The Congressional Budget Office (CBO), in September 2018, released an updated analysis on the operating costs of aging USAF aircraft. Following is a summary of key findings.
As aircraft age, they generally become more expensive to operate. The rate at which those operating costs grow is important for setting operating budgets and for deciding when to replace aging systems. The faster costs grow as a system ages, the more funding will be needed to maintain existing aircraft and the sooner it becomes cost effective to replace aging systems with new aircraft.
How Have Rates of Cost Growth Changed?
The rate of cost growth associated with the aging of Air Force aircraft has increased in recent years. A Congressional Budget Office report from August 2001 found that in the 1990s, operating costs typically grew between 1 percent and 3 percent annually in real terms (that is, after removing the effects of inflation).
Recent growth in operating costs per flying hour has been greater than CBO calculated in its 2001 analysis. For nine of the 13 aircraft fleets examined, CBO found real annual growth rates in operating costs per flying hour that ranged between 3 percent and 7 percent.
Why Have Rates of Cost Growth Changed?
Growth in the total Air Force budget during the 2000s appears to explain a considerable portion of the higher estimated annual growth rates in operating costs per flying hour beyond the growth rate intrinsic to the aging of the fleet. In other words, because the Air Force had more resources available, it was able to increase spending on aircraft operation and maintenance.
After accounting for the larger Air Force budget, CBO estimates that the real cost growth associated with aircraft aging generally ranged from 1.5 percent to 4.1 percent over the 1999–2016 period. That rate of growth is lower than the rate observed in the raw data but higher than the rate CBO estimated in its 2001 report. One interpretation of those results is that the underlying intrinsic age effects remained roughly as they were in the 1990s and that changes in the size of the Air Force’s budget lessened the observed growth rates in the 1990s and boosted them in the 2000s.