United States General Accounting Office

GAO Report to the Chairman and Ranking

Minority Member, Subcommittee on

Seapower, Committee on Armed

Services, U.S. Senate

March 1996 MILITARY AIRLIFT

Observations on the

Civil Reserve Air Fleet

Program

G O A

years

1921 - 1996

GAO/NSIAD-96-125

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-271418 

March 29, 1996

The Honorable William S. Cohen

Chairman

The Honorable Edward M. Kennedy

Ranking Minority Member

Subcommittee on Seapower

Committee on Armed Services

United States Senate

This report responds to your request that we provide information on the

Civil Reserve Air Fleet (CRAF) program, which augments military airlift

during emergencies.1

 According to Air Mobility Command (AMC)

documents, CRAF aircraft performed a vital role in Operations Desert

Shield/Storm by providing 62 percent of the Air Force’s passenger airlift

capability and 27 percent of its cargo airlift capability. In this report, we

discuss (1) the extent that participation by commercial carriers in the CRAF

program meets wartime requirements, (2) the Department of Defense’s

(DOD) efforts to ensure future carrier participation, and (3) the recent

review of the CRAF program that was directed by the C-17 Defense

Acquisition Board (DAB).

Results in Brief The extent of carrier participation varies in different segments of the CRAF

program.

• Commercial carriers have committed only 19 of the 44 aircraft required for

aeromedical evacuation. As a result, AMC could have difficulties evacuating

casualties from an overseas contingency operation.

• Carriers have committed 114 of the 120 wide-body equivalent aircraft

required for cargo airlift. However, this shortage of aircraft has not

affected DOD’s ability to quickly deploy troops and equipment.

• Participation in passenger airlift exceeds requirements—a commitment of

161 wide-body equivalent aircraft to meet a requirement of 136.

To encourage continued carrier participation, AMC has proposed making

the award of additional DOD and other government airlift business

contingent on some form of commitment to the CRAF program.

Additionally, AMC is addressing carriers’ concerns about war risk insurance

coverage.

1

We last reported on the program in Military Airlift: Changes Underway to Ensure Continued Success

of Civil Reserve Air Fleet (GAO/NSIAD-93-12, Dec. 31, 1992).

Page 1 GAO/NSIAD-96-125 Military Airlift
B-271418 

The recent C-17 DAB decision, recognizing the importance of the CRAF

program, directed that DOD study ways to stabilize carrier participation and

increase commitment of B-747-400 freighter aircraft. The final results are

not due until June 1, 1996.

Background The CRAF program is managed by AMC, a component of the U.S.

Transportation Command, located at Scott Air Force Base, Illinois.

Established in 1952, the CRAF program was designed to provide DOD with

access to commercial aircraft to augment military airlift during

emergencies. CRAF is composed of civil air carriers that voluntarily commit

cargo and passenger aircraft to support airlift requirements that exceed

the capabilities of Air Force-owned aircraft.

The rewards for CRAF participation—shares of DOD’s peacetime business

with cargo and passenger aircraft services—are detailed in contracts with

each carrier. Excluding the amounts paid for Operations Desert

Shield/Storm airlift, the amount of annual international contracts to the

carriers has averaged about $536 million from fiscal years 1989 through

1996.

The carriers pledge aircraft at one or more of three stages. Stage I—

committed expansion—was activated for the first time on August 17, 1990,

during Operations Desert Shield/Storm. Stage II—defense airlift

emergency—was subsequently activated on January 17, 1991.

Stage III—national emergency—has never been activated.

A major benefit of the CRAF program is that it provides up to half of the

nation’s strategic airlift capability without the government having to

purchase additional aircraft, pay personnel costs, or fly and maintain the

aircraft during peacetime. According to a recent RAND study, replacing

the CRAF capability with military aircraft would have cost DOD about

$1 billion to $3 billion annually over the past 30 years.2

CRAF Carrier

Participation

AMC currently has a major shortage of aircraft committed to aeromedical

evacuation and a minor shortage of wide-body equivalents for cargo airlift.

