The USAF has not dramatically changed its RFP. Language now says that a higher priced offering will be considered based on capabilities. This was not quite what the Northrop Grumman/EADS team wanted, but it is not too far off. Many speculate that the KC-30 team will withdraw. We don't think so. They have a lot riding on this deal and giving up now will not be a good decision.

As pointed out by Scott Hamilton, "Long forgotten is the fact that Airbus parent EADS in 2001-2002 offered the KC-330 for a price that was less than Boeing offered the KC-767." Scott notes that Airbus offered its A330 (on which the KC-30 is based) at 44% off retail to Thai Airways. Scott then points out that the A330F launch customers might be paying $70m per unit – that's 56% off retail.

Boeing's 767 retails at $120m. Yesterday's UPS order gives Boeing a boost in terms of how low it will go in its bid for a 767-based tanker. Boeing could cut its price 50% on its plane, and offer it for $60m. Then the Pentagon would have to consider if the more capable KC-30 is worth $10m more than the KC-767. The question will be how much are the KC-30's additional capabilities worth? It is a more capable airplane. The Pentagon brass insist the primary mission is refueling. Other capabilities like cargo capacity are not as crucial. If refueling is given more priority then the KC-767 has the advantage and if the "other" capabilities are given more priority the KC-30 has the advantage.

But this decision will not be the Pentagon's to make. Too much is riding on this deal for politicians. In the current Congress, there seems to be more seniority on the Washington State side than on the Alabama side. The former being the "home" of the KC-767 and the latter the planned "home" for the KC-30. Even if the KC-30 was equally priced to the KC-767 and its additional capabilities were "free", the critical mass (or is that mess?) favors the xenophobes. The military's needs are secondary and tax-payer value for money comes way after that. At least Northrop Grumman/EADS is keeping Boeing honest this time round.

The USAF has not dramatically changed its RFP. Language now says that a higher priced offering will be considered based on capabilities. This was not quite what the Northrop Grumman/EADS team wanted, but it is not too far off. Many speculate that the KC-30 team will withdraw. We don't think so. They have a lot riding on this deal and giving up now will not be a good decision.

As pointed out by Scott Hamilton, "Long forgotten is the fact that Airbus parent EADS in 2001-2002 offered the KC-330 for a price that was less than Boeing offered the KC-767." Scott notes that Airbus offered its A330 (on which the KC-30 is based) at 44% off retail to Thai Airways. Scott then points out that the A330F launch customers might be paying $70m per unit – that's 56% off retail.

Boeing's 767 retails at $120m. Yesterday's UPS order gives Boeing a boost in terms of how low it will go in its bid for a 767-based tanker. Boeing could cut its price 50% on its plane, and offer it for $60m. Then the Pentagon would have to consider if the more capable KC-30 is worth $10m more than the KC-767. The question will be how much are the KC-30's additional capabilities worth? It is a more capable airplane. The Pentagon brass insist the primary mission is refueling. Other capabilities like cargo capacity are not as crucial. If refueling is given more priority then the KC-767 has the advantage and if the "other" capabilities are given more priority the KC-30 has the advantage.

But this decision will not be the Pentagon's to make. Too much is riding on this deal for politicians. In the current Congress, there seems to be more seniority on the Washington State side than on the Alabama side. The former being the "home" of the KC-767 and the latter the planned "home" for the KC-30. Even if the KC-30 was equally priced to the KC-767 and its additional capabilities were "free", the critical mass (or is that mess?) favors the xenophobes. The military's needs are secondary and tax-payer value for money comes way after that. At least Northrop Grumman/EADS is keeping Boeing honest this time round.