DOD depends on the charter passenger industry to move more than 90  percent of its peacetime requirements, as well as all contingency surges. While the charter passenger capability has, historically, satisfied DOD’s  requirements, there has been a 60 percent decline in this capability since  2003 due mainly to a declining demand for charter airlines in the  commercial sector. Figure I shows this decline in CRAF participants’  charter passenger aircraft from a high of 66 aircraft in 2004 to 29 in 2008. Because there are no U.S. commercial cargo  aircraft capable of moving outsized cargo such as MRAP vehicles into Iraq  and Afghanistan, DOD is using foreign-owned carriers to support such  movements to supplement its military airlift capability. We found and DOD confirmed that in the 2005 Mobility  Capabilities Study, DOD planned for U.S. commercial cargo carriers  participating in the CRAF program to move only bulk cargo, and did not  identify a need for these carriers to move outsized cargo; however,  without some supplemental capability—such as the use of foreign-owned  carriers—the need for DOD to move outsized cargo into areas of crisis,  and have that cargo arrive in a timely manner, could limit DOD’s ability to  meet future airlift requirements. DOD Is Not Fully Aware of How Changes in Its Charter Passenger Airlift Capabilities and DOD’s Outsized Cargo Needs Affected CRAF Because It Has Not Conducted Risk Assessments

DOD is not fully aware of the extent to which these changes may have  affected the CRAF program’s ability to meet DOD’s future transportation  requirements because DOD has not conducted risk assessments as  described in the 2008 National Defense Strategy. The study also did not quantify the  risk associated with the passenger charter capability decline that has  already occurred. DOD Has Not Issued Policies That Would Strengthen Management of the CRAF Program

DOD’s management of the CRAF program has not provided CRAF air  carrier participants with a clear understanding of some critical areas of the  program, which could strengthen the program’s effectiveness and the  ability to support its objectives. DOD Has Not Developed Policies Related to Four CRAF Program Objectives

			DOD Has Not Developed Policy Concerning 60/40 Rule Enforcement

DOD has not developed policy regarding the enforcement of its business  rules, such as the 60/40 rule, that would help strengthen the CRAF  mobilization base. Carriers that earn more than 40 percent of their revenue from DOD may be  penalized by reductions in their entitlement to DOD business. Without policy that  clearly states the guidelines and objectives of the 60/40 rule, CRAF carriers  may not be able to properly size their fleets to meet DOD demands, and  have the capacity for DOD to draw on to meet demands, which may  decrease the mobilization base of the CRAF program. DOD Has Not Developed Policy Concerning CRAF Fleet Modernization

DOD has not developed policies that promote CRAF fleet modernization,  although DOD officials have recognized the need for a more modern CRAF  fleet. Until risk  assessments are conducted and actions are taken to mitigate any risks that  are identified, DOD and industry decision makers will not be fully  informed about risks in the CRAF charter passenger segment and in  outsized cargo capability that could prevent CRAF from meeting DOD’s  airlift requirements. Until DOD develops policies that provide  commercial air carriers with a clear understanding of critical aspects of  the CRAF program, such as enforcement of business rules (such as the  60/40 rule), specific modernization guidelines, distribution of peacetime  business, and a framework for communication, thus strengthening its  management of the program, DOD cannot provide reasonable assurance  that the CRAF program will meet its primary objective of providing critical  airlift to support DOD operations. Second, to strengthen the effectiveness of the critical partnership between  DOD and the U.S. commercial air carrier industry and the management of  the CRAF program to achieve its objectives, we recommend that the  Secretary of Defense direct the Under Secretary of Defense for  Acquisition, Technology and Logistics (Transportation Policy) to develop  policy that  establishes enforcement guidelines for the basic CRAF business rules,  to include intent, objectives, and measures of effectiveness  mechanisms;  establishes incentives, objectives and measures of effectiveness  required to ensure modernization of the CRAF fleets;  establishes and describes oversight mechanisms by which DOD will  monitor how peacetime airlift business is distributed to ensure that its  CRAF incentive program is working as intended; and  establishes and describes the mechanisms by which DOD includes  CRAF participants to provide comments on pending program decisions  and in information sharing, and that includes objectives and measures  of effectiveness of these activities. Civil Reserve Air Fleet (CRAF) Study Report, Council for Logistics  Research, July 13, 2008. Related GAO Products

