Turboprop freighter fleet analysis 2019: A stable niche or still nascent?

[caption id="attachment_6957" align="alignright" width="369"] An ATR 72F operating on behalf of FedEx.[/caption] The turboprop freighter fleet for aircraft with payloads of 3.8 - 8.8 tonnes grew by just 7% year-over-year to 181 units in June 2019, up 12 units from a total of 169 the year prior. While growth of 7% wouldn’t be unimpressive on its own, many of the additions this year stemmed from the reactivation of stored aircraft, rather than the redelivery of recent conversions. Redeliveries of ATR 72-500Fs , which represent 59% of the turboprops in operation are expected to accelerate in the second half of this year and will further increase the number of operators in the space. Long-term, there is some debate as to whether the runaway e-commerce market will cause demand for this freighter size category to skyrocket, or if volume growth will be such that many routes currently served with turboprop freighters will be upgauged. Answering this question requires a basic understanding of the payload and range capabilities of the aircraft, and the missions for which they serve. As the chart at right shows, the eight most common turboprops in commercial service boast maximum payloads of between 3.8 - 8.8 tonnes with ranges of 335 nautical miles on the low end with the Saab 340F, and 1,200 nautical miles on the high-end with the Bombardier Q400PF. Most of the aircraft in operation do so on behalf of major integrators looking to provide time-definite delivery for small-and-medium sized markets. A smaller subset of the fleet connects archipelago geographies in island regions of East Asia, and North America. In taking a closer look at the freighter fleet’s distribution across regions (see chart on next page ), the majority (64%) are operated by European carriers, mostly under contract to integrators or postal services. Europe’s share of turboprop freighter operations has continued to grow over the past year as parked freighters as units have been brought out of storage. In August 2018, Hungary-based Fleet Air International established a Bulgarian subsidiary, Fleet Air BG and began operating an ATR 42-300F (121) that was previously operated by ASL Ireland. Two other aircraft, an ATR 42-300F (66) transferred from Fleet Air International and another ex-ASL Airlines ATR 72-200F (183) are in maintenance but are reportedly going to operate on an ACMI basis for the Hungarian operation. Fleet Air International continues to operate three Saab 340AFs on its own AOC. Urban development across North America that favors cities spread across large distances limits the number of city pairs suitable for turboprops. In Europe, the closer juxtaposition of cities broadens the potential scope of short-range freighter operations in the region. Carriers in North America operate just over a quarter of the world’s turboprop freighter fleet with 27.5% of the fleet registered with carriers based in Canada and the US. This figure remained unchanged, even though Empire Airlines put an ATR-72F into service for Hawaiian Airlines’ ‘Ohana affiliate. Just 8% of the fleet operates elsewhere. Operators of ATR turboprop freighters, which represent 59% of the turboprops in the fleet report “stable” demand for the size category. One operator in Europe told Cargo Facts that it has seen much higher demand for narrowbody jets, such as the 737F but that it retains a decent market for regional operations with turboprops. E-commerce remains an undefined variable under study when it comes to forecasting future demand for propeller-powered freighters. Although still under study, evidence suggests e-commerce fueled demand will boost freighter demand across all aircraft size categories, including turboprops. In China, where the majority of narrowbody freighters have been added over the past five years for growth purposes (as opposed to replacement), there doesn’t exist a single turboprop freighter in operation. China-based integrators with fledgling air networks compared to DHL , FedEx and UPS , have focused their energies instead on connecting major trunk routes with jet freighters. As these markets mature, there is optimism that like in Europe and North America, turboprop freighters will one day connect hubs with secondary and tertiary cities. Although airline executives in China have identified regions and routes where turboprop freighters would make sense, for now, adding the airframe isn’t a priority for most of the major carriers. Although outside China, perhaps the biggest vote of confidence in long-term turboprop operations is FedEx’s outstanding order backlog for up to 50 production ATR-72Fs – including thirty firm and twenty options. Deliveries are expected to commence next year. With other integrators expected to invest – either directly as FedEx has done, or indirectly through ACMI, an estimated 550 turboprop and regional jet freighters will be needed over the next twenty years, according to Cargo Facts Consulting’s 2019 20-year Freighter Forecast. At least half of these are expected to be non-jet turboprops. As demonstrated by FedEx’s order, the long-term prospect for ATR 72Fs remains positive. Over the years, many of the older ATP and ATR 42 turboprop freighters have been phased out, and the overall fleet makeup is increasingly favoring newer ATR 72 freighters. Of the fifteen ATP freighters operating last year, only three are still operating today. Some may take to the skies again in markets outside of Europe, but growth will be minimum. Despite no additional conversions, the number of ATR 42 freighters in operation has actually grown, to forty-one, up from thirty-six last year – though down still from forty-three units in 2017. In addition to the gradual addition of converted ATR 72Fs to the fleet, the freighter will soon make up an even greater portion of the overall fleet, thanks to the introduction