However, the aeromedical evacuation requirement is being reassessed.

Carrier participation in passenger airlift exceeds current requirements.

2

Finding the Right Mix of Military and Civil Airlift, Issues and Implications, RAND (1994).

Page 2 GAO/NSIAD-96-125 Military Airlift
B-271418 

Aeromedical Evacuation

Shortage

As of January 31, 1996, commercial carriers had committed only 19 B-767s

for aeromedical evacuation, and only 4 of the 19 aircraft were ready for

activation. Because of this shortage, AMC could have difficulty evacuating

medical casualties. DOD currently requires 44 B-767 aircraft for

aeromedical evacuation. However, according to AMC officials, an ongoing

joint U.S. Transportation Command-AMC study suggests that this

requirement could be lowered significantly.

Additionally, a problem exists with the modified cargo door on 15 of the

committed B-767s. The kits used to convert the passenger aircraft to an

evacuation aircraft need modification. As a result of changes made by

aircraft manufacturers to enlarge cargo doors on these aircraft, parts of

the aeromedical evacuation kits sit unsupported in front of the cargo door,

making the system unusable. AMC is evaluating contractor proposals to

resolve the problem and hopes to have it corrected later this year.

To help alleviate the aircraft shortage, AMC is considering using the DC-10

aircraft as well as the newer B-767 aircraft, which carriers are more

reluctant to commit to the program. But first the aeromedical evacuation

kits will have to be modified. AMC officials expect a feasibility study on

using the DC-10s to be completed in early spring 1996. According to AMC

officials, a reduced requirement could negate the need for the DC-10

aircraft. In addition, they said AMC is looking at using more military aircraft

to help fill the requirement.

Cargo Aircraft Shortage The CRAF program is just below its requirement for aircraft to fly

long-range international cargo.3

 Commercial carriers have committed 114

of the 120 required wide-body equivalent aircraft to the CRAF program.

However, the current commitment is above the 17.5-million ton miles/day

of capability (or 101 wide-body equivalent aircraft) AMC depends on getting

from the CRAF program. Although DOD’s cargo deployment capability is

currently sufficient, if the shortage worsens, this capability could be

threatened.

Passenger Aircraft Exceed

Requirements

Commercial carrier participation in the CRAF long-range international

passenger component is well above the recently revised requirement. The

current CRAF commitment for passenger aircraft is 161 wide-body

equivalents. In 1995, the requirement was reduced from 210 to 

3

These aircraft support AMC’s global operations, such as Operations Desert Shield/Storm, and are

required to be capable of extended overwater operations.

Page 3 GAO/NSIAD-96-125 Military Airlift
B-271418 

136 wide-body equivalents based on a reassessment of wartime

requirements.

Future Carrier

Participation

Although commercial carriers responded promptly to the activation and

played a key role in Operations Desert Shield/Storm, they raised a number

of concerns about the CRAF program. According to all the carriers we

interviewed, they were considering reducing future aircraft commitments

unless AMC changed the CRAF program. AMC’s ability to maintain current and

future levels of CRAF participation depends primarily on whether it can

maintain adequate incentives for the carriers and resolve differences

concerning war risk insurance coverage.

Incentives to Increase

Carrier Participation

To maintain carrier participation, DOD and the General Services

Administration (GSA) are now requiring that commercial carriers wishing

to participate in passenger business through GSA be members of the CRAF

program. Once in CRAF, carriers are required to commit 30 percent of their

passenger fleet or 15 percent of their cargo fleet to the program. AMC is

also considering additional incentives and/or requirements, such as

• allowing carriers to bid for contracts to transport small packages if they

commit more than the minimum number of aircraft required for the CRAF

program;

• allowing carriers to use military bases for commercial operations if they

meet or increase the minimum number of aircraft committed to the

program; and

• working with other federal agencies, such as the Federal Emergency

Management Agency or the Departments of Transportation and State, to

require that carriers wishing to do business with those agencies be

enrolled in the CRAF program.

