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An Examination of the Relationship Between Usage and Operating-and-Support Costs of U.S. Air Force Aircraft

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Technical rept.

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Developing annual budgets is a major responsibility of the Air Forces financial management community. On a weapon-system-by-weapon-system basis, plans are set forth as to how many aircraft will be in operation and how much each is expected to fly. Financial managers must then make sure that enough, but not too much, funding is allocated to fulfill the desired plan. While many budgeting activities occur on an annual basis, financial managers may also be called upon to adjust budgets during a fiscal year FY. For example, a system might be operated more than expected and augmented funding might be required. Some costs of operating aircraft vary directly with the amount of usage the system gets- fuel costs being a prominent example. Other types of costs, however, do not vary much with usage. For instance, the amount of corrosion-induced maintenance on an aircraft is likely to be a function of an aircrafts age and where it has been stationed, but it has little to do with how much it has been flown. The cost metrics discussed in this report variable cost per flying hour and variable cost per TAI are used by Air Force cost analysts to compare the total life cycle costs of various force structure mixes. These cost metrics include contractor logistics support and depot maintenance, whose budgets are not built using factors. The factor-driven flying hour budgets cover fuel, consumables, and depot-level reparables only. If the improvements discussed in this report are implemented, then the Air Force will have much more accurate costs for building force structure life cycle trade-off models.

Subject Categories:

  • Economics and Cost Analysis
  • Military Forces and Organizations

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