# 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**)*

- As sample case, we will take into account a fleet with a yearly need of 3200 flight-hours.
- 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) - 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_Aircraft**

**x 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 toGaussian law), their is aCapability Pointbelow which it can be considered that it will face todeficiencies of capacityeven 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 :

- 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). - 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…)

- As we have seen, in case of over-use,

- Per aircraft :

- 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.
- Nevertheless, a cut leads a
**lower availability**per aircraft and therefore the fleet.

- Operationally :

- 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. - 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**. - 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.

- Over-use leads to

- At the end :

- 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**. - 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. - 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…

- An

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

(c) *Julien Maire.*