Boeing vs IAI

Boeing seems to be moving towards another tanker scuffle. This time they are apparently trying to prevent IAI from building any critical mass in the tanker business. There are three primary places you can buy an aerial refueling tanker: Airbus, Boeing, and IAI. Russia and China also are options but are not as a common as Boeing and Airbus. Boeing was not the inventor of the aerial tanker business. Airbus is a much more recent participant and has done exceptionally well and beaten Boeing several times with its A330 MRTT in competitions. The rise of the IAI option is a bother to Boeing. The reason is that IAI has proven itself capable of delivering a tanker that is about as capable as the Boeing product but for half the price. Since it is governments that buy these aircraft, that is a compelling offer. IAI has delivered a 767 tanker to Colombia. Brazil has also ordered some but absent any payments these aircraft are not being developed. Israel has tried to buy Boeing tankers before and been rebuffed. Israel has needed in-flight refueling for a long time to enable it to reach any threat as the country has no strategic depth - all its fighting has to take place over "enemy" territory. This is a useful link for some background on the IAF's tiny tanker squadron. The Israelis developed their own in-flight refueling solution for their 707-based system. Note the link dates to 2001 - yet the solution included electro-optics and three-dimensional goggles for the boom operator. Impressive for 2001. IAI offers information on their experience in the conversion and tanker business. The company has 35 years' experience with in-flight refueling. That is a much longer period than Airbus. The current IAI boom solution is FBW, offers 900 GPM (Boeing's version offers 1,200 GPM) and the IAI solution can be fitted to the 767, IL-78 and Airbus aircraft. This makes the IAI solution really interesting. IAI has been working hard on turning older 767s into modern freighters and are behind many of the aircraft now flying for Amazon's Prime. IAI knows the 767 very well. How can Boeing stymie IAI? Firstly by using its much greater critical mass to limit any 767s on the secondary market. Secondly, when IAI secures a 767, Boeing has to be paid a fee for any modifications. Boeing can withhold any approvals of these modifications. Boeing is playing rough because it does not want the IAI solution to acquire critical mass. This is making life difficult for IAI. Boeing also has the benefit of being able to tap into US government aid to Israel as a means to fund tanker purchases. But Israel also remembers that when it once asked for tankers, the US refused to help. That is why IAI went down the road with the 707 solution and developed what the IAF needed. IAI today has several hundred highly skilled engineers that can build what the IAF needs. And they can do this more cheaply than Boeing, and also ensure the IAF has a reliable supplier that will be there when the pressure is on. The Israeli government now faces a tough trade-off: it can buy locally and protect IAI. Or it can buy Boeing at better financing but potentially hurt the IAI talent pool. While Israel has a friend in President Trump, this is not something they can rely on. How the deal plays out will demonstrate the trade-off - If Boeing wins the deal, IAI is deemed less critical. On the other hand, IAI might be given compensation in other ways by the Israeli government. It would be shortsighted to hurt the IAI talent pool. Perhaps IAI gets other projects that keep the talent busy if Boeing wins. Perhaps IAI could acquire an A330 to develop a tanker out of that as an example? This avoids any Boeing problems but might irritate Airbus. Airbus has no political clout in Israel and therefore there is no real consequence beyond paying for licenses. Would Airbus play the same kind of hardball as Boeing?

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