Jetrader - Summer 2017 - 19

Freighter ReƟrements
2010-16

Narrow bodies

91

77
72

75

59

56
49
45

Wide bodies

29

29

27

22

22
21

2010

2011

2012

2013

2014

2015

2016

Source: Ascend

Index 2007=1
(seasonally adjusted)
1.4
InternaƟonal FTKs

1.3
1.2
1.1
1

World Trade

0.9
0.8
2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

0.7

Source: Netherlands CPB, IATA

operators to replace these aircraft with
next-generation freighters such as the
737 Classics and 757s. The abundance and
favorable pricing of feedstock resulting
from the passenger airline replacement
cycle also contributed to narrowbody
freighter turnover.
In the case of widebody freighters, retirements were predominantly the result of the
global recession. The 747 freighter, which
carried trans-Pacific and Europe-Asia traffic, experienced a 35 percent fleet reduction between 2010-2016, with 138 units
permanently taken out of service. The global
downturn was the catalyst, but A300B4s,
DC-10s and MD11s were also forced into
retirement due to high operating costs (i.e.
fuel burn, crew and maintenance costs).
Fortunately, the freighter market has
turned the corner, and a resurgence in

freighter conversions and new deliveries
is underway. Global trade has recovered,
shipments lost to ocean shipping are
returning, and yields and load factors are
rising. Adding to existing freight flows, two
specific markets stand out as key drivers
that should sustain long-term growth in
the freighter fleet.

e-commerce
While e-commerce - formerly known as
business-to-consumer (B2C) - has been
in the market for many years, it is now
experiencing tremendous innovation and
explosive growth. e-commerce has provided
a profitable segue for the integrators as the
overnight document market declined. Sales
volume on Cyber Monday and Singles Day
(China) alone topped $18 billion in 2016.
Although global e-commerce sales exceeded

$1.9 trillion in 2016, this was still only a
fraction of the total global retail sales of
$27.7 trillion. With continued movement
from brick-and-mortar retailers to online
shopping and a rapidly growing global middle class, e-commerce is widely expected to
capture a larger market share of retail sales.
B2C market growth will, in turn, be a major
component in the demand for additional
freighters. The best example of this additional demand is Amazon's aggressive move
to bring a portion of its delivery network in
house. Last year, Amazon signed agreements
with Atlas Air and ATSG to operate 40 767300SFs, as well as taking an ownership
interest in both companies. More recently,
Amazon announced its intentions to build a
$1.5 billion air hub in Cincinnati. Amazon's
actions clearly foreshadow their interest in
air transportation of their products, and further freighter acquisitions can be expected.

Intra-China Air Freight
China is rapidly building out the country's air transportation infrastructure to
support growing demand for passenger and
freight growth, driven by ongoing urbanization and a burgeoning middle class. As a
vivid illustration of how underdeveloped
the intra-China airfreight market is, one
need only consider that China has a population four times the size of the U.S., but the
U.S. domestic freighter fleet is more than
three times larger. Although several Chinese
carriers have added converted narrowbody
freighters in recent years, future growth
clearly points to the need for a significant
number of additional aircraft.

Freighter Aircraft Review
Narrowbodies
CRJ-100/200

AEI, which has a long history in the
freighter conversion business with 440-plus
conversions, saw a market opportunity for
a regional jet freighter and in cooperation
with Bombardier launched a CRJ-100/200
conversion program in 2013. The aircraft
provides eight main deck pallet positions
and a 15,000-pound payload. The aircraft is
designed to service small, short-haul markets - particularly those that have limited
road and rail options. Despite a degree of
skepticism from the competition, the prototype is completing certification, and six
units are expected to begin the conversion
Jetrader * Summer 2017 19



Table of Contents for the Digital Edition of Jetrader - Summer 2017

A Message from the President
Calendar/News
Q&A: Douglas W. Runte, CFA, Managing Director, Securitized Products & High Yield Research, Deutsche Bank
Printing the Future
Upward Bound
Q&A: Abdol Moabery, President and CEO, GA Telesis, LLC
Escalation and Hope — Reflections from ISTAT Americas 2017
Forward Facing: ISTAT Asia
Aircraft Economic Life
Aviation History
Aircraft Appraisals
ISTAT Foundation
Advertiser Index
Advertiser.com
Jetrader - Summer 2017 - Intro
Jetrader - Summer 2017 - cover1
Jetrader - Summer 2017 - cover2
Jetrader - Summer 2017 - 3
Jetrader - Summer 2017 - 4
Jetrader - Summer 2017 - A Message from the President
Jetrader - Summer 2017 - 6
Jetrader - Summer 2017 - 7
Jetrader - Summer 2017 - Calendar/News
Jetrader - Summer 2017 - 9
Jetrader - Summer 2017 - Q&A: Douglas W. Runte, CFA, Managing Director, Securitized Products & High Yield Research, Deutsche Bank
Jetrader - Summer 2017 - 11
Jetrader - Summer 2017 - 12
Jetrader - Summer 2017 - 13
Jetrader - Summer 2017 - Printing the Future
Jetrader - Summer 2017 - 15
Jetrader - Summer 2017 - 16
Jetrader - Summer 2017 - 17
Jetrader - Summer 2017 - Upward Bound
Jetrader - Summer 2017 - 19
Jetrader - Summer 2017 - 20
Jetrader - Summer 2017 - 21
Jetrader - Summer 2017 - Q&A: Abdol Moabery, President and CEO, GA Telesis, LLC
Jetrader - Summer 2017 - 23
Jetrader - Summer 2017 - 24
Jetrader - Summer 2017 - 25
Jetrader - Summer 2017 - Escalation and Hope — Reflections from ISTAT Americas 2017
Jetrader - Summer 2017 - 27
Jetrader - Summer 2017 - 28
Jetrader - Summer 2017 - 29
Jetrader - Summer 2017 - 30
Jetrader - Summer 2017 - 31
Jetrader - Summer 2017 - Forward Facing: ISTAT Asia
Jetrader - Summer 2017 - 33
Jetrader - Summer 2017 - 34
Jetrader - Summer 2017 - 35
Jetrader - Summer 2017 - 36
Jetrader - Summer 2017 - 37
Jetrader - Summer 2017 - 38
Jetrader - Summer 2017 - 39
Jetrader - Summer 2017 - Aircraft Economic Life
Jetrader - Summer 2017 - 41
Jetrader - Summer 2017 - Aviation History
Jetrader - Summer 2017 - 43
Jetrader - Summer 2017 - Aircraft Appraisals
Jetrader - Summer 2017 - 45
Jetrader - Summer 2017 - ISTAT Foundation
Jetrader - Summer 2017 - 47
Jetrader - Summer 2017 - 48
Jetrader - Summer 2017 - Advertiser Index
Jetrader - Summer 2017 - Advertiser.com
Jetrader - Summer 2017 - cover3
Jetrader - Summer 2017 - cover4
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