MRAP Rapid Acquisition: Rapid Acquisition of Mine Resistant Ambush  Protected Vehicles.
Why GAO Did This Study

To move passengers and cargo, the Department of Defense (DOD) must supplement its military aircraft with cargo and passenger aircraft from commercial carriers participating in the Civil Reserve Air Fleet (CRAF) program. Carriers participating in CRAF commit their aircraft to DOD to support a range of military operations. In the Fiscal Year 2008 National Defense Authorization Act, Congress required DOD to sponsor an assessment of CRAF and required GAO to review that assessment. GAO briefed congressional staff on its observations. As discussed with the staff, GAO further analyzed some of the issues identified in its review. This report assesses (1) the extent to which DOD has assessed potential risks to the CRAF program, and (2) the extent to which DOD's management of CRAF supports program objectives. For this engagement, GAO reviewed DOD-sponsored CRAF study reports and interviewed study leadership. GAO also interviewed over 20 of 35 CRAF participating carriers that responded to a request for a meeting, DOD officials, and industry officials.

What GAO Found

DOD needs to establish the level of risk associated with declining charter passenger capabilities and DOD's increased need to move very large cargo. Although DOD depends on CRAF charter passenger aircraft to move more than 90 percent of its peacetime needs, there has been nearly a 55 percent decline in this CRAF capacity since 2003. In addition, since 2003, DOD's large cargo movement needs have increased with the acquisition of over 15,000 Mine Resistant Ambush Protected vehicles. Since there are no U.S. commercial cargo aircraft capable of moving cargo this size into Iraq and Afghanistan, DOD is using foreign-owned carriers to assist its military aircraft in such movements. However, there are scenarios where foreign-owned carriers may be unwilling or not allowed to fly. As a result, the lack of a commercial U.S. outsized cargo capability might restrict DOD's ability to meet its large cargo airlift needs in a timely manner. DOD has not quantified the risks these challenges pose to the CRAF program's ability to meet DOD's future transportation requirements because DOD has not completed risk assessments as described in the 2008 National Defense Strategy. Until risk assessments are conducted, DOD will not be sufficiently informed about potential risks in the CRAF charter passenger segment and in very large cargo airlift capability that could prevent DOD from managing its future airlift needs and the CRAF program effectively. DOD's management of CRAF has not provided CRAF participants with a clear understanding, which could strengthen the program's ability to support its objectives, in some critical areas of the program. Although internal controls such as policies can help meet program objectives, CRAF business partners do not have a clear understanding of DOD's expectations concerning four CRAF objectives--an enhanced mobilization base, modernization, increased air carrier participation, and communication--because DOD has not developed policies in these four areas. First, DOD has not developed policies regarding the enforcement of its business rules, such as the 60/40 rule that states that participants should fly only 40 percent of their total business for DOD. DOD does not consistently enforce this rule and this may decrease the mobilization base since it is difficult for carriers to size their fleets to meet DOD demands. Second, DOD has not developed policies or economic incentives that promote CRAF modernization and this may hinder CRAF carriers from modernizing their aircraft. Third, DOD has not developed policies regarding oversight of the distribution of its peacetime airlift business, the primary incentive to carriers for participating in CRAF. DOD has no involvement in this distribution, and the perceptions of some carriers that this process is unfair could ultimately reduce carrier participation in CRAF. Fourth, DOD has not developed policy concerning communication with the carriers on CRAF studies or proposed changes to the CRAF program. DOD has not always communicated with carriers prior to implementing changes or completing studies. Until DOD develops policies that provide carriers with a clear understanding of CRAF, DOD cannot provide reasonable assurance that CRAF will meet its primary objective of providing critical airlift.