Abstract
Abstract : The Military Airlift Command (MAC) routinely incurs substantial financial losses on its Frequency Channels (routes flown on a regular schedule). In FY89 alone, 90 percent of MAC's Frequency Channels incurred losses totaling about $90 million. We recommended that MAC, in conjunction with the DoD comptroller, take the following actions: Remove the Hidden Frequency Channel Subsidy. MAC's current policy of cross-subsidizing Frequency Channel service fosters inefficiency. Accordingly, MAC should lower Requirement Channel rates to the extent that the cover Frequency Channel losses, and the DoD Comptroller should reduce Requirement Channel user's funding by a corresponding amount. Calculate Frequency Channel Financial Losses. MAC should estimate the expected losses on all existing Frequency Channels on the basis of prior-year records, and the theoretical losses on all new Frequency Channels should be formulated from anticipated utilization rates and operating costs. MAC should then submit these estimates to the DoD Comptroller. Earmark Funding for Requesters. The DoD Comptroller should ensure that requesters receive funding to represent the financial losses on existing Frequency Channels. Because the requesters are the most knowledgeable about their Frequency Channels, this new funding should encourage increased efficiency without adversely affecting readiness.
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