JFZ90 - Perhaps you could start by listing the downsides and the costs, then I could respond?
Uncle Ginsters - hasn't there already been a precedent with the status of FSTA? Or - for example - the Securité Civile in France?
It would not be impossible to register some aircraft on the civil register (after all, most C130s are not armed) and have them flown by crew who are part "civilian" and part "military", depending on the operation. There are plenty of precedents for that too - how do you explain the status of ex-RAF crew flying for Virgin, who still have reservist status, or TA soldiers, who happen to fly commercially for their civilian job? The Chicago convention was based on immediate post WW2 definitions of civil/military aviation which have been continually blurred since. Whatever the detail, it is not an insurmountable legislative obstacle.
Secondly, as has to be asked with any PFI, you would need enough redundancy so as not to endanger charter ops for ad hoc mil ops. That sort of redundancy is unjustifiable in fleet-size terms these days. How would you insure against losing charter tasks when mil ops take precedence? Could you compete with genuine charter ops without that uncertainty
That is a worthwhile argument - but that is exactly why you would have to carefully word and design the rules of commercial engagement as well as the rules of operational engagement. If such rules were in place, it would have avoided the recent situation where HMG were embarassingly bounced into deploying the RAF into Libya by tabloid trial, rather than through clear, transparent progression of government policy.
Besides, HMG has flown aircraft almost more or less continuously in far more blatant breach of Chicago Convention since 1944, as you might be aware..