United States Government Accountability Office Report to Congressional Committees June 2013 MILITARY AIRLIFT DOD Needs to Take Steps to Manage Workload Distributed to the Civil Reserve Air Fleet GAO-13-564 June 2013 MILITARY AIRLIFT DOD Needs to Take Steps to Manage Workload Distributed to the Civil Reserve Air Fleet Highlights of GAO-13-564, a report to congressional committees Why GAO Did This Study What GAO Found To move passengers and cargo, DOD DOD exceeded the flying hours needed to meet military training requirements for supplements its military aircraft with fiscal years 2002 through 2010 because of increased operational requirements cargo and passenger aircraft from associated with Afghanistan and Iraq; however it does not know whether it used volunteer commercial carriers Civil Reserve Air Fleet (CRAF) participants to the maximum extent practicable. participating in the CRAF program. DOD guidance requires it to meet training requirements and to use commercial Participating carriers commit their transportation to the “maximum extent practicable.” During fiscal years 2002 aircraft to support a range of military through 2010, DOD flew its fleet more than needed to train its crews, although its operations in exchange for peacetime flying has more closely matched its training needs in recent years. DOD has also business. A House Armed Services used CRAF participants extensively to supplement military airlift. Although DOD Committee mandated GAO to report has taken steps to make more airlift business available to CRAF participants, on matters related to the CRAF officials said that overseas operations have provided enough missions to support program. GAO assessed whether DOD both training and CRAF business obligations. However, with the drawdown in (1) met its military airlift training Afghanistan, DOD officials expect the need for airlift to decline by at least 66 requirements while also using CRAF percent—to pre-September 2001 levels—reducing both training hours available participants to the maximum extent practicable, (2) provided justification for for DOD and business opportunities for CRAF. DOD does not use its process for restricting commercial carriers from monitoring flying hours to determine when it will exceed required training hours transporting partial plane loads of and allocate eligible airlift missions to CRAF participants. Therefore, it cannot cargo over certain routes, and (3) has determine whether it is using CRAF to the maximum extent practicable. As a established future requirements for result, DOD may be using its military fleet more than necessary—which officials CRAF and how the planned size of say is less economical—while risking reduced CRAF participation. CRAF compares to those DOD provided several reasons for restricting commercial carriers from requirements. GAO reviewed guidance transporting partial plane loads of cargo over channel routes, including the need and policies pertaining to the program, to promote efficiency, meet its military airlift training requirements, and fulfill flying hour data, and DOD-sponsored CRAF study reports. GAO also peacetime business obligations to CRAF participants. Channel route missions interviewed DOD and industry officials. are regularly scheduled airlift missions used to transport cargo and provide aircrew training time. These missions also help DOD provide business to CRAF What GAO Recommends participants. According to U.S. Transportation Command (TRANSCOM) officials, DOD generally requires aircraft conducting channel route missions to be GAO recommends that the Secretary completely full of cargo before takeoff. The policy restricting carriers from flying of Defense direct the Secretary of the Air Force and the Commander, U.S. partial loads over channel routes allows DOD to consolidate cargo previously Transportation Command—in flown by commercial carriers in less than full plane loads and redirect that cargo conjunction with the Commander, Air into the channel route system, where it will be transported by either commercial Mobility Command—to use its existing or military aircraft as part of a full plane load mission. According to DOD, processes for monitoring training to consolidating cargo into full loads flown over the channel route system has determine when it can shift its increased both the efficiency of these missions and the availability of missions distribution of peacetime airlift that DOD uses to train its crews and fulfill its business obligations to CRAF. workload from military to commercial It is unclear whether the planned size of CRAF will be adequate to meet future sources. In comments on a draft of this airlift requirements. DOD last established its future requirements based on the report, DOD concurred with GAO’s recommendation and stated that it wartime scenarios in the Mobility Capability Requirements Study 2016, issued in believes implementing the 2010. However, due to changing military strategy and priorities, the 2010 study recommendation will further improve does not reflect current mission needs. The National Defense Authorization Act the Civil Reserve Air Fleet program. for Fiscal Year 2013 requires DOD to conduct a new mobility capabilities and requirements study. DOD has not begun this study or finalized its ongoing reviews of the CRAF program’s ability to support future requirements. Once they View GAO-13-564. For more information, are finalized, these studies should allow DOD to better understand future contact Zina Merritt at (202) 512-5257 or [email protected]. requirements for CRAF and whether the CRAF program will meet future airlift requirements. United States Government Accountability Office Contents Letter 