For discussion FCR(95-96)102
on 5 January 1996

ITEM FOR FINANCE COMMITTEE

HEAD 166 - GOVERNMENT FLYING SERVICE
Subhead 603 Plant, vehicles and equipment

Members are invited to approve a commitment of $140 million for the purchase of two purpose-built replacement search and rescue (S&R) fixed-wing aircraft fitted with modern S&R and surveillance equipment for the Government Flying Service.

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PROBLEM
PROPOSAL
JUSTIFICATION

The FLIR system
Radar and avionics system
Maintenance costs of the FLIR, radar and avionics system
The two Super King Airs

FINANCIAL IMPLICATIONS
BACKGROUND INFORMATION

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PROBLEM

The two existing fixed-wing search and rescue (S&R) aircraft, B200C Super King Airs, are approaching the end of their serviceable life. Likewise, the Forward Looking Infra-Red (FLIR), radar and avionics systems on these two aircraft are also at the end of their serviceable life and their conditions have deteriorated. The two aircraft and the systems therefore need to be replaced.

PROPOSAL

2. The Controller, Government Flying Service (C, GFS) proposes to purchase two purpose-built S&R fixed-wing aircraft fitted with modern S&R and surveillance equipment to replace the two existing Super King Airs.

JUSTIFICATION

3. The Aeroplane Section of the Government Flying Service (GFS) operates, among others, two Super King Airs to provide S&R service and flights in support of Police operations and aerial survey. The two existing aircraft had flown a total of 1 471 hours in 1994-95. Owing to the maritime operational environment and constant exposure to the corrosive effects of gases from the Kai Tak Nullah, the FLIR, radar and avionics systems of the two aircraft are now reaching the end of their serviceable life and will need to be replaced by 1997-98.

The FLIR system

4. Each of the two existing aircraft is equipped with an FLIR system, which consists of an infra-red sensor mounting installed below the aircraft. The scene captured by the sensor, remotely controlled from the cabin, is displayed to the aircrew on a video monitor. The system transmits images even in total darkness, thereby enhancing night S&R capability. The system significantly enhances the ability of the GFS to deal with S&R, sea-borne illegal immigration and smuggling problems. However, the performance of the two existing FLIR systems (with prototypes manufactured some 20 years ago) has become unreliable because of aging. Failure rate is high and spare parts have to be fabricated on request, resulting in high maintenance cost and long delivery time for spares (which may range from six to 12 months). In 1994-95, the system on each of the Super King Airs was down 30% of the time. This down-time has increased to some 40% in the current financial year. This has adversely affected the S&R capability of the GFS.

Radar and avionics system

5. Similar to the FLIR systems, the radar and avionics systems on the two Super King Airs are also beyond economical repair and maintenance. The failure rate of some avionics items is 20 to 30 times higher than the standard rate. In 1994-95 the avionics systems on both aircraft were down 25% of the time. As regards the radar systems, they were down 40% of the time in 1994-95, which is five times the standard rate.

Maintenance costs of the FLIR, radar and avionics system

6. Annual maintenance cost for the FLIR, radar and avionics systems has increased from $850,000 in 1993-94 to $1.2 million in 1994-95. By October 1995, we have already incurred $940,000 for the maintenance of the systems. Replacing these systems with new and advanced equipment will better ensure flight safety and enhance both operational and service reliability and cost efficiency.

The two Super King Airs

7. Having been exposed to the corrosive environment at Kai Tak for the past eight years, the two Super King Airs are approaching the end of their serviceable life. The annual costs of maintenance of the two aircraft alone (i.e. excluding the FLIR, radar and avionics systems) total about $2.4 million. Though the aircraft are still in a serviceable situation until 1999-2000, replacing the aircraft at the same time as the FLIR, the avionics and radar systems are replaced will have the following benefits -

1. ensuring uninterrupted provision of S&R capability - Replacing the systems on the existing Super King Airs would mean that each of the aircraft would have to be grounded for nine to 12 months for modification work, installation of new systems, air tests and performance evaluation. This implies that only one fixed-wing aircraft will be available for a period of 24 months. During that period, there will be virtually no serviceable fixed-wing aircraft whenever servicing, maintenance or repair is carried out. We cannot afford a complete loss of S&R capability for any period of time; and
2. ensuring compatibility of systems with aircraft and optimising cost-efficiency - These can be achieved by obviating the need to redesign the existing aircraft. The cost of modifying the existing aircraft, procuring and installing the various systems is estimated at $74 million.

8. C, GFS proposes that the two replacement aircraft should be specifically designed and equipped for S&R tasks. Police’s anti-illegal immigration and anti-smuggling operations will benefit from the improved night surveillance, real-time ground viewing and reduction of aircraft noise (especially useful for covert operations) that the new aircraft and the new FLIR, radar and avionics systems can offer.

9. Subject to Members’ approval of this proposal, we will sell the two existing Super King Airs and the associated systems when the two replacement aircraft are available. It is not possible at this stage to estimate the resale price which will depend very much on the condition of the aircraft at the time of the sale and whether there would be competitive demand for that type of aircraft.

10. The tentative schedule for the purchase is as follows -

FINANCIAL IMPLICATIONS

11. C, GFS estimates that the total non-recurrent expenditure of the proposal is $140 million, made up as follows -

12. As regards paragraph 11(a), this covers the basic design, manufacture and delivery costs of two purpose-built S&R fixed-wing aircraft complete with radar systems and avionics equipment.

13. As regards paragraph 11(b), this covers the cost of two FLIR systems with datalink for transmission of real-time information to command and control centres on ground.

14. As regards paragraph 11(c), this covers the cost of tooling and spare parts for two years.

15. As regards paragraph 11(d), this covers tailor-made training for pilots and maintenance staff provided by the manufacturer.

16. In terms of cashflow, we shall pay 20% of the total cost, i.e. $27,956,000 in 1996-97 as deposits. We shall pay the remaining 80%, i.e. $111,823,000 progressively and effect the final payment upon the full commissioning of the aircraft in 1997-98 (which will occur only after thorough testing of the aircraft and the various systems).

17. We will not need any additional staff because we will offset any requirement by those staff who at present operate and maintain the two Super King Airs which we will sell. C, GFS estimates that the annually recurrent expenditure for repairs and maintenance of the replacement aircraft and systems will be $1.5 million for the first three years. There will be total initial savings of $7.5 million in maintenance cost over the first three years as it is more economical to maintain new aircraft and equipment than those reaching the end of their serviceable life.

18. If Members approve the proposal, we will include sufficient provision in the 1996-97 draft Estimates and future Estimates for the purpose.

BACKGROUND INFORMATION

19. At the Finance Committee meeting held on 4 December 1985, Members approved, among others, the purchase of a replacement fixed-wing aircraft equipped with the FLIR system. A B200C Super King Air was delivered in 1987. At its meeting held on 6 May 1987, the Finance Committee approved the purchase of a second Super King Air which was delivered in 1988 to replace another fixed-wing aircraft.

Security Branch
December 1995

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