Budget Cuts (1/2) : Consequences of Fleet Size cut

#Defence :
This article illustrates impacts that are already relevant with a limited fleet cut of 10% only.
In real cases, fleets cuts are usually more important, around -20%, -30% (at least because a 10-percent cut is usually not profitable regarding contract re-negociation).

(Translation of the article written in french in July 2017 : 
Coupes budgétaires (1/2) : l’impact des réductions de flottes)

1. As sample case, we will take into account a fleet with a yearly need of 3200 flight-hours.
2. The equipment has a periodic #maintenance each 400FT and/or 2 years 
   (a bit like your car with a frequency of 30000 km \ 5 years)
3. The basic duration of the periodic inspection is 6 months.

• If the fleet is underused, the calendar maintenance will be the driver
  –> basically, it is not wise : you do not fully use the flying potential of the equipment.
• If the fleet is over-used, the driver will be the flying hours
  –> here too, it is not wise : you increase the frequency of the periodic inspection (the famous 6 months), so the unavailability.

Optimal point is at the junction of the 2.

What is the yearly potential of flight-hours, at this optimal point, given by each aircraft ?
–> 160.
(If you minded 200, you were wrong : 1 aircraft get 400 FT every … 2 years and 1/2 : 2 years of availability + 6 months of maintenance)
400 / (2 + 0.5) = 160

The sizing of a fleet is calculated as follows :
Yeary_FT_need / Yearly_FT_Potiential = 3200 / 160 = 20 aircraft

... Current calculation is not fully correct : equipment face to some "major inspections", for example every 1600 FT \ 10 years (almost every 4 periodic inspections), and of a longer leadtime such as 1 year. (However, in order to keep this study easy-to-access, we will ignore it from the calculation)

With 20 aircraft, with a use of 3200 FT / year, each aircraft will face to a periodic inspection every 2.5 years (30 months) :

• Over 5 years, the fleet will have faced to 40 periodic inspections, so 2 per aircraft.
• Over 20 years, each aircraft will have faced to 6 periodic inspection plus 1 major inspection.

Consequency : Each aircraft, over 20 years, will have faced to (at least) a total of unavailability due to maintenance of …
4 years (6 x 0.5 + 1 x 1), i.e 20% of its lifetime
In other words, you have (at least) 20% of your fleet which is unavailable, so a maximum of 16 aircraft only that are available.

Consider now, due to a #Budget cut, that the fleet is cut of 2, to 18 aircraft (i.e -10%).
What consequences :

With 18 aircraft, the frequency of periodic inspections will be 27 months (18 x 400 / 3200).

• Over 5 years, the fleet will have faced to 40 periodic inspections (see below), so 2.22 per aircraft.
• Over 20 years, each aircraft will have faced to 6 periodic inspection plus 2 major inspections.

Consequency : each aircraft, over 20 years, will have faced to (at least) a total of unavailability due to maintenance of …
5 years (6 x 0.5 + 2 x 1), i.e 25%
So, at least 25% of the fleet will not be available,which means a maximum of only 13 aircraft available.

Note that in case of over-use, the quantity of periodic inspections over a period is not related to the number of aircraft, but Flight-Hours performed :
Nb_PI[Period] = Nb_Aircraft x Period / PI_Frequency
= Nb_Aircraftx Period / (Yearly_Capacity / Yearly_Load)
= Nb_Aircraft x Period / (Nb_Aircraft x AC_FT_Potential / Yearly_Load)
= Period / (AC_FT_Potential / Yearly Load)

E.g, over 5 years :
Nb_PI[5 years] = 5 / (400 / 3200) = 40

… It does not matter if you have 20, 18 or 10 aircraft, for 3200 yearly Flight Hours, you will face, over 5 years, to 40 periodic inspections.

This number of inspections (since it is the hourly-based frequency that drives the critical path) is not related to the size of your fleet but its rate of use.

However, 3 limits to this calcul :

• over the optimal point (20 aircraft here) : critical path will be driven by the calendar-based frequency, so the number of periodic inspections will be related to the number of aircraft
• Maintenance frequency can not fall under the leadtime of periodic inspection + a certain leadtime to perform the flight hours
  (in our case : 6 months + a minimum number of days to perform 400h (and the daily maintenance), at least 2 months … which means a minimum of 8 months, so a minimum of 5 aircraft [400 / (8/12)] )
• Last but not least : current calculation is simplified to periodic inspections, out of major inspections.
  (Nevertheless enhanced algorithms enable to take into account this parameter, but I spare you this boring formulas)

… Back to our topic :

• With 20 aircraft over 20 years, we get :
  20 x ( 20 x (1 – 20%) ) = 20 x 20 x 0.8 = 320 cumulated years of availability (maximum)
• With 18 aircraft over 20 years :
  18 x ( 20 x (1 – 25%) ) = 18 x 20 x 0.75 = 270 cumulated years of availability (maximum)

… So a cut of capacity of more than 15%, resulting in long-term capacity failures.

