It was a $23 billion lease. The lease was competititvely priced, but it was naturally rather expensive compared to buying the planes. The whole point of the lease was to get the planes faster and in service faster with lower upfront costs. Of course one of the things embedded in the cost of a lease is interest. One thing government cand do cheaper than anyone else is borrow money. People will accept T-Bills with lower interest rates than corporate bonds, because they are perceived as being almost zero risk. A lease imbeds the cost of borrowing money from the private sector into the lease payments.
Another part of the lease cost was that it included the cost of Boeing developing the tanker variant rather than amortizing across the whole production run. A big part of the problem is that tankers tend to be long lasting capital goods that have lower utilization rates than equivalent vintage commercial aircraft. Paying that much for 100 planes on a ten year lease doesn't make much financial sense for the federal government compared to an airline that can use similar equipment to generate income. After the lease, the federal government still doesn't own the planes. For an airline, that's not a problem, because they could lease newer planes with better capabilites, and they can also fully deduct the cost of the lease from their taxable income each year rather than having to amortize a fleet over a much longer period than they actually want to have a fleet in their service. The federal government doens't pay income taxes, so the deductbility of lease payments is of no benefit to them.
Yes there was corruption involving a Boeing employee and an Air Force officer who was offered a job at Boeing while she was working on the procurement contract for the lease of 767 tankers. Boeing also gave her daugter a job. What does get forgotten in all this is that if the offered lease or a renegotiated lease or purchase agreement had accepted, the USAF would already have about 100 new tankers that are much more capable than the KC-135 tankers they would have replaced, and they would be in use today in Iraq and Afghanistan not ten years from now.
Maybe. But ihe Iralians and Japanese, who ordered their Boeings even earlier, still don't have them operational.
Well said.