War Risk Insurance Normal commercial insurance policies generally exclude coverage for air

carriers operating in war zones or during CRAF activation periods. Thus,

commercial carriers flying during an activation must generally rely on

supplemental insurance programs provided by the government for carrier

hull and liability claims. The Aviation War Risk Insurance Program,

administered by the Federal Aviation Administration under 

49 U.S.C. 44302-03, provides this insurance. The program generally covers

losses due to war, capture, seizure, nuclear detonation, hijacking, strikes,

and vandalism.

Page 4 GAO/NSIAD-96-125 Military Airlift
B-271418 

During Operations Desert Shield/Storm, carriers had problems with the

types of coverage provided under the Aviation War Risk Insurance

Program. AMC, in conjunction with the Federal Aviation Administration,

has substantially modified the insurance program to address many of these

problems.

Although the government would eventually reimburse carriers for aircraft

losses during a CRAF activation, carriers are still concerned that insufficient

funds are available for the timely settlement of insurance claims. The

Aviation War Risk Insurance Program currently has about $60 million

available to it. According to U.S. Transportation Command officials, this

fund is less than half the amount needed to cover the loss of a commercial

aircraft valued at over $150 million and substantially less than the

estimated $1 billion in associated liabilities. According to DOD officials, to

resolve this problem, DOD has proposed legislation allowing the Secretary

of Defense to tap unobligated funds from any source to promptly pay

carrier liability claims.

C-17 DAB Study The C-17 DAB directed the Air Force to study (1) the use of long-term

contracts to stabilize CRAF commitment and (2) ways to encourage carriers

to purchase more militarily capable aircraft, such as the enhanced version

of the B-747-400 freighter aircraft. (The enhanced B-747-400 is the

commercial alternative to the C-17.)

The DAB-directed study results are due on June 1, 1996. According to the

study plan, AMC will evaluate alternative contracting strategies and the

potential for long-term contracts to increase CRAF commitments. However,

according to AMC officials, several factors make multiyear contracts

difficult to use for the CRAF program. First, some carriers are unwilling to

assume the increased activation risk that is inherent in longer-term

contracts. Second, AMC’s customers find it difficult to accurately predict

the amount of commercial business they will receive during the next fiscal

year with any accuracy. Third, CRAF is now tied to other programs awarded

on an annual basis, such as the transporting of passengers through GSA.

The study will also assess the incentives needed for carriers to acquire and

commit B-747-400 freighter aircraft to the CRAF program. However, a

number of carrier representatives that we interviewed said it would be

difficult, if not impossible, to provide enough incentives to encourage

them to purchase B-747-400s. The capabilities of these aircraft exceed the

carriers’ normal commercial requirements, and government business is not

Page 5 GAO/NSIAD-96-125 Military Airlift
B-271418 

large enough for them to buy aircraft that do not fit well with their

commercial operations. According to a representative of one major air

carrier, for example, AMC contract revenue provided less than 1 percent of

his company’s fiscal year 1995 revenue.

Scope and

Methodology

We performed our audit work primarily at the U.S. Transportation

Command and AMC at Scott Air Force Base, Illinois. We also contacted

representatives of seven CRAF air carriers, representing all major CRAF

segments and 42 percent of total aircraft committed to the CRAF program,

to solicit their views on the program.

We obtained written comments of a draft of this report from the

Transportation Command and AMC and discussed the information

presented in this report with the responsible program official from DOD’s

Office of the Secretary of Defense. These officials generally concurred

with our observations, and their comments have been incorporated in the

report where appropriate. We conducted our review between October

1995 and February 1996 in accordance with generally accepted

government auditing standards.

We are sending copies of this report to the Secretaries of Defense and the

Air Force and other interested congressional committees. Copies will be

made available to others upon request.

Please contact me at (202) 512-3961 if you or your staff have any questions

concerning this report. Major contributors to this report were Elliott C.

Smith, Gregory J. Symons, Claudia J. Saul-Dickey, and Karen Rieger.

Mark E. Gebicke

Director, Military Operations

 and Capabilities Issues

(703118) Page 6 GAO/NSIAD-96-125 Military Airlift
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