The freighter conversion landscape: Part II

Yesterday we began our analysis of the changing freighter conversion market with a look at how the conversion landscape has evolved from a long period of very little change, to the current point of transition to a whole new landscape. You can read Part I here, and today we continue, first with some thoughts about how rapid the evolution will be, and then with a closer look at the individual players and their programs.

In part I, we pointed out that during the transition period to the new types, conversion and redelivery of the previous generation of aircraft will continue, and that freighter-converted 737 Classics, 757s, and 767s would continue to enter service. There have long been those who predict that, as long as feedstock is available, the difference in price between these older types and their prospective replacements will ensure that service entry for the new types in quantity will be postponed.

Others disagree, believing that the transition period will be relatively short, with the new types taking over fairly quickly.

GECAS has converted over 100 freighters, and maintains the largest freighter fleet of any lessor, so we put the question to Rich Greener, Senior Vice President and Manager of GECAS’s cargo group. His view was that while it will be possible to convert and put into service one of the older types for less than its newer counterpart, trying to save money this way was false economy. Why? Because, while there may be exceptions, for the most part the remaining feedstock for the older types is, well, old. Acquisition and conversion cost might be relatively low, but operating and maintenance costs will be high, and useful life limited. In addition, national aviation authorities are imposing ever-stricter controls on the importation – or even operation – of older aircraft. This is still not a problem in the US or Europe, but elsewhere, the age of available feedstock may rule against conversion of older types.

It will be about two years before all of the new programs are certified and ready to turn out conversions on a regular basis. We expect that by that time, feedstock for the older types will have become scarce enough, and old enough, that the transition to the newer types will be in full swing.

If you are interested in an in-depth discussion of this subject, be sure to join us at Cargo Facts Asia 2018, 23 – 25 April, in Shanghai, where we will devote two sessions to the future of the freighter fleet. Widebodies, narrowbodies, production freighters, conversions… Senior executives from the major conversion houses, as well as operators and lessors, will share their views. For more information, or to register, go to CargoFactsAsia.com.

Before we turn to the conversion houses and programs shown in the charts in Part I, we take a look at one major new player and two programs not shown in the charts:

One company that has become significantly involved in the conversion business in the last year is US-based Air Transport Services Group. ATSG has long been known as the world’s biggest operator (and lessor) of freighter converted 767s but, beginning in early January 2017, it moved into the other end of the game with the acquisition of PEMCO World Air Services. PEMCO has been a major source of 737 Classic conversions for many years, and has now launched both passenger-to-freighter, and passenger-to-combi programs for the 737-700. But ATSG did not stop there, and in August signed an agreement with Precision Aircraft Solutions to create a joint venture – 321 Precision Conversions – to develop a passenger-to-freighter conversion program for the Airbus A321-200.

The charts only show conversion programs for jet aircraft, but Switzerland-based IPR Conversions, which acquired Alenia’s OEM conversion programs for the twin-turboprop ATR 42 and 72 models in 2015, has since breathed new life into the turboprop conversion market. And whereas the OEM STCs were for just the ATR 42-300 and 72-200, IPR Conversions has since received certification for both large-door and bulk-load (what IPR calls structural tube) conversions for the 42-500 and the 72-500 and -600 types.

IPR has now converted seven ATR 72s to large cargo door configuration and three to bulk load, and says it expects to do five large-door and five bulk-load conversions in 2018

But the IPR story doesn’t end there. If you read our recent story, you will see that ATR has announced a thirty-unit launch order, from FedEx, for its first-ever production freighter. As part of the new program, ATR signed a technology-licensing agreement, granting ATR the license to install IPR Large Cargo Door (LCD) and Structural Tube modifications on the new 72-600F freighters.

Finally, the other program not shown is from C3 Aerospace (pronounced C Cubed). California-based C3 announced passenger-to-freighter conversion programs for the Airbus A320 and A321 aircraft in September 2017, but did not release technical specifications for either freighter, nor any details about when it expects certification, or who the launch customer might be. When further details become available, we will post them on our website.

And tomorrow, we will examine each of the major conversion houses and their passenger-to-freighter programs.

You can read Part III here.

You can read Part IV here.