Budget traps: navy on a mission to cut the cost of aviation.

Expectations of a smaller force and leaner budgets set the tone for an ongoing, sweeping review of Navy aviation programs.

An estimated $40.4 billion a year operation, the Navy's air force for years has been under pressure to cut costs. In the latest round of scrutiny, the Navy might determine how much of its aviation enterprise can be downsized to help pay for the service's number-one procurement priority--its shipbuilding plan, officials tell National Defense.

The chief of naval operations, Adm. Michael G. Mullen, last year directed a detailed review of aviation assets, and its outcome will shape spending plans beginning in fiscal year 2008. Among the issues that will be probed is the extent to which aviation expenditures will need to drop in order to help fund the expansion of the fleet from 289 to 313 ships during the next three decades.

One of the senior Navy officers in charge of the aviation enterprise, Vice Adm. Wally Massenburg, says that the CNO will seek to "properly size" the force in the context of a 313-ship Navy.

How many of its 3,823 aircraft and 182,000 people--if any--the Navy air force may lose has yet to be determined. But it is fairly certain that lean times are ahead, says Massenburg, who runs the Naval Air Systems Command.

"My feeling is that, unless we learn how to do things differently in the Navy, if we are going to afford the Navy for the future at the same time we have to fight today, we need a different business model," Massenburg says in a recent interview. The model assumes that each of the Navy's warfare communities--aviation, surface and undersea--is expected to sacrifice assets "for the greater good of the Navy."

The aviation force is beginning to come to grips with this reality, he adds. "If it's the greater good of the Navy, it's up to us to become as efficient and effective as possible ... In the past, I'm not so sure we understood the connection."

A concerted campaign to lower the cost of flying airplanes in the Navy began in the late 1990s and gained momentum under the former chief of naval operations, Adm. Vernon Clark.

"Adm. Clark was very unhappy with us in naval aviation," Massenburg says. "He looked at us as not understanding our business. He saw us as ever increasingly expensive to operate, with no end in sight."

Notably, Clark spearheaded the merging of the Navy and Marine Corps' air forces, which allowed the services to eliminate hundreds of aircraft from their future procurement plans.

Of the $40.4 billion the Navy spends currently on aviation, $26 billion is for procurement of new aircraft. The rest goes to operations and maintenance of the fleet. To the Navy's credit, says Massenburg, the service has been able to slow down the rapid growth in expenses such as flying operations and depot repairs. Flying costs include not only fuel and spare parts, but also the labor associated with maintenance and repairs. These costs were rising annually by 14 to 17 percent in the late 1990s. Last fiscal year, Massenburg says, flying-hour program expenses rose by only 4.5 percent.

The money saved is being "returned" to the Navy, he says. As proof, he offers that in 2005, Naval Air Systems Command eliminated expenses worth about $50 million, which the Navy was able to reallocate to other areas.

To get a handle on costs, the Navy created a virtual organization about three years ago--known as the "naval aviation enterprise"--to instill corporate business practices into the operation.

As is the case in the private sector, the naval aviation enterprise is all about "performance based" management, Massenburg says. This takes more than just demanding that people spend less money. It requires everyone--from pilots and maintenance crews, to depot workers and spare-parts buyers--to behave differently.

Navy pilots traditionally have been concerned about accumulating flying hours and carrier-arrested landings--or "traps" in carrier aviation lingo. Clark wanted to do away with that mentality, and complained that aviators were running up their trap counts to boost their egos, says Massenburg. In early 2001, he recalls, "CNO Clark told us, 'You are burning up my air force, and I won't have it when I need it to fight.'"

Clark largely was successful in bringing about change. Now, pilot performance evaluations are less about flying hours and traps, and more about "productivity and achieving readiness at lower costs," says Massenburg.

An efficiency-minded culture already is pervading the naval air force, says Cmdr. Patrick Cleary, commander of the strike fighter squadron VFA-122, at Naval Air Station Lemoore, Calif. The squadron operates the newest Navy fighter, the F/A-18 E/F Super Hornet.

The squadron, for example, found ways to trim time and labor from tasks such as aircraft inspections and crew training, without compromising the quality, Cleary says in an interview. Inspections that used to take four days now take two. And maintainers who required six to eight months of schooling now get trained in three months. Rather than stock large reserves of spare parts, the squadron only orders what it needs for its training program.

Flying hours and traps are carefully measured as a function of "combat readiness," he explains. "We've identified the proper amount of training that pilots need to do. We know how many flight hours and traps they need." The same thinking extends to aircraft maintenance. "Instead of applying 100 percent of money and effort to every single airplane, I know I may not need to when the pilots only need 80 percent."

The emphasis on readiness at lower costs has turned aviators into better managers, Cleary says. Given that it costs $5,500 per hour to fly a Super Hornet, every bit of savings adds up.

It is debatable, however, whether these efforts are about good management or just pure budget drills, says Owen R. Cote Jr., associate director of the security studies program at the Massachusetts Institute of Technology.

If a service has to slash expenses relatively quickly, operations and maintenance are the obvious targets. Unlike procurement cutbacks, the savings from cutting flying hours are reaped immediately, says Cote in an interview. "That's always where people go to get savings. You get it right away." Conversely, "If you cut a procurement program, the savings are spread over several years ... Historically, people look for savings in operations and maintenance because they are the easiest to do, relatively invisible from a political point of view."

The CNO's decision to launch a review of aviation programs makes apparent his belief that "aviation is a place where there's money to be saved that hasn't been mined as much as other areas," Cote says. "I think he is going to get a lot of pushback from Navy aviation on that."

After the consolidation of Navy and Marine Corps aviation three years ago, "I'm not sure how much more there is to save," he adds. Carrier air-wings already have been downsized substantially during the past decade--from six to four fighter squadrons per wing.

Internal Navy politics play a major role in these decisions, Cote asserts. In his opinion, Clark, the former naval chief, had in mind only the best interests of his own warfare community, the surface force. He was "widely perceived as having been as partisan a CNO as any in recent memory."

It would be a mistake to continue to pare down aviation assets, especially when the United States may have to increasingly rely on aircraft carriers to substitute for land bases in foreign countries, he says. "Carrier aviation has a lot of relevance."