Empirical Evidence Relating Aircraft Age and Operating and Support Cost Growth

Abstract

Abstract Since the mid-1990's, senior Air Force leaders have pointed to an aging fleet for justification to procure new aircraft. They believe rising Operating and Support (O&S) costs are inhibiting new investments and leading the Air Force into a ‘death spiral’ (Tirpak 2006). Using 11 years of data from the Air Force Total Ownership Cost (AFTOC) database, this study investigates the relationship between aircraft age and ownership Cost Per Flying Hour (CPFH) cost growth from seventy four different airframes in the Air Force's inventory. The analysis reveals that cost growth follows a ‘bathtub’ curve where the burn-in, steady-state, and end-life display cost growth rates of 6.6%, 3.1%, and 6.9% respectively. Furthermore, the variability associated with this increase follows the same functional form as the cost growth. This research suggests that very young and very old aircraft exhibit significantly higher levels of cost growth and variability, but the magnitude of the cost growth and variability for old aircraft is relatively equal to that of young aircraft.