What happened to the widebody conversion market?

2013 was a very good year in the narrowbody conversion market, as orders poured in for passenger-to-freighter conversion of 737-300s, 737-400s, MD-80s, and 757-200s. For those offering widebody conversions, however, it was “the year that wasn’t.” That is, as far as we know, there was not a single widebody conversion order placed in 2013.

Passenger-to-freighter conversion programs were available for the 747-400, MD-11, A330-200/-300, and 767-200/-300, as well as the recently-introduced LCF conversion program for A340, A330, and 777 airframes,  but if there has been an order for any of those, it was not announced. The most recent activity is a three-unit 767-300BCF order placed by Guggenheim Aviation Partners in late 2012. In fact, that Guggenheim order is the only widebody conversion order placed in the last two years – there were a handful of 747-400BDSFs/BDFs and 767-300BDSFs redelivered in 2012, but the orders for those conversions had been placed earlier. [Note: A reader from DHL Express has reminded me that DHL took delivery of rather a lot of freighter-converted A300-600s in 2012 and 2013. However, these conversions were ordered earlier.]

Part of the explanation lies in the fact that the last two years have seen almost no growth in demand for airfreight, coupled with a significant increase in capacity. Dozens of new-build 767-300Fs, A330-200Fs, 777Fs and 747-8Fs entered service during the period, along with a steady stream of cargo-friendly 777, 787, and A330 passenger aircraft. This put pressure on yields and carriers responded by parking older freighters.

If the trend of demand growth that began in the third quarter of 2013 continues through the first half of 2014, carriers looking for widebody lift but unable to afford new-build freighters may come back to the market, and we would not be surprised to see some orders for A330 and 767 conversions. However, given that there is no shortage of large widebody freighters – both production and conversion – available in the used aircraft market, a fresh round of 747 conversion orders seems much less likely. The US desert is awash with 747-400Fs, BCFs, and BDSFs, many in excellent condition, and more are on the way. And while the MD-11 P-to-F program may be still officially on offer, no one expects that there will be any more conversions. Not only are there plenty of used MD-11Fs available, but there is almost no feedstock.

As to the LCF – the Low Cost Freighter based on using internal lifts to move pallets from lower deck to main deck, thereby eliminating the need for a main-deck cargo door, the jury is still out. The concept has been on offer from LCF  Conversions for about two years, but so far the company has received no orders. Will an upswing in air freight demand change that? We shall see.

And what about future conversion programs? If the air freight market had seen strong demand growth over the last few years, it is possible that Boeing or Bedek Aviation Group might already have launched a P-to-F program for the 777-200. But now, with so many used 747-400Fs/BCFs/BDSFs and MD-11Fs available, can Boeing or Bedek see enough demand for a freighter-converted 777 to justify the investment required to launch such a program? In the near term, at least, that seems unlikely.