Key Point

  • The UK's experience could prove useful to the Australian Government which is looking at potential areas where Public Private Partnerships could be applied

AirTanker Limited has signed a 27-year contract with the UK's Ministry of Defence for the provision of an advanced Air to Air Refuelling and Air Transport capability for the Royal Air Force.

This £2.485 billion deal, the world's largest ever Defence Private Finance Initiative, closed on 27 March 2008 some four years after AirTanker was named preferred bidder. The total through-life cost of the FSTA project is estimated at £13 billion.

The Australian Government is currently looking at potential areas where Public Private Partnerships could be applied in Australia. Thus the details of this transaction will be of interest both to Government and the private sector. It is to be hoped however that the inordinately long length of time to reach close after preferment is not repeated in any Australian transaction. The Australian approach to bidding and closure of PPP deals is different to that used in the UK and should produce a quite different timeframe.

The AirTanker Limited consortium includes:

  • EADS - responsible for designing, developing and converting the tankers ready for delivery as well as providing support services;
  • Rolls Royce - provision of engines;
  • Cobham - refuelling equipment and aircraft conversion;
  • Thales UK - avionics, simulators and training services; and
  • VT Group - infrastructure and facilities management.

The transaction was financed by seven banks led by the Bank of Scotland, the others being RBC Capital Markets, Calyon, Lloyds, BayernLB, BBVA and Fortis.

The Future Strategic Tanker Aircraft (FSTA) contract promises a 2011 delivery date for a fleet of 14 new tanker aircraft based on the Airbus A330-200 and each powered by two Rolls Royce Trent 700 engines. The deal includes the provision of all necessary infrastructure: a state of the art 2-bay hangar, training, maintenance, flight operations, fleet management and ground services to allow global Air-to-Air Refuelling and Air Transport missions. The infrastructure building programme commenced in May 2008 at RAF Brize Norton in Oxfordshire and is expected to directly sustain up to 3,000 long-term jobs and indirectly sustain up to a further 4,500 jobs.

Under the PFI arrangement, the RAF will pay for a service on the basis of availability and usage which will be provided by the 14 aircraft acquired by AirTanker and flying in RAF colours. The through-life risks of ownership will lie with industry. It is anticipated that RAF will not need all of the FSTA all of the time, so that AirTanker will be able to earn extra revenue by using spare aircraft for commercial operations. However, the RAF will have first call on all aircraft in an emergency.

Tanker aircraft are being procured under a fixed-price contract with the Military Transport Aircraft Division of EADS. Conversion of the aircraft follows the similar A330-200 MRTT tanker programme for the Royal Australian Air Force which is three years in advance of the FSTA project and currently in the final stages of flight tests before delivery next year. The design of the A330-200 allows it to fulfil its required roles for the FSTA deal without reconfiguration, except for some specialist medical evacuations. The fuel necessary for refuelling operations and the aircraft itself is carried within the existing tanks in the wings and fuselage. This leaves the cabins free for transporting up to 290 personnel while the cargo hold remains available for military equipment up to a maximum payload of 44 tonnes.

The FSTA will replace the RAF's 1960s fleet of 19 VC-10 and 9 Tristar aircraft, providing twice the refuelling capability of the VC10s. The new aircraft's total fuel dispensing rate is approximately 80 litres per second while also offering substantial operational enhancement through the aircraft's own fuel efficiency.

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