have reached the end of my tether. If sources such as the UKDJ cannot be trusted, then it is impossible to avoid being a fantasy fleeter. Even if it were, I’ve said too many fantasy fleeter comments to be redeemable.
SO:
How should fantasy fleeters be punished? As commentator “fruitman” of the Thin Pinstriped Line said so robustly, there is nothing good about fantasy fleeters.
https://thinpinstripedline.blogspot.com/2019/06/persistence-over-presence-british-armed.html
I might ask well as those with robust and sharp views what is to be done.
These two articles raise some interesting points but do miss a few obvious ones. Firstly the C130 fleet is an air transport asset that is heavily committed and barely has enough aircraft and flying hours to maintain training currencies for the crews and its obligations on ops without having more aircraft taken off the front line for converting to a needless AAR asset. Once converted it could then only be used for AAR and a few other minor roles not what it was purchased and desperately needed for. As for the A400 it has its own problems and is far from working to full capability and the support network could not cope with the addition of extra roles.