Photo credit: Boeing

In news just announced via Reuters, Italy is to get its first two tankers this year.  The remaining two will be modified and be delivered later – no date has been announced.

This comes some five years late.  The announcement of this news comes at an important time for Boeing.  The company is going to have a tough battle with EADS for the USAF tanker contest.  EADS has not had an easy run with its own tanker – its to the RAAF is also running late.

The fight for the USAF tanker was tough to start with and has only gotten rougher – with more to come.  For Boeing’s team is great that they are getting ready to deliver the Italian tankers.  It means problems have been solved and provides more confidence in the next generation they want to build.

But there is an aspect to story that has not gotten much attention.  Boeing’s tanker team to date has likely been relatively small.  After all, four tankers over the last few years surely was a low volume and low importance program.  The 787 and 747 programs are the places the the best talent was going to go.  Besides, Boeing has been going through regular cost cutting. So the slow progress on its current tankers is understandable.

However, on the horizon, ever so quietly is another competitor which has gotten little notice. The Israeli program is rather like the Airbus business model – theirs is a business whose primary aim includes “soft” things like stable jobs and building skills.  Consequently they started off developing a small 767 modification program to turn airliners to freighters. Israel is focused on small projects because that is all they need to stay busy.  Obviously they are happy to sell these freighters, but there is another customer IAI always watches out for, the IAF.

Astute analysts saw this 767 freighter program as the same move IAI had undertaken previously with the 707.  Some El Al 707s  retired from the airline and ended up being converted to tankers for the IAF. El Al has a few 767-200s that are likely to be replaced by 787s.  And where do you think those 767s might end up?

Today you can source decent second hand 767-200s for ~$10m.  Then gut the plane, then fix and update what needs to done for a low cycle operator. Israel can offer its basic 767 tanker at the fraction of what Boeing offers.

Colombia is a great example – they are an IAI customer for Kfir fighters.  So a deal for a tanker was a “natural”.  Estimates are the Colombians got their tanker for ~$70m.  is essentially a 767 freighter with tanker capabilities.  None of the fancy electronic kit the Boeing and EADS tankers come with.

This is no small market – how many air forces need sophisticated multi-role tankers?  There is a market for a simple and cost effective solution to replace 707 tankers.  The volume programs come with horrible politics.  Sure the KC-X is a high profile $40bn program – but look at the aggravation.

How much business can the Israeli’s win? The chart below from G2 Solution’s provides a guide.  They have a tanker report available for those who need the full story.

That is plenty enough for them to build maintain their local skill set and keep smart people employed.  So whether Boeing or EADS wins the KC-X has little impact on many of the smaller customers.  Apparently there are a half dozen target customers for the IAI tanker.  is simple, cost effective and gets the job done – and it includes a boom.  Maybe not the latest and greatest, but it can get the job done.

Even as EADS and Boeing tout their tankers as being able to do everything and more for the USAF, there is a nice market out there for a simpler solution that comes at a fraction of the cost and gets the core task done.

Please follow and like us:
%d bloggers like this: