The Arizona Republic

July 17, 2011

Luke Air Force Base is scheduled to shrink in the next three years, potentially drying up millions of dollars in economic impact for Arizona as one of the state’s largest employers.

But base advocates are optimistic the Air Force will replace two F-16 training squadrons scheduled for relocation with a new training mission at Luke: the F-35 Lightning II, known as the Joint Strike Fighter.

In a good scenario, the mission would land at Luke, ensure the base’s future and make up for the expected financial loss.

In a less-optimistic scenario, delays could continue to hamper Lockheed Martin’s production of the F-35, Luke could face a gap of activity between missions, and the state could temporarily lose out on jobs and revenue. Worse case, the F-16s could leave and the F-35 training mission could be placed elsewhere.

The base already has lost nearly 50 F-16s and thousands of jobs in recent years as the Air Force retired aging jets or assigned them to other bases.

Those losses mean Luke’s workforce is smaller. Fewer flights take off from the base each day, and the base no longer generates $2.2 billion annually in economic impact for the state.

The latest drawdown is expected to begin in two years.

The Air Force plans to transfer 56 F-16 jet fighters and more than 1,000 personnel to Holloman Air Force Base in New Mexico, bringing Luke to its lowest level of F-16 aircraft and personnel since the training mission arrived at the Glendale base in 1994.

Luke official Rusty Mitchell said one F-16 Fighting Falcon squadron would leave for New Mexico in April 2013 and the second in April 2014. Luke officials have not yet announced which squadrons and personnel would go to Holloman, he said.

Brig. Gen. Jerry D. Harris Jr., Luke’s commander, said that Luke’s 56th Fighter Wing remains the largest fighter wing in the Air Force, flying as many as twice the number of daily F-16 sorties as a typical wing.

The roaring gray dogfighters have played a major role in Luke’s reputation for the past decade and a half. Hundreds of pilots and maintenance technicians graduate annually from Luke. Thousands of Air Force retirees have come to Arizona and live near the base.

Changing mission

Luke’s mission, however, is changing.

Just six years ago, when Luke was pegged as a $2.2 billion economic engine annually, Luke boasted 185 F-16 jet fighters, nine flying squadrons and more than 10,000 active-duty military, reservist, civilian and student personnel, based on an economic study of 2005 figures.

Then, part of an Air Force Reserve unit was relocated due to nationwide base realignments, and the aircraft of two other F-16 squadrons were retired and put into storage in Tucson, Mitchell said.

Today the base’s aircraft and personnel have shrunk to 138 jets, six flying squadrons and about 7,400 active-duty military, reservist, civilian and student personnel.

Those numbers will drop further- by 40 percent for aircraft and at least 15 percent for personnel – once the transition to Holloman is completed.

Base supporters say the F-16 transfer is a good indication that Luke will secure the F-35.

Luke is the Air Force’s preferred second training site for the next generation of stealth fighters, which will replace the military’s aging F-16 fleets. Three versions of the twin-tailed F-35, spotlighted in this summer’s action-adventure film “The Green Lantern,” are being built for the Air Force, Navy, Marine Corps and U.S. allies.

The Air Force’s initial F-35 training base will be at Eglin Air Force Base in Florida. It is expected to receive the first F-35 off the production line this month, eventually ramping up to 59.

For the second training base, the Air Force is considering Luke, along with bases in New Mexico, Idaho and Tucson.

The chosen base is expected to receive its first jet in August 2013, to grow to 72 F-35s in three squadrons, said Jennifer Cassidy, a spokeswoman for the secretary of the Air Force. If Luke secured the mission, base modifications to accommodate the F-35 could generate an economic impact of about $125 million.

Pentagon officials will release more detailed plans for the F-35 training site, including a draft environmental-impact statement, in September. The final site decision is expected by spring of next year.

Mitchell, Luke’s director of community initiatives, said the Air Force does not tie the F-16 relocation to the F-35 decision.

Instead, he said the transfer is part of the Air Force’s effort to deploy resources efficiently. Holloman is scheduled to lose F-22s to a base in Florida by 2013, Mitchell said, and the Air Force doesn’t want to waste Holloman’s White Sands Missile Range, a “national asset.”

“We’re stewards of the taxpayers’ dollars, and we’re going to maximize that out as best we can,” he said. Relocating the F-16s “ensures the viability of the long-term strategic training location (Holloman) and the White Sands Missile Range.”

Peoria Mayor Bob Barrett said construction under way at Holloman to accommodate Luke’s F-16 jets is a positive sign.

“They’re not going to go to all this trouble of extending Holloman’s runway unless we’re getting the F-35,” he said.

Another positive indicator is that the Holloman relocation was delayed about 18 months from original estimates. The F-35 program itself has experienced delays.

Barrett said the F-16 postponement benefits Arizona, so “there’s no economic gap” before the F-35 arrives.

Steve Methvin, a spokesman for Glendale Mayor Elaine Scruggs, said she supports the Air Force as it configures bases strategically, but it is too soon to know the local impact of the Luke F-16 transition.

David Evertsen, principal consultant with Goodyear-based Municipal Solutions, said transferring F-16s to Holloman is likely a strategy to make room at Luke and increase the chances of securing the F-35.

“It’s a bit of a risk,” he said. “Every time they lose a squadron, that’s a big chunk” of economic impact for the state.

“On the one hand, you may dip a little bit on your impact, but you may help your chances to get the F-35,” said Evertsen, who attended grade school at Luke, has worked on Luke land issues and has consulted at bases internationally.

Evertsen said officials should be concerned that major development delays and cost overruns could widen the gap between the F-16 transition and the potential arrival of the F-35 mission at Luke.

“The longer the delay, the longer the dip,” he said.

Complicated equation

It’s difficult to know exactly how much economic activity Arizona would lose from the relocated F-16 squadrons, because no updated study has been done, said Alan Maguire of Phoenix-based the Maguire Co., whose most recent Luke economic analysis was based on 2005 figures.

The equation is complicated. Not only does Luke pump money into Arizona through employee payroll, but revenue trickles down from base employees and construction projects to local businesses.

Transferring more than 1,000 military personnel to Holloman would likely represent the loss of tens of millions of dollars in annual direct wages, perhaps $50 million based on the base’s 2005 payroll. That total would be multiplied several times throughout the Valley, because of diminished business from banks to grocery stores and schools to manufacturers.

“No doubt it’s going to be diminished, but by what percent or what amount is the million-dollar question,” said Judie Scalise, of Phoenix-based ESI Corp., who partnered with Maguire on the study.

The loss may turn out to be somewhat mitigated today due to inflation and other factors, Maguire said. Base supporters hope the F-35 mission would make up for any loss.

Sen. John McCain, R-Ariz., although a staunch supporter of the F-35 mission’s coming to Luke, has been critical of the program as a budget hawk in Washington.

McCain recently called the program “unaffordable” and said “out-of-control” costs threaten to “put at risk every other major Defense procurement program.”

Republican and Democratic senators in May asked whether the military should seek alternatives to the F-35.

Despite problems, too much money and time have been poured into developing the F-35 to abandon the program, said John Schell, Peoria intergovernmental-affairs director.

“There’s too much at stake for these issues not to be figured out,” he said.

McCain also criticizes the plan to move the F-16s.

He contends Luke can handle both the F-35 and F-16 missions, saving the military $48 million in costs for Holloman to acquire the aircraft and build facilities.

“The idea of shifting F-16s from Luke Air Force Base to somewhere else doesn’t make any more sense than it did before the delay,” McCain spokesman Brian Rogers said. “Luke Air Force Base is not only the best facility to house the F-16 squadrons, but keeping F-16 pilot training consolidated in Arizona will result in cost savings compared to moving them to New Mexico.”

Barrett and Mitchell differed with McCain.

Barrett called the F-35’s overruns and delays normal for such a large defense project, while Mitchell said improving operations, such as transitioning squadrons to New Mexico, will always be costly.

“Some very smart people back at the air staff have weighed the cost analysis involved to be able to utilize the airspace in New Mexico and decided this is the right thing to do,” he said.