of an ATR 72-600 production freighter. As operators of aging freighter-converted ATR 72Fs begin to consider replacement, freighter-converted ATR 72-600s appear high on their wish list. “The 200 series aircraft are beginning to age and will need to be replaced in the next few years,” Colin Grant, Chief Executive, ASL Airlines Europe told Cargo Facts. “In our experience, the 500 series did not add significant benefits to operation [compared to the ATR 72-200F.” The -600 variant remains an aircraft to watch, said Grant. The chart on the next page shows the distribution of the important regional freighter types in the makeup of the current fleet. There are hundreds of smaller aircraft (including Cessnas, Beechcraft, Metros, and others) in use as freighters, but they are beyond the scope of this analysis. Older types, such as Shorts 330/360s and F27s, are also still in use as freighters, but their increasing age ensures that the newer types will gradually replace them. While the tally includes freighters in maintenance that appear likely to be returned to commercial service, we omit aircraft in long-term storage. Evaluating the turboprop fleet in more detail by type, we find the following: ATR 42F : A total of fifty-three ATR 42s have been converted to freighter configuration, all but one of which are in bulk-load configuration. Of the fifty-three, four have been written off, two have been scrapped, and nine are in storage. Forty-one are in service, down from forty-three two years ago, but up slightly from last year when five units appeared to be in long-term storage. ATR 72F : Going forward, continued redeliveries of ATR 72-500Fs and the introduction of an ATR 72-600 production freighter are expected to continue dominating the turboprop segment. Seventy-two ATR 72s have been converted to freighter configuration, seven of which are in storage or extended maintenance. As older ATR 42Fs and ATPFs are retired, the ATR 72F is increasingly becoming the favored turboprop freighter – Switzerland-based IPR Conversions , which took over Alenia Aermacchi’s ATR passenger-to-freighter conversion STCs in 2015, told Cargo Facts that in order to accommodate anticipated demand for more conversions, it is in the pro cess of adding conversion lines at Empire Aerospace in Idaho, and Sabena Technic in Brittany – to complement active conversion lines at Sabena Technics in Dinard, France. Empire inducted an ATR 72-200 for conversion (432, ex-First Air) and expects to put the aircraft on its AOC and begin operating it for ‘Ohana later this year. IPR said it expects to redeliver eight container-capable large cargo door conversions in 2019. Two will go into the ‘Ohana operation, with the first of those (432) redelivered in late June, while another pair is joining the Cebu Air fleet following conversion. Cebu’s first aircraft (820) has been redelivered. The second aircraft (828), meanwhile, is already undergoing conversion in Dinard. IPR is also planning to expand the function of its leasing business, IPR leasing. The conversion house’s leasing affiliate will convert three ATR 72-500s for redelivery to carriers on an operating lease. ATPF : The number of in-service ATP freighters continues to fall from year-to-year from fifteen last year to thirteen this year as Sweden-based West Atlantic retired more of its older units. Forty-five ATP aircraft of the sixty-five total produced were converted to freighter configuration – twenty-four with large cargo doors, and twenty-one as bulk loaders. Saab 340F : Forty-five Saab 340s have been converted to freighter configuration. Of these, thirty-five are in active service, unchanged from last year. Fokker 50F : Nineteen Fokker 50s have been converted to freighter configuration. Of these, sixteen are now in operation, flat with last year’s total. Thirteen remain at Sweden-based Amapola Flyg and three at Kenya-based Jetways Airlines. Bombardier Q300PF/Q400PF : The Bombardier turboprop fleet remains unchanged over the past year, but could pick up momentum with a new large cargo door Q300 conversion program under development in a partnership between Canada-based Air Inuit and Collins Aerospace. Air Inuit is the only operator of the bulkload Q300F with two in service and one large cargo door conversion in development. Air Inuit expects to eventually modify its two existing Q300Fs with the cargo door. For now, Q400PF and Q100PF fleets remain stable, with Kenya-based Blue Bird Aviation operating five Q400Fs. Similarly, Wasaya remains the sole operator of the Q100PF. In recent years demand from our Integrator customers for regional freighter aircraft has been stable, though not increasing from the levels of growth that were previously recorded. The B737-400 has been the subject of bigger growth in recent years. The level of interest from e-commerce in regional aircraft will be interesting to understand. Europe is more closely concentrated geographically, than the US for example, which favours regional aircraft. The competition between having the right aircraft for niche deliveries/ routes and the complexity of managing multiple small aircraft will determine the outcomes, though the high levels of growth forecast for e-commerce should provide requirements for aircraft of all types and sizes. Those interested in learning more about the market for turboprop freighters are invited to join us at Cargo Facts Symposium 2019, to be held 16-18 October at the Intercontinental San Diego. For more information, or to register, visit www.cargofactssymposium.com

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Cebu Pacific takes redelivery of first IPR-converted ATR 72F

Freighter aircraft leasing part II: E-commerce behind growing leasing market

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CARGO FACTS CONSULTING

Japanese air exports up in December and January, imports down

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