Jetrader - Summer 2018 - 21

FREIGHTER
PROGRAMS
REVIEW
Narrowbodies
CRJ-100/200

Aeronautical Engineers Inc. (AEI)
launched the CRJ-100/200 conversion program in 2013. The aircraft provides eight
main-deck pallet positions, a 15,000-pound
payload and is designed to service small,
short-haul markets, particularly those that
have limited road and rail options. As of
this date, seven aircraft have been converted and are serving markets in Mexico,
the Caribbean and Scandinavia. An additional nine aircraft are scheduled for conversion in 2018.

Source: Ascend
*Excludes 737-700SF

Fig. 3

MD80

Source: Ascend

Fig. 4

The widebody freighter fleet followed a
similar pattern, albeit for different reasons.
As seen in Fig. 4, 113 early generation 747s
were retired and replaced by 77 747-400
conversions and production freighters. Firstgeneration A300B4s and A310s were retired,
while the A300-600 converted freighter fleet
grew. Production 777 and 767 freighters
were added as well as 767 conversions, while
the DC10/MD11 shrank. Despite an increase
of 41 units in the widebody freighter fleet,
the aggregate fleet payload capacity actually shrank by five percent.
Take a moment to consider the current
situation:
* Strong growth forecast for the next
five years
* Increasing yields and freighter load
factors
* Little or no freighter fleet growth
* Freighter feedstock shortage due to
strong passenger demand
* Factory freighter production constrained

Unless an extraordinary event occurs to
negatively impact demand for air freight, a
pronounced shortage of freighter capacity
is possible. However, previous forecasts
have predicted the demise of cyclicality
in commercial aircraft markets only to be
proven wrong. IATA and others make a
strong argument that the airfreight market
is currently experiencing a paradigm shift
due to a fundamental structural change
in demand from rapidly growing markets
such as e-commerce and pharmaceuticals.
Will companies that perform freighter conversions and were previously impacted
by overbuilding production capacity be
convinced that this time will be different
and that the market has fundamentally
changed? If so, where will feedstock come
from at the right price and in the right
quantities? A review of the active and
planned conversion programs will give a
better picture of how well the market is
prepared for these challenges.

Like the CRJ, AEI undertook a speculative conversion program for the MD80 with
the first delivery in 2013. The MD80SF
is a very capable 46,000-pound payload
freighter with 12 main-deck pallet positions. Although MD80 feedstock is inexpensive and plentiful with a reasonably
priced conversion cost, demand for the
aircraft is constrained by the advanced age
of the fleet and a narrower fuselage cross
section, which precludes carrying standard
size pallets. AEI has converted 12 aircraft,
which are operating in Mexico and Alaska
with a backlog of six units.

737 Classic
The 737-300 and -400 have proven to
be an excellent addition to the small narrowbody freighter market with 343 aircraft converted. Initial interest was in
the 737-300 due to its lower feedstock
cost, but demand has now switched to
the 737-400, which offers two additional
main-deck pallet positions. There are two
primary conversion providers, AEI and
PEMCO, who have a combined backlog of
approximately 28 units stretching into
2019. Suitable feedstock is beginning to
be in short supply, and the 737 Classic
conversion programs can be expected to
wind down in the early 2020s.
Jetrader * Summer 2018 21

Jetrader - Summer 2018

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