How many narrowbody conversion programs does the world need?
When Aeronautical Engineers Inc announced the launch of a 737-800 P-to-F conversion program at the Cargo Facts Asia event in Hong Kong this spring, we did not expect AEI would have the field to itself for long. But just six months later the field has become crowded indeed, and it looks to become even more crowded.
In late September, PACAVI launched its A320/A321 passenger-to-freighter conversion programs, and at the Cargo Facts Symposium in Miami in late October PEMCO World Air Services formally launched its conversion programs for the Boeing 737NG Family.
Also at the Cargo Facts Symposium, Boeing announced it had received Board authority to offer a 737-800BCF conversion program, and Bedek Aviation Group (the MRO and conversion arm of Israel Aerospace Industries) confirmed its intention to develop a BDSF freighter conversion program for the 737NG Family.
In addition, we believe it likely that Airbus will announce an A321 conversion program next year (possibly in cooperation with ST Aerospace), which would bring the total number of 737NG and A320/A321 conversion programs on offer to six.
The current narrowbody conversion landscape is relatively straightforward, effectively offering two competing programs for each of the main aircraft types, as follows:
- 737-300: Aeronautical Engineers and PEMCO both offer Passenger-to-Freighter conversions, and PEMCO also offers Passenger-to-Combi and Passenger-to-Quick Change conversions
- 737-400: Similar to the 737-300, with AEI and PEMCO both offering P-to-F conversions, and PEMCO offering P-to-Combi.
- 757-200: Precision Aircraft Solutions and ST Aerospace both offer P-to-F and P-to-Combi conversions
That’s it. Two competing programs for each of three aircraft types. Yes, there are options for different numbers of pallet positions, and for combi and QC conversions, but the marketplace seems satisfied with a competitive landscape that offers two programs per type. Other companies have tested this market – Boeing with a 757-200 program, Bedek with 737-300 and -400 programs, and Airbus/EFW with an A320 Family program – but all have withdrawn.
There is no question that in several years, with feedstock drying up for the currently popular types, the market will require development of conversion programs for the newer 737NG and A320 Families. If all the players who have so far announced their intent to launch conversion programs for these aircraft make it to the production stage, the new landscape will look like this:
- 737-700: Bedek and PEMCO will offer P-to-F conversions. PEMCO will also offer P-to-Convertible and P-to-QC options. Bedek has not announced whether it will offer Combi, QC, or Convertible conversions.
- 737-800: AEI, Bedek, Boeing, and PEMCO will all offer P-to-F conversions. AEI will offer a P-to-Combi conversion, and PEMCO will offer both P-to-QC and P-to-Convertible conversions. Whether Bedek and Boeing will offer other options has not been confirmed.
- A320: PACAVI is so far the only entrant to the A320 conversion game, and has said it will offer a P-to-F program.
- A321: PACAVI plans to offer a P-to-F conversion program for the A321, but most in the industry believe that Airbus will enter this arena as well, with an announcement expected early next year (although the company has not confirmed this). If Airbus does make the move, it will likely be through its MRO and conversion subsidiary EFW, in which ST Aero has a 35% stake.
Looking at the above list, what jumps out is that while the 737-700 and A321 will fall into the two-competitors-per-type pattern, there are four proposed 737-800 conversion programs. One could even say five, given that the A320 will compete more-or-less directly with the 737-800 as a conversion candidate. We also note that one of the current players in the narrowbody conversion market – Precision Aircraft Solutions – has made no announcement of its intentions regarding future programs. If it does jump in, that will bring the total to seven competitors.
Whether six, or even seven, companies offering conversion programs for four narrowbody types can all operate profitably in a market that currently only sustains four companies and three types is an interesting question…