1 Background 5 DOD’s Process for Monitoring Flying Hours Provides Information That Could Help It Determine When to Shift Eligible Missions to CRAF Participants 9 DOD Restricts Partial Plane Loads on Channel Routes to Promote Efficiency, Meet Training Requirements, and Fulfill Peacetime Business Obligations to CRAF 21 Adequacy of CRAF to Meet Future Mission Needs is Unclear until DOD Completes Several Assessments 30 Conclusions 35 Recommendation for Executive Action 35 Agency Comments 35 Appendix I Scope and Methodology 38 Appendix II U.S. Transportation Command Restricted Route Policy 42 Appendix III List of Civil Reserve Air Fleet Participants (As of April 2013) 43 Appendix IV Comments from the Department of Defense 44 Appendix V GAO Contact and Staff Acknowledgments 45 Table Table 1: Level of Airlift Support Pledged by CRAF Participants for Stage 3 in Fiscal Years 2011–2013 16 Figures Figure 1: Percentage by Which Actual AMC Flying Hours Exceeded Planned AMC Flying Hours in Fiscal Years 2001–2012 12 Page i GAO-13-564 Military Airlift Figure 2: AMC-Managed Sorties Flown in Fiscal Years 2004–2012, by Airlift Source 13 Figure 3: Passengers Flown on AMC-Managed Flights in Fiscal Years 2004–2012, by Airlift Source 14 Figure 4: Cargo Tons Flown on AMC-Managed Flights in Fiscal Years 2004–2012, by Airlift Source 15 Figure 5: DOD Payments Made to CRAF Participants and Foreign Carriers in Fiscal Years 2001–2012 18 Figure 6: Fiscal Years 2010–2012 Cargo Tons Flown by Airlift Mission Type (as Percentages of All Airlift) 24 Figure 7: Commercial versus Military Channel Route Movements for Fiscal Years 2000 and 2012 28 Abbreviations AMC Air Mobility Command CRAF Civil Reserve Air Fleet DOD Department of Defense MCRS Mobility Capability Requirements Study MRCS Mobility Requirements and Capability Study NDAA National Defense Authorization Act REMIS Reliability and Maintainability Information System TACC Tanker Airlift Control Center TRANSCOM U.S. Transportation Command This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately. Page ii GAO-13-564 Military Airlift 441 G St. N.W. Washington, DC 20548 June 20, 2013 Congressional Committees DOD augments its military cargo and passenger airlift capability with aircraft from commercial carriers participating in the Civil Reserve Air Fleet (CRAF) program. Participating carriers commit their aircraft to be called upon, or activated,1 for use to support a range of military operations. The U.S. government provides commercial carriers with economic incentives to encourage their participation in CRAF, by giving them the opportunity to transport DOD personnel and cargo in peacetime and by reserving a number of additional airlift contracts for CRAF carriers, such as the U.S. General Services Administration’s City Pairs program and the U.S. Transportation Command-managed World Wide Express program. Since 2001, CRAF participants have received nearly $30 billion in revenue for providing peacetime airlift services to DOD.2 In fiscal year 2012, CRAF participants received approximately $2 billion in payments from DOD for their peacetime participation. However, DOD projects that by 2015, its peacetime business will decline by an estimated 66 percent as it returns to pre-September 11, 2001 levels, raising concerns within DOD and among CRAF participants about the effect this loss of business will have on the carriers and their ability to continue participating in the program. The Office of the Deputy Assistant Secretary of Defense for Transportation Policy serves as the principal advisor for establishing policies and providing guidance to DOD components for efficient and effective use of government and commercial transportation resources. DOD’s U.S. Transportation Command (TRANSCOM), headquartered at Scott Air Force Base in Illinois, manages many aspects of the CRAF program and makes recommendations concerning the capability, capacity, and other requirements for mobility assets needed to execute TRANSCOM’s mission. 1Aircraft committed to the CRAF program can be activated during a war-time or emergency scenario under a stage I, II, or III CRAF activation. In exchange for participation in the program, carriers are eligible to fly peacetime airlift missions under a non-activated status. 2DOD refers to any business performed by CRAF participants outside of an activation as commercial augmentation, otherwise referred to as “peacetime business” throughout this report. DOD’s last CRAF activation occurred from February to June 2003 at the start of Operation Iraqi Freedom. Page 1 GAO-13-564 Military Airlift According to TRANSCOM officials, CRAF benefits the nation by providing up to half of the nation’s long-range airlift capability, allowing the government to avoid having to buy additional aircraft, pay personnel costs, or maintain the aircraft during peacetime. The National Airlift Policy emphasizes the importance of CRAF to the nation by noting that military and commercial resources are equally important and interdependent in the fulfillment of the national defense airlift objective.3 Consistent with that policy, DOD Instruction 4500.57 requires that DOD operate its fleet to meet its training requirements while also using commercial sources of transportation to the “maximum extent practicable.”4 According to Air Mobility Command (AMC) officials, airlift missions that are not conducted to satisfy training requirements should be performed by CRAF participants, except when there is some other feature of the mission that requires military airlift. Further, since DOD’s military fleet has limited capability to meet its passenger airlift requirements, it mostly relies on CRAF commercial carriers to fulfill