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Sat, Jul 12, 2003

New USAF Tankers: Buy Or Lease

Air Force Makes Recommendation To Congress

It's a classic decision that almost all of us face, whether shopping for a car, a truck or an airplane. Should I buy or lease? In discussions on whether to purchase or lease about 100 specially-fitted Boeing 767, the Air Force lands on the side of making a purchase. It is, according to a USAF report to Congress, worth the extra $100 million, because the purchased aircraft can be delivered faster.

Fast Is Good

Faster is just what the Air Force says it needs in replacing its fleet of 544 KC-135 tankers, the bulk of an aging tanker fleet that the brass says is almost too old to safely service. The price difference may sound like a lot of money (well, it is to us mere mortals), but overall, it's a relative drop in the bucket. The Pentagon estimates buying the 100 tankers would cost $17.2 billion, while leasing them would cost $17.1 billion. The difference is less than one percent.

But, of course, that's just one cost model. Other assumptions indicate cost of leasing the planes higher than purchasing them outright. The difference could be almost $2 billion. Now, we're talking serious money.

The Air Force recommendation calls for delivery of the first specially-modified 767 in 2009, with the last of the 100 aircraft to be in USAF inventory by 2016.

FMI: www.af.mil

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