Fleet closest to last mile thrives

Like clockwork, FedEx freighters arrive at Montreal Mirabel Airport (YMX) from the integrator’s U.S. hubs in Indianapolis (IND) and Memphis (MEM) at around 7 a.m. each weekday. Within a matter of hours, parcels from the jets are swiftly loaded onto an ATR 72-200F operated by Morningstar Air Express, and shuffled over to Quebec (YQB). The ATR 72F makes just one round trip on most weekdays with less than two hours of flight time. Yet the flights enable the integrator’s ability to meet time-definite deliveries in the region. The scene is one that plays out at airports around the globe each day, as sizable ground crews ensure the rapid transfer of freight from jet to regional freighter. Even as the composite of the air cargo market soured toward the end of 2019, regional carriers continued to see burgeoning demand for services closest to the last mile. Growth of the segment appears to be all but assured given the positive link with e-commerce, which has accelerated rapidly during the pandemic. However, the equipment deployed and the role of regional aircraft in express networks are open to further refinement as purpose-built ATR 72-600 and Cessna SkyCourier freighters with containerized capabilities begin to hit the market. As of late October, the regional freighter fleet for aircraft with payloads of 3.8–8.8 tonnes totaled 250 units and was distributed across forty-nine operators. About half of the active, in-service fleet comprises ATR freighters of different variants and configurations. Saab 340 and EMB-120 in freighter configuration make up 18% and 14% of the fleet, respectively. The tally also includes models for which no further conversions are expected, such as the ATPF and Fokker 50F. Active conversion programs for multiple Dash 8 variants as well as the CRJ 200F offer an opportunity to further diversify the fleet — assuming freighter-converted regional aircraft continue to dominate the fleet. Conversions continue to dominate The emergence of factory-built turboprop freighters is not expected to replace more than a fraction of the segment. According to the Cargo Facts Consulting Freighter Forecast for 2020-2039, the global feeder freighter fleet is expected to grow in the first quarter of 2020 from some 243 units to 420 units by the end of 2039. The net growth of 177, combined with 224 retirements, equates to an overall need for 401 freighters through 2039, consisting of ninety production ATR 72-600Fs and 311 conversions of various types, including the Dash 8 series. At Cargo Facts Symposium 2020, appraisers agreed that production freighters are unlikely to flood the feeder segment in large numbers for now, especially since conversion feedstock is so readily available. Lindsey Webster, vice president of asset valuations at mba Aviation, said that values of the ATR 72-500 had been impacted due to availability in the market even before the pandemic, but despite the low prices, some operators are still selecting the -200 for conversion. “There are so many ATR 72-200s out there that are so much cheaper, and there’s really not much difference as far as the actual capacity of the aircraft,” she said. “I think the prices of the -500 probably still have a bit further to go.” Off the assembly line and into service ATR’s first production freighter prototype (1653) made its first flight in mid-September and is expected to be granted an STC from the European Union Aviation Safety Agency (EASA) by the end of November. [caption id="attachment_414938" align="alignright" width="600"] The first production ATR 72-600F will soon be delivered to FedEx. (Photo: ATR)[/caption] According to ATR, while it had seen many previously parked ATR 72s being returned to passenger service, it had also seen slightly more conversions in 2020, but that isn’t expected to have a major impact on the ATR 72-600F. “We don’t think the -600F is directly competitive with conversions,” said Guillaume Huertas, head of leasing, asset management and freighters at ATR. “There are always carriers willing to select new technology, especially those with higher utilization. The -600F represents an opportunity to have a new, homogenous fleet.” In any case, ATR is optimistic about the prospects for regional freighters, noting that e-commerce had already been booming irrespective of the crisis. The planemaker said it has had discussions with a variety of airlines and logistics players that have shown particular interest in the large cargo door and the cargo loading system. According to Alessandro Luzi, chief engineer of the ATR 72-600F program, in the lead up to the aircraft’s launch in 2017, he'd had discussions with potential customers and employees working directly with freighters on a daily basis to understand the areas that needed to be improved and tailored specifically toward the type of cargo operations to be carried out by the ATR 72-600F. Such improvements include brighter LED interior lighting, rear bulk cargo nets optimized for more volume, and a rear door that has its hinge on top and opens upwards for easier cargo loading; on passenger versions the rear door has steps built into it and unfolds downwards. Unit 1653, painted in full FedEx colors late October, will be handed over for CMI operation by ASL Airlines Ireland , which had said earlier in the month that it expects to begin flying at least four other ATR 72-600Fs on behalf of the integrator. FedEx is currently the only customer for the ATR 72-600F, having placed a firm order for thirty aircraft along with twenty options in 2017. Empire Airlines , which