these requirements. DOD’s military fleet has the capability to carry bulk, outsized, and oversized cargo; however, DOD relies on commercial cargo carriers to move a portion of its bulk cargo both in peacetime and in times of crisis or war. Over the last several years, we and others have reported on the challenges faced by the CRAF program. In September 2009, we recommended that DOD assess the level of risk associated with the commercial carriers’ declining charter passenger capabilities and DOD’s increased need to move very large cargo. DOD did not agree with our recommendation because, it stated, an assessment of the declining charter passenger capabilities had already been done in 2008 by the Institute for Defense Analysis; however, as we stated in our report, the assessment conducted by the Institute for Defense Analysis on DOD’s behalf did not include the most current and relevant data affecting the program; for that reason we believe our recommendation is still viable and important. Additionally, we recommended that, given the importance of the CRAF program in moving passengers and cargo to support 3See National Security Decision Directive 280, National Airlift Policy (June 24, 1987) (hereinafter cited as National Airlift Policy (June 24, 1987)). As described by the policy, the national defense airlift objective is to ensure that military and civil airlift resources will be able to meet defense mobilization and deployment requirements in support of U.S. defense and foreign policies. See id. 4See Department of Defense Instruction 4500.57, Transportation and Traffic Management (Mar. 18, 2008) (hereinafter cited as DODI 4500.57 (Mar. 18, 2008)). Page 2 GAO-13-564 Military Airlift peacetime, contingency, and major operations, DOD should develop appropriate policies and procedures for mitigating risks regarding the CRAF program in order to maintain its viability to meet DOD’s future needs.5 DOD agreed that there is a need for comprehensive policy governing all of the CRAF program elements identified in our report; however DOD did not identify what, if any, specific actions it would take in response to our recommendation. However, DOD updated some of its guidance regarding the CRAF program in 2011, and in fiscal year 2012, AMC began a series of studies that may begin to address this recommendation. Further, multiple DOD-sponsored studies have identified risks to the CRAF program resulting from a changed business environment and an expected decrease in CRAF participation—especially in the level of charter airline participation—as DOD’s airlift workload declines.6 House Report 112-479, accompanying a bill for the National Defense Authorization Act for Fiscal Year 2013, mandated us to report to the congressional defense committees on matters related to the long-term ability of CRAF to meet DOD’s needs. 7 Accordingly, we assessed the extent to which DOD has (1) met its military airlift training requirements while also using CRAF participants to the maximum extent practicable, (2) provided justification for restricting commercial carriers from transporting partial plane loads of cargo over certain routes, and (3) established future requirements for the CRAF program, and how the planned size of CRAF compares to those requirements. To assess the extent to which DOD has met its military airlift training requirements while also using CRAF participants to the maximum extent practicable, we analyzed policies, regulations and guidance pertaining to the management of the CRAF program. We also analyzed DOD’s training requirements for its flying hour program to determine the number of hours DOD flew its strategic airlift fleet compared to the number of hours it was 5GAO, Military Airlift: DOD Should Take Steps to Strengthen Management of the Civil Reserve Air Fleet Program, GAO-09-625 (Washington D.C.: Sept.30, 2009). 6Institute for Defense Analysis: Civil Reserve Air Fleet: Economics and Strategy, IDA paper P-4373; August 22, 2008; Council for Logistics Research, Civil Reserve Air Fleet Study Report, July 31, 2008. 7See H.R. Rep. No. 112-479, at129-30 (2012). Page 3 GAO-13-564 Military Airlift required to fly to meet training requirements over the last 10 years.8 In addition, we conducted interviews with officials from TRANSCOM, AMC, and The Office of the Under Secretary of Defense for Acquisition, Technology and Logistics to understand how DOD decides whether to use the military fleet or commercial airlift. We also interviewed officials from 21 of the 30 CRAF carriers who were participating in the program as of October 2012, as well as representatives from the National Air Carrier Association—an industry association representing several CRAF participants—to understand the perspectives of commercial participants in the CRAF program. To assess the extent to which DOD provided justification for restricting commercial carriers from transporting partial plane loads of cargo over certain routes, we reviewed DOD policies that place restrictions on commercial carriers flying over certain routes. We also reviewed data from fiscal years 2000 and 2012, and interviewed TRANSCOM officials, to obtain information on the rationale and benefits of these restrictions. In addition, we conducted interviews and obtained written responses from CRAF participants to gain an understanding of how such restrictions were affecting their business. To assess whether DOD has established future requirements for the CRAF program and how the planned size of CRAF compares to those requirements, we reviewed studies assessing DOD’s strategic airlift capabilities, such as DOD’s Mobility Capabilities and Requirements Study–2016, and the Air Mobility Command 2012 