An analysis of the two-tier cost structure for aviation jet fuels on the Naval Reserve's C-9 airlift services program

The purpose of this thesis was to examine the two-tier cost structure for military and commercial contract aviation jet fuels and its effect on the Naval Reserve's C-9 Airlift Services Program. In the past, a single-tier system was in place in which the services were charged the same price for fuel purchased at military bases or at commercial airports under contract. The problem was that in reality a higher price existed for commercial contract fuel. This difference was absorbed by the Department of Defense. The two-tier system formally established a separate price for commercial contract fuel, which is now charged to and paid for by the services. The analysis compared the differences in total jet fuel costs between the original and new cost structures. It also projected probable quantities of fuel purchases for a given total cost (budget) and price, based on different assumptions and scenarios under the two-tier system.