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Wed, Jun 14, 2006

Omega Air Tosses Its Hat In Ring For Tanker Contract

Would Offer Privately-Owned DC-10s For USAF Use

Ever heard of Omega Air? The privately-held, Ireland-based company has made a pretty good name for itself over the last five years by offering contract refueling services to the Air Force using a refitted Boeing 707... and now, it's looking for a bigger piece of the pie.

Last Friday -- the deadline for the Air Force's request for information on its next generation tanker program --Omega submitted an intriguing offer: the use of up to 60 modified DC-10 tankers, to compete with Boeing's offer of a 767-based tanker and Northrop Grumman's A330-based KC-30.

Besides the choice of aircraft, Omega is also adding a new twist to the tanker program: all of Omega's planes would be privately owned, and the Air Force would contract refueling services from the company... as it does now with that 707 we mentioned earlier.

While the Air Force wouldn't have direct authority over the tankers, Omega says the Air Force would decide the schedule... and most importantly, the Air Force wouldn't have to pay for the planes, or the pilots. That gives Omega a significant price advantage... especially as it can pick up used DC-10s relatively cheaply on the commercial market.

"That's a very strong position to have if there's a budget crunch," said Teal Group aircraft expert Richard Aboulafia.

Others, however, doubt that privately owned planes could meet the Air Force's strict requirements.

"The Air Force believes that it needs absolute control over a large and capable fleet of aerial refueling tankers," said Lexington Institute defense consultant Loren Thompson to CBS Marketwatch. "If you procure these services from the outside, you will only have a contractual claim on the aircraft."

Aboulafia maintains that Omega's offer is "a contrarian approach" to the tanker competition... which, given earlier procurement scandals and current squabbling between Boeing and Airbus over WTO issues... could wind up being the most logical approach of all.

FMI: www.omegaairrefueling.com

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