Remind: with 20 aircraft, you have a unavailability of (at least) 20%, i.e an operational potential of 18 aircraft.

On the other hand, with 18 aircraft, your unavailability raises up to 25%, i.e an operational potential of 13.5 aircraft ! (18 x 75% = 13.5).

• No inspection savings (as we have seen : the number of periodic inspections is not related to the number of equipment, since we are in case of over-use, as it is for French fleets for 15 years)

• … An over-cost per aircraft, due to the increase in the frequency of periodic inspections, 25% higher (unavailability moving from 20% to 25%).
  (and, in fact, same global rolling cost for maintenance than with 20 aircraft, as the number of periodic inspections is the same)

• Premature aging of 10% (inspections frequency = 27 months instead of 30 months).
  –> Which will require to replace the equipment earlier (e.g : after 36 years instead of 40), or to spend additional costs in order to extend equipement lifetime (note: such extention is almost unknown regarding composite cells, for which there is a lack of knowledge on aging).

I made the choice to avoid here any aspect not related to the fleet cut, but which also influence the calculation of optimal fleet sizing :

• Calculations considering a linear load (constant and smooth) excluding any aspect of load volatility
• Deployment to conflicts (which supposes heavier and longer periodic inspections, due to some over-wear : hot, dust and dirty environement, etc…)
• Failures, daily ISS (maintenance per flight-hour, parts replacements, etc…)
• Mid-life Retrofit (but I will come back on that in the next article)
• In case of several variants, with their own types of missions

As you may have understood, the hot point of the matter is the rate of availability.
How to calculate it ?
Availability Rate = 1 - [ PI_Leadtime / PI_Frequency ]
= 1 - [ PI_Leadtime / (Fleet_FT_Capacity / FT_Load) ]
= 1 - [ PI_Leadtime / (Nb_Aircraft x AC_FT_Potential / FT_Load) ]

Without detailing on Sigma (refer to Gaussian law), their is a Capability Point below which it can be considered that it will face to deficiencies of capacity even in a smooth use of the fleet.
(This point, based on the rate of unavailability, is a theorical value that must be confirmed by the Sigma applied on the rate of use, considering all risks of volatility)

Is it a good deal ?

• In term of Budgets :
   
  1. As we have seen, in case of over-use, the cost of use is not related to the size fo the fleet, but the rate of use 
     (remember : it does not matter if you have 18 or 20 aircraft, in anyway you perform 3200 FT / year and so 40 PI over 5 years). 
  2. You save the cost of acquisition 
     … out of consideration of non-recurring costs (e.g : development) and contract renegociation costs…
     But if we follow thios simple vision, why not to cut the fleet to its basic minimum ? (remember the theorical sizing of 5 aircraft…)

• Per aircraft :
   
  1. The ratio Flight-Hour Cost (all #ISS incl.) / Acquisition Cost promotes again to cut the fleet, especially as #Défense #WhitePaper usually cover a limited period, but not the full lifetime of a fleet up to its replacement. 
  2. Nevertheless, a cut leads a lower availability per aircraft and therefore the fleet.

• Operationally :
   
  1. Over-use leads to risks of capacity deficiencies due to an increased frequency of periodic inspections and therefore a worsering of the operational fleet sizing.
     … Up to a point of incapability where your potential does not enable you to meet the needs and thus leads to capacity deficiencies as seen in some French forces helicopters fleets. 
  2. The risk of capacityu deficiencies can lead to the loss of crews qualifications, unable to train and perform their yearly flight-hours required, or the inability to train new crews and/or, in order to moderate this effect, under-sinzing formats in Operations. 
  3. While equipment do not have the ability of ubiquity, a cut, worsed by the over-use, can lead to local uncapabilities, even if you have in in global the potential of hours.
     

• At the end :
   
  1. An acceleration of the need of the fleet replacement (whose potential will hugely fall down) and therefore an acceleration of needs in White Papers and so of Budgets, which is totally in contraction with the aim of the budget cut which expects enduring equipment. Moreover this worses the adequacy between allocated budget and required budget. 
  2. Thus, on French side at least, budget cuts of the past 15 years are partly the cause of the imperative of a #Budget at 2% of GDP by 2025. They are partly and doubly: because of the deliveries slips (read next article) and also the acceleration of replacements of the equipments. 
  3. Before this end of lifetime, there is the mid-life Retrofit which, due to the acceleration of aging, are not anymore at an optimum time for the fleet, but we will see that also in the next article…

To be continued : Budget cuts : Consequences of a shift of deliveries

(c) Julien Maire.