already operates nine ATR 42-300Fs and six ATR 72-200Fs for FedEx, told Cargo Facts it also expects to fly a number of the integrator’s -600Fs starting in 2021, and that its pilots and mechanics had already started going through differences training. Early deliveries of factory-built ATR 72-600Fs may be used to supplement rather than replace freighter-converted units, at least initially. During a session on regional operations in North America at this year’s Cargo Facts Symposium, Scot Struminger, who took up the role of EVP and CEO of aviation at FedEx Express this month, noted that the increased demand from the pandemic and the acceleration of e-commerce during 2020 has “put a squeeze” on regional capacity. “These [new] airplanes were planned for modernization to retire older aircraft, but you know, if we have to keep those [older] aircraft in service for another six months, it doesn’t change the game significantly for us,” he said. Freighter fate for Dash 8 Only ten Bombardier Dash-8 aircraft have been converted to cargo configuration, but an “oversupply” of feedstock resulting from the collapse of U.K.-based Flybe as well as a few other carriers creates a pricing dynamic with “potential,” according to Mike Yeomans, director of valuations at IBA. Additionally, multiple new conversion STCs are being developed to further grow the freighter-converted fleet. An estimated 240 Dash 8 Q400s are currently in storage, most of which are less than twenty years old. But Yeomans said other ATR 72-500s can be acquired for similarly low prices and are still more of “a proven platform” for freighter conversion, with lower operating and maintenance costs, so will continue to be the more prevalent model being converted. Multiple carriers have also partially reconfigured Q100 and Q400 aircraft for use in cargo-only operations during the pandemic, including Jazz Aviation and Kenya-based 748 Air Services. These aircraft are omitted from our tally due to the expected temporary nature of these operations. Package-freighter conversion options already exist for the Q300 and the Q400, and Collins Aerospace is in the final stages of developing a large-cargo-door conversion of the Q300 for Air Inuit . While cargo doors on most jet freighter conversions are placed near the front of the fuselage, the Collins design places the door in the back, between the wing and the tail. Given the time and investment required to develop a structural modification, and the commonality between the Q300 and the stretched Q400, Collins is also in a favorable position to develop a large cargo door conversion for the Q400. At the same time, De Havilland told Cargo Facts that its development plans include several additional freighter solutions for the Dash 8-400. The company already produces a combi variant of the Q400, now in service with Japan-based Ryukyu Air Commuter, but is looking at package-freighter conversions of the aircraft, as well as a production version featuring a large cargo door. But given the significant investment that a large cargo door represents, not to mention the operational change for carriers not currently moving palletized or large cargo, it remains to be seen whether multiple large cargo-door solutions for the same platform are necessary. “We are in discussions with several potential customers and will make a decision on the Full Package Freighter upon confirming the market demand,” said Todd Young, chief operating officer of De Havilland. “Of course, the current aerospace industry environment will also impact the timing of our decision.” Other programs for Dash 8 aircraft include a package-freighter conversion of the Q400 by Cascade Aerospace, and a package-freighter conversion based on the smaller Dash 8-100 by Voyageur Aviation Corp. Voyageur is a subsidiary of regional aircraft lessor Chorus Aviation Inc., which also owns Jazz Aviation. Embraer 120 The smaller four-tonne EMB-120 continues to carve out a regional niche with the fleet in cargo configuration nearing three-dozen units. Worldwide Aircraft Services, which holds passenger-to-freighter conversion STCs for the EMB-120, Saab-340 and Fairchild Metroliner, told Cargo Facts 2020 is shaping up to be its busiest year yet for conversions. “The freighter market has been good for the last several years, but it seems that the pandemic or on-line purchasing has pushed capacity to its limit,” said Dave Vorbeck, administrative director of Worldwide Aircraft Services. The majority of the EMB-120 fleet in full-freighter configuration have been converted according to a Worldwide Aircraft Service STC, which supports cargo payloads of around four tonnes across four cargo compartments. The company estimates some fifty EMB 120s have been converted to date, though many are no longer active. Thirty-four of the type are currently in service, with the majority operated by U.S.-based Ameriflight and Berry Aviation, and Spain-based Swiftair. Ten EMB-120ERs are currently in storage at Springfield Airport (SGF), where Worldwide has carried out the majority of its conversions. At least two of the aircraft are registered to Freight Runners Express, which currently operates one EMB-120 in freighter configuration. As for conversion prospects for the aircraft, Vorbeck believes the program still has legs. Passenger carriers operating the EMB-120 continue to replace the type with EMB-145s and other aircraft, freeing up feedstock. The stored fleet of EMB-120s surpassed 100 units during the pandemic, with many unlikely to be returned to passenger service.

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