CRAF Phase 1 study. We also reviewed data on the number of commercial aircraft committed to DOD’s CRAF program and compared these data with DOD’s current airlift requirements. Lastly, we interviewed TRANSCOM and AMC officials to determine what steps are being taken to establish future requirements and to gain their perspective on the challenges, if any, they expect to face as they continue to manage the CRAF program. We conducted this performance audit from August 2012 to June 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence and data obtained was sufficiently reliable for our purposes, and provides a reasonable basis for our findings and conclusions based 8We obtained training requirement data on DOD’s flying hour program from the Air Mobility Command. Page 4 GAO-13-564 Military Airlift on our audit objectives. More detailed information on our scope and methodology is provided in appendix I. Background The Civil Reserve Air Fleet (CRAF) is a voluntary, contract-based agreement between DOD and U.S. commercial air carriers that augments DOD’s military airlift capability during times of war and national emergency. It was created in 1951 to augment DOD airlift capability during a national defense-related crisis. The National Airlift Policy, signed by President Reagan in 1987 and still in effect, establishes policy that the military will rely on the commercial air carrier industry to provide the airlift capability required beyond that available in the military airlift fleet.9 The policy includes guidelines for meeting airlift requirements in both peacetime and wartime. These guidelines direct, among other things, that policies be designed to increase participation in CRAF and enhance the mobilization base10 of the U.S. commercial air carrier industry. In exchange for this participation, the government provides commercial carriers the opportunity to fly DOD peacetime missions moving passengers and cargo and also sets aside business for CRAF participants in the General Services Administration City Pairs passenger program and TRANSCOM’s Worldwide Express cargo program. CRAF is divided into three progressive stages that TRANSCOM can activate during times of crisis, in part or in whole, with the approval of the Secretary of Defense. • Stage I covers a minor regional contingency or other situations where AMC cannot simultaneously meet both deployment and other airlift requirements. • Stage II is tailored for a major theater war or a defense airlift emergency short of a full national emergency. 9See National Airlift Policy (June 24, 1987). 10DOD defines the mobilization base as the total of all resources available, or that can be made available, to meet foreseeable wartime needs. Such resources include the manpower and materiel resources and services required for the support of essential military, civilian, and survival activities, as well as the elements affecting their state of readiness. Joint Chiefs of Staff, Joint Pub. 1-02, Department of Defense Dictionary of Military and Associated Terms, at 189 (Nov. 8, 2010) (as amended through Mar. 15, 2013). Page 5 GAO-13-564 Military Airlift • Stage III would be required if the military had to fight more than one major theater war at the same time or operate in a larger crisis, including a national emergency declared by the President or Congress. A stage III CRAF activation has never occurred. DOD has activated CRAF only twice in the history of the program. Stage I and part of stage II were activated in support of Operations Desert Shield and Desert Storm in August 1990 and January 1991, respectively, through May 1991. The CRAF stage I passenger segment was activated in support of Operation Iraqi Freedom in February through June 2003. To enter the CRAF program, an air carrier must (1) be a U.S. flagged, Federal Aviation Administration approved Part 121 air carrier, (2) be approved by the Commercial Airlift Review Board, 11 (3) have one year prior equivalent uninterrupted service to the commercial sector, (4) meet a minimum fleet participation level (for international carriers), (5) meet a specified utilization rate (for international and aeromedical evacuation fleet participants), and (6) be able to meet manning and crew requirements. Once approved to participate, carriers commit the number of aircraft they will make available for each of the three stages of the CRAF program. AMC then decides the number of aircraft that will be accepted into the CRAF program, based on DOD’s wartime requirements. As of April 2013, a total of 64 aircraft were committed to stage I, 308 to stage II, and 554 to stage III. Two segments of the commercial airlift industry—scheduled service carriers and charter carriers—comprise the CRAF wartime capability. The scheduled service carriers—which include large passenger airlines such as American Airlines and Delta Air Lines and cargo carriers such as FedEx and UPS—pledge the majority of the aircraft accepted into the CRAF program. DOD will use most of the pledged aircraft only during a CRAF activation. In peacetime, scheduled service carriers operate commercial flights on regular routes and cannot afford unplanned disruptions to their airline networks. Because many DOD missions are not routine in their locations or timing, charter carriers—which have the flexibility to provide airlift based on their customers’ schedules—transport the majority of DOD’s peacetime, contingency, and stage I business. For 11The Commercial Airlift Review Board is comprised of DOD senior officials and makes decisions regarding the use or nonuse of air carriers participating or attempting to participate in the DOD air transportation program. Page 6 GAO-13-564 Military Airlift