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KC-X Tanker Competition Heats Up

Now that Boeing and EADS have each submitted bids for the Air Force’s lucrative KC-X refueling tanker contract, the war of words between supporters of both companies has kicked into high gear.

Following a WTO ruling against illegal subsidies provided to EADS by European governments and the Pentagon’s refusal to take the KC-45’s greater fuel capacity into account, it seems that momentum has shifted towards Boeing in the contest.  Loren Thompson of the Lexington Institute writes that EADS’ math is “shaky,” continuing “unfortunately for EADS, its plane has 40 feet more wingspan than the rival Boeing 767 tanker; sells for $50 million more; and burns at least a ton more fuel per flight hour.”

Also, the House of Representatives voted 410-8 in May to force the Pentagon to consider illegal subsidies in its evaluation of bids from foreign firms, and while the Senate has yet to take action, the landslide vote represents a significant political headwind for EADS to overcome.  Loren Thompson notes that, while the Air Force is “trying real hard” to avoid the debate on subsidies, “the issue will become unavoidable if it picks the European tanker again. Members of Congress will want to know how EADS got its price so low, and whether taxpayers are in effect being asked to reward the company for decades of violating trade rules.”

Additionally, Louis Gallois, CEO of EADS, recently commented that “We prefer to lose (the contract) than not to gain money,” and also criticized the WTO’s decision to delay a ruling on American subsidies to Boeing, saying “I think it’s not a fair situation.”

But advocates for EADS’ KC-45 point out that the design has other features that work in its favor.  EADS North America Chairman Ralph Crosby recently pointed out his company’s design has less risk than Boeing’s because its A330 MRTT tanker built for the Royal Australian Air Force is more similar to its KC-45 tanker than Boeing’s current 767-based tankers are to NewGen.

He also lashed out at critics of the KC-45 design, saying “the central issue in this competition, quite frankly, is how do you get the best system for the U.S. war fighter. And we’ve spent all of our time talking about a bunch of crap which has no relevance to the fact of whether you’re going to get airplanes that can fly for 50 years and adapt themselves to a changing environment with a substantially greater capability.  Wasting a lot of time trying to derail a process because somebody’s worried that their airplane is inferior is a major distraction.”

Bill Barksdale, a spokesman for Boeing’s tanker project, said that the 767 on which the NewGen is based “is 15 to 20 percent less costly to maintain than the A330” and will save $10 billion in fuel costs alone over the life of the fleet when compared to the KC-45.  He added that Boeing’s aircraft will respond better to pilots in and near combat and will have the best flight displays in the world.

On the issue of illegal subsidies, Barksdale added “They’re offering an Airbus A330 in this competition and, in that ruling, that was one of those planes listed as getting illegal subsidies. From our perspective you have to consider that and you have to realize that for us to compete on a level playing field, which is everything in this, this is an issue that has to be considered.”

The Air Force is expected to choose a bid in November, and we’ll keep tracking this story as it develops.

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