Has Voyager Been Value For Money?

In 2004 the AirTanker consortium won the Future Strategic Tanker Aircraft competition to provide air-to-air refuelling (AAR) aircraft to the UK military until 2035. The contract stipulates that the Royal Air Force (RAF) will have fourteen aircraft in the fleet although only nine are generally available for day-to-day operations. The aircraft are known in RAF service as the Voyager KC.2 and KC.3 and this refers to the number of refuelling stations per aircraft.

Program History

The competition began in 2000 when the Ministry of Defence (MoD) announced it would pursue a Private Finance Initiative (PFI) rather than purchasing aircraft outright. Originally the aircraft were meant to enter service in 2008 to replace VC10s before replacing the Tristars in 2012.

Originally AirTanker had offered a mix of new build and used Airbus A330-200s converted for use as tanker aircraft and strategic transports. Competing against AirTanker was the Tanker Transport Services Consortium (TTSC) which was offering used British Airways 767-300ER converted in a similar manner. AirTanker consists of Rolls-Royce, Airbus Military (then EADS), Cobham, Babcock (then VT Aerospace), and Thales whereas TTSC consisted of British Airways, Boeing, Marshalls, Serco, and Spectrum Capital.

The A330 MRTT was competing against the Boeing KC-767. Seen here in Japanese service the 767 continues to compete with the A330 MRTT on the international market. (Airwolfhound, CC BY-SA 2.0)

In January 2004 it was announced that AirTanker had been selected as the preferred bidder and they entered exclusive talks with the Ministry of Defence. During these talks, it was decided that all the aircraft would be new-build aircraft

Due to delays in the program Marshalls of Cambridge offered to some of the large number of second-hand Tristars as an interim capability. This was attractive as the aircraft could be integrated into the RAF’s fleet without the need for new supply chains or training programs. However, this option wasn’t pursued due to the cost and time it would take to convert aircraft.

February 2005 saw AirTanker confirmed as the preferred bidder for the £13bn contract. This was then followed by a 2007 MoD announcement confirming approval for AirTanker to begin procurement. This approval allowed AirTanker to begin to generate the £2bn in financing required to acquire and convert the aircraft.

During March 2008 it was announced that over the remaining twenty-seven years until 2035 the RAF would pay £10.5bn. This money is for the operation of the aircraft, the capital expenditure spent on acquiring the aircraft

Included in the contract was a requirement for AirTanker to construct a new hanger and support building at RAF Brize Norton in Oxfordshire. The hanger has been built to allow for two aircraft to be in maintenance simultaneously as well as including a flight operations centre.

2011 saw the naming ceremony of the type. Held at Brize Norton during the Royal International Air Tattoo at RAF Fairford it was announced that the aircraft would be known as Voyager.  It was also announced that Cobham’s facilities were ready to convert the aircraft into tankers.

It was originally intended that the final twelve aircraft would be converted at Cobham’s facility at Bournemouth Airport. However, due to the delays in the program, it was announced in 2012 that only the third and fourth aircraft were converted at Bournemouth. The remaining aircraft were therefore converted at Airbus Military’s site in Getafe, Spain, just south of Madrid.

The first aircraft to enter RAF service arrived at RAF Brize Norton in December 2011 and the first training involving the type began in 2012. During this training, it was found that the Variable Drag Drogues didn’t function correctly and therefore were replaced by standard Sargent Fletcher drogues.

Voyager became certified on 16th May 2013 and this was followed by the first operational sortie on the 20th. It must, however, be stated that at this point the aircraft were not cleared to operate in potentially hostile airspace. It took until December 2013 for the aircraft to be fitted with the correct DASS (Defensive Aids Sub Systems) and therefore prior to this the RAF was forced to operate Tristars on its flights into Afghanistan.

The final aircraft was delivered to the RAF in 2016 and is expected to remain in RAF service until at least 19 years. It is unknown if the aircraft will be handed over to the RAF at the end of the contract or if they’ll be available for AirTanker to sell on.

The Wrong Aircraft?

While the A330 MRTT aircraft are the most widely regarded tankers on the planet the MoD ordered the aircraft to the wrong specification.

Currently, the Airseeker, C-17, and Poseidon fleets cannot be refuelled using the probe and drogue method. Coupled with the order for 737 Wedgetail airborne early warning aircraft we reach a total of 25 aircraft in RAF service that are capable of air-to-air refuelling that cannot be refuelled using Voyager. For a more detailed look at how Voyager fits into the RAF overall, we have a Strategic Defence and Security Review preview here.

