Determining the Boeing 747 Conversion Costs for the Civil Reserve Air Fleet Enhancement Program.
Abstract
The Civil Reserve Air Fleet (CRAF) Enhancement Program provides a contractual arrangement between the Air Force and major U.S. airlines for modifying Boeing 747 and DC-10 passenger aircraft for use as convertibles--aircraft capable of carrying military cargo in an emergency, while providing commercial passenger service in peacetime. The airlines will incur several costs as a result of modifying these aircraft, each of which must be reimbursed by the Air Force. The costs incurred by the airlines include: net revenue lost during the eight week modification period; the modification cost: increased operating costs for 16 years due to the higher weight and increased value of a convertible aircraft; and the opportunity cost of retaining a modified aircraft for 16 years. Each of these costs were calculated for the Boeing 747, with the following results: $3,014,564 net loss of revenue during modification; $14,300,000 modification cost; 46,637,015 increased operating costs for 16 years; and no opportunity cost. These costs total $23,951,579, and represent the amount of reimbursement from the Air Force for each Boeing 747 conversion. (Author)
Document Details
- Document Type
- Technical Report
- Publication Date
- Sep 01, 1983
- Accession Number
- ADA134446
Entities
People
- James C. Orr
Organizations
- Air Force Institute of Technology