Home' Asian Aviation : AAV July-Aug 2014 Contents 38 AsianAviation | JULY-AUG 2014
The waning popularity of the Boeing 747-
400 has been evident for some time, with
oil prices above US$100 making the
four-engine aircraft a costly option for
But whereas ageing widebodies were traditionally
considered ideal targets for passenger-to-freighter
(P2F) conversions, structural changes in the troubled
air cargo market are now dampening demand.
Instead, cargo operators are turning to more nimble
narrowbody jets, leaving a growing numbers of
widebodies abandoned in storage.
The trend is borne out by statistics. Between 2012
and 2013, the number of parked 747-400Fs spiked
from 18 to 42 globally. Despite a wave of retired
passenger units entering the secondary market,
conversions of all widebody types -- also including
767s, MD-11s and Airbus A300s -- collapsed from
29 to just 8.
Dan da Silva, vice president of modification
and conversion services at Boeing, explains that a
combination of factors is at play, with Asia particularly
exposed to the downturn.
"You have to realise that two-thirds of the tonnage
of air cargo in the entire world is between Asia and
Europe, and Asia and the United States," he begins.
"Those two corridors dominate the demand for air
cargo in terms of tonnage. That's where the heavy
cargo usually flies -- industrial goods manufactured
in Asia and then spread out through the two largest
consumer markets in Europe and the United States.
So given the economic situation since 2008 ... the
mild recovery really has not lent itself to that heavy
cargo corridor functioning very well."
As for the root causes of the downturn, analysts posit
a slew of reasons ranging from capacity increases in
belly cargo to improved sea freight technologies to
the growing digitisation and miniaturisation of goods.
Regionally, the slowdown in Chinese manufacturing
only exacerbates the situation.
But a more nuanced phenomenon is also becoming
apparent, with emerging economies benefiting
from smaller aircraft during the early stages of their
development. Narrowbodies are deemed preferable
mainly because of the limited tonnage destined
for these markets, but also the restrictive ground
infrastructure that supports onward traffic flows.
Brian McCarthy, vice president of sales and
marketing at Precision Aircraft Solutions, an Oregon-
based aircraft modifier specialising in 757s, says a
handful of dominant players like SF Airlines and Air
China are driving this intra-Chinese growth.
"As e-commerce continues to grow substantially
and sweep the entire country, a lot of the express
traffic that had been flying just north-to-south ... is
now moving well out into the countryside and into
many other cities," he explains.
"Right now it's long and thin routes. They might
have 50,000 pounds of cargo going in the right
direction, but they're just not at a widebody type of
network yet ... So when you're looking out 1,500
miles into China from the eastern seaboard, the
757, because of its volume, is going to be a very
In August 2013, Air China commissioned Precision
to deliver four 757-200PCFs in a noteworthy departure
from its focus on 747s. But Precision does not have a
monopoly on 757 conversions. SF Airlines has since
tasked Singapore's ST Aerospace with converting five
757-200SFs, adding to the eight units in its fleet.
The latter type has also proven popular among
western operators, with FedEx and DHL accounting
for many of the more than 100 conversions to date.
Precision's model has meanwhile rolled off the
production line 43 times, though McCarthy predicts
"another 50 or 60" conversions before the programme
winds down, including about 25 placed in Asia.
Pricing has been a major factor in the 757s
popularity, with rising feedstocks promoting healthy
competition between the two conversion specialists.
"For Asia in general -- from Malaysia to Hong Kong
to mainland China -- a lot of our activity is being driven
by affordable 757s," McCarthy explains. "Values
have been steadily coming down to acceptable rates
for second-tier cargo operators. The aeroplanes are
falling into a pricing range that makes sense for
US$1 and US$2 per pound cargo holds."
Yet there are other options in the narrowbody
space. Aeronautical Engineers Inc (AEI) continues
to see strong demand for 737-300 and 737-400
conversions -- offering between 9 and 11 pallets,
compared with the 757's 15 pallets -- as well as
"We currently have 11 aeroplanes in conversions,
all but one of which are -400s," says Bob Convey,
AEI's vice president of sales and marketing. "We
have a backlog of over 20 firm ordered aeroplanes
on top of those. We're delivering an aeroplane every
week and a half right now ... The Classics have got
another 15 years of life in them at least, and I think
they'll be converted in strong numbers for another
four to five years."
Beyond that timeframe, AEI hopes customers will
begin transitioning to its newly launched 12-pallet
737-800SF programme. The company announced
While the widebody freighter conversion market remains subdued, narrowbody
conversions are nding favour, especially in emerging economies. Martin Rivers
AERONAUTICAL ENGINEERS INC
AEI's 737-800SF will have capacity for 12 pallets.
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