Unlike RAF Voyagers the Royal Australian Air Force’s KC-30s (Locally designated A330 MRTTs) are equipped with a flying boom to allow them to refuel more types of aircraft. Here a KC-30 refuels a USAF C-17 (U.S. Air Force photo by Christian Turner)

It has been speculated that the RAF wishes to add flying booms to at least some of the fleet to enable them to conduct refuelling of these types however no announcement has been forthcoming. If the RAF had purchased the aircraft outright, they would be able t do with them as they please and therefore they would likely have already had booms added.

Commentators have also criticised the aircraft for the lack of cargo capacity. The aircraft Voyager replace, the VC10 and Tristar, both had cargo doors that allowed larger items to be transported than can be carried in the lower cargo holds. However, with the introduction of the C-17 in 2001, this capability isn’t as in demand as it used to be.

Value for Money?

The contract between AirTanker and the MoD stipulates that AirTanker receives £390m per annum. Of this £80m is for the running costs of the aircraft and the remainder covers profit and the capital cost of the acquisition. We don’t have a capital cost of the aircraft to compare this to, and therefore struggle to compare the costs of the PFI compared to buying the aircraft outright.

What we do know is that Airbus offered Australia an extra A330 MRTT in 2012 for around £150m. However, it must be noted that the Royal Australian Air Force’s aircraft have a centreline ‘flying boom’, unlike RAF aircraft. Seven of the RAF’s aircraft have a Fuselage Refuelling Unit which consists of a hose and drogue and the remainder don’t have a centreline station. If we make our best guess at £130m for an average RAF aircraft, we reach a procurement cost of £1.8bn at 2012 rates.

An RAF Hercules refuels from a Voyager over the West Coast of England. (Cpl Lee Matthews, RAF © Crown copyright)

Now adding that procurement cost to the annual operating cost gives us a total of £3.32bn. Now while we are not using accurate numbers it is clear to see that the profit margin for AirTanker seems huge. Factoring the fact that five of the aircraft are available for commercial lease AirTanker seems to have struck the corporate deal of the century.

Exactly how much operating costs and such like will change over the course of the contract is of course unknown. This, therefore, means that we will never be able to get an accurate calculation as to their exact profit margin.

Even if they made half of the estimated profit it shows that at least another twenty combat aircraft could have been purchased if the MoD had decided on capital expenditure over PFI.

In January British Defence filled a Freedom of Information with the MoD regarding what the contract states with regards to using other platforms for air-to-air refuelling. Although we don’t have a copy of the contract to look over the FOI response gives us the following:

The MoD stated that there are “exclusivity provisions” within the contract regarding both tanking and strategic transport missions. These provisions seem to state that if Voyager can carry out the tasking then Voyager must be used, or the MoD pays compensation. This means that fixed-wing aircraft equipped for probe and drogue refuelling must be refuelled using Voyager. The MoD made it clear in their response that if helicopter AAR was required, they could do so without paying compensation.

If an aircraft requires flying boom refuelling, then the MoD can have a different platform perform the mission without paying compensation. The MoD stated that they have not paid compensation due to refuelling from allied aircraft due to Voyager also being used reciprocally to refuel allied aircraft. They use an unknown formula to work out these exclusivity compensation payments and as stated above no extra money has been paid.

A final question was asked relating to defensive aids subsystems (DASS) on the aircraft. This was due to it being unknown what level of protection the aircraft had. The MoD replied saying that the aircraft are fitted with the correct DASS to enable the aircraft to be protected.

If you’d like to read the FOI request you can do so here.

Coupled with the fact that an outright purchase would have allowed all fourteen aircraft to be in permanent RAF service it is clear to see that the RAF has been ripped off.

A March 2010 National Audit Office (NAO) report into the program state; “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.”

PFI has shown time and time again, throughout different government departments, that it isn’t the solution for providing value for the taxpayer.  In fact, in his 2018 Autumn budget, then Chancellor Phillip Hammond announced that the use of PFI would end.

In fact, the same NAO report stated that the MoD failed to conduct calculations for AirTanker’s cost to acquire and modify the aircraft.

The sheer cost of the program coupled with the fact that the MoD completely failed to do their due diligence shows us that there is no scenario where the PFI contract is value for money. Without the exact numbers being available to us we are only able to make best guesses and despite this we can only conclude that the taxpayer has been completely ripped off!

 

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