Aerial Refuelling: Tracking Boeing's Triumph

In February, Boeing beat EADS to provide a new generation of aerial refuelling tankers to the US Air Force. In the wake of this landmark $35bn deal, Chris Lo examines the battle between the two bidders to find out what it takes to win a large-scale contract in this technical sector.


Aerial refuelling capability has been an important component of modern air forces since the US Air Force's extensive use of the KC-135 Stratotanker during the Vietnam War.

It was during this conflict that refuelling tankers proved their worth, not only for their original task of refuelling, but also for extending the range and combat times of tactical fighters and bombers.

From the 1960s, aerial refuelling has played a major part in air force operations in many military conflicts, including the Gulf War, the Iraq War and the ongoing crisis in Libya.

Since its adoption by the US Air Force in 1957, the KC-135 has become one of the longest continuously serving fixed-wing aircraft in the world. The US has been looking for a suitable replacement for the veteran tanker for the best part of a decade, but a convoluted process of competing bids and cancelled proposals has meant that a firm contract for the KC-X project was not secured until February 2011.

Replacing the KC-135

Contrary to the predictions of analysts, the bid from US manufacturer Boeing, offering a new tanker design based on its 767 airliner, beat European rival EADS, which proposed a design based on the Airbus 330. The contract, worth $35bn, tasks Boeing with replacing 179 of the US Air Force's 400 KC-135s, starting with an initial delivery of 18 new KC-46A tankers by 2017, at a cost of $3.5bn.

"The US has been looking for a suitable replacement for the veteran tanker for the best part of a decade."

The news represents a significant boost for Boeing's 767 jet, which has seen orders dwindle of late; the deal will also be welcomed by the US state of Washington, where the new tankers will reportedly be built. Missing out will be the community of Mobile, Alabama, the port city that would have been the construction site for EADS's design.

While Boeing CEO Jim McNerney celebrated the news, announcing that the company was "ready to apply our 60 years of tanker experience to develop and build an airplane that will serve the nation for decades to come", the reaction in Washington has been one of relief rather than elation.

After all, the US Air Force's search for a tanker replacement dragged on far longer than it might have. The US's original scheme to purchase and lease new tankers from Boeing collapsed in 2004 after allegations of corruption. This prompted the government to issue a request for proposals for a new tanker in 2007, which was won by a joint venture of Northrop Grumman and EADS. Boeing, however, protested the decision, and it was overturned by the US Government Accountability Office in 2008.

Northrop then withdrew from the bidding process in early 2010, leaving EADS to compete against Boeing alone. Boeing finally won the massive contract decisively in 2011, with EADS announcing that it would not be protesting the decision.

With this exhausting series of events, it's little wonder that, in the wake of the contract, US Air Force chief of staff General Norton Schwartz commented: "Let me just say that I'm pleased that this has produced an outcome … that we'll get to delivering a capability that's long overdue, and we'll stop talking about it."

What gave Boeing the edge?

But what was it about Boeing's 767-derived design that swung the US Air Force's decision its way? On the surface, EADS's competing design held the distinct advantage of more than 40,000lb of additional fuel capacity. In its response to the decision, EADS North America noted that the air force had found its design to be "superior in capability to the Boeing offering as measured by the service's fleet effectiveness rating".

"The contract, worth $35bn, tasks Boeing with replacing 179 of the US Air Force's 400 KC-135s."

But during a time when defence budgets are more pressed than ever before, 'superior capability' is often outmatched by cost effectiveness and enticing lifecycle cost projections. The EADS design's larger fuel capacity also brought with it greater size and weight than Boeing's offering (it is 50% larger and 25% heavier). According to a lifecycle cost study carried out by AeroStrategy for Boeing as part of the company's bid, these larger proportions have a knock-on effect on the ongoing maintenance and fuel costs throughout the fleet's operating life.

AeroStrategy's report argues that these maintenance and fuel costs, multiplied over an aircraft's operating period spanning several decades, can represent up to 80% of total project costs from initial acquisition to aircraft retirement. The company analysed total costs for both aircraft based on specifications provided by the bids and costs for maintenance, upgrades and fuel over the aircraft's proposed 40-year lifecycle.

"In all ten scenarios analysed," says the report, "the lifecycle cost of the A330 [EADS's design] was at least 20% higher than that for the 767." Given the long time period and the size of the programme, a 20% increase represents around $11bn in extra costs. It's clear that with a technology as well refined as aerial refuelling, cost can be the decisive factor, as the general ability of each bidder's system to do the task at hand can be proven relatively easily.

Boeing may have won the KC-X contract by demonstrating the cost effectiveness of its proposal, but this could yet prove to be a double-edged sword. Now the company must prove that it can live up to the potential of its bid. An analysis of Boeing's winning bid by EADS after the US Air Force's decision noted that the company had reduced its price for 179 tankers by nearly $16bn compared with its original purchase/lease offer in 2002.

Based on his comments, the challenge that now stands before Boeing is not lost on EADS North America chairman Ralph D Crosby Jr. "Much is promised by our competitor, whom we congratulate," he said. "However, should they fail to deliver, we stand ready to step in with a proven and reliable tanker."

"Northrop plans to demonstrate autonomous high-altitude refuelling with two of its RQ-4 Global Hawk UAVs."

Northrop's UAV refuelling technology

Northrop Grumman, which turned out to play only a subsidiary role in the KC-X saga, has not been idle in the aerial refuelling sector since it dropped out of the US Air Force's tanker race in early 2010. The company has been working on the next step in aerial refuelling with the US Defense Advance Research Projects Agency (DARPA) – unmanned aerial refuelling. In a $33m project with the agency, called KQ-X, Northrop plans to demonstrate autonomous high-altitude refuelling with two of its RQ-4 Global Hawk UAVs.

In January this year, the company came a step closer to realising its goal when a Northrop's Proteus autonomous test aircraft maintained a distance of just 40ft to a Nasa Global Hawk, setting the stage for fully autonomous aerial refuelling between UAVs.

"Demonstrating close formation flight of two high-altitude aircraft, whether manned or unmanned, is a notable accomplishment," said Geoffrey Sommer, KQ-X programme manager at Northrop Grumman Aerospace Systems. "When you add autonomous flight of both aircraft into the mix, as we will do later in the KQ-X programme, you gain a capability that has mission applications far beyond just aerial refuelling."