The cargo market for Boeing models is accelerating, with increased levels of business for both new-build and converted aircraft
A recent spate of orders for new-build 747-400 and 767-300 freighters, certification of converted 757 freighters, and significant cargo conversion deals by ABX Air and Alaska Airlines for 767-200 and 737-400 freighters, respectively, make 2005 a landmark year for the air cargo business in general and Boeing models in particular.
“I’m in awe of how successful we’ve been,” says Boeing cargo marketing regional director Tom Crabtree, talking specifically about sales of new-build freighters. Even though air cargo growth has slumped to a relatively flat 3% for 2005 so far, compared with up to 12% in 2004, “that’s not too shabby”, says Crabtree.
Although Boeing believes rising oil prices have forced many businesses to buy maritime shipping capacity in the short-to-mid-term, the longer-term impact could be good for air cargo. “A lot of carriers may be driven to ‘re-fleet’ to more efficient, more modern aircraft,” he says.
The inexorable growth in the air cargo business, traditionally seen as a poor relation of the higher-profile, higher-profit (and loss) passenger aircraft market, is now seen as increasingly vital to Boeing, which provides 90% of the world’s air cargo capacity. “We’re working hard to maintain that leadership,” says Crabtree, citing new 747-400F/ERF sales, development of the 747F Advanced, the imminent first flight of the 747-400SF, studies of the 767-300SF and the launch of the 777F.
It is no surprise that Boeing’s focus is predominantly on the large and medium widebody sectors, which between them account for about 64% of the estimated 2,872 new and converted freighters that the company predicts will enter service between now and 2024. Including around 800 survivors from today’s cargo operators, the total freighter fleet is predicted to be more than 3,500 by 2024.
Traffic to triple
The widebody freighter fleet, which today makes up only 47% of the global fleet, is expected to grow at a faster rate than ever before over this period, during which cargo traffic is expected to triple to about 600 billion revenue kilometres. “The overall result is, we think, a doubling of the freighter fleet over the next two decades from 1,757 aircraft today to around 3,526 by 2024,” says Crabtree.
The engine of growth is still mainly the “golden triangle” of air freight – the routes connecting the Americas, Asia, intra-Asia and Europe. The long-haul, high-capacity nature of the triangle means that “as a result we’ll see larger cargo aircraft with lower costs, which are typically widebody freighters,” he says. For Boeing’s forecast, large freighters are defined as carrying a payload of 65t or more, and includes aircraft such as the DC-10-30, MD-11F, all variants of the 747 and the upcoming 777F and Airbus A380-800F.
Boeing forecasts that almost 1,000 large widebody cargo aircraft will join the fleet between now and 2024, of which about 520 will be new airframes and 477 converted. Should these predictions come true, it will be the first time the growth rate of new-build jet freighters will have exceeded their converted equivalents. “We are seeing growing interest in production freighters,” says Crabtree, who adds that the increase in tempo builds on a trend going back 15 years to when the 747-200F was phased out and replaced by the -400F. And the numbers back this up.
Between the handover of the first factory-built 747-200F in March 1972 and the last delivery of the type to Nippon Cargo in November 1991, a total of 72 were handed over. Compared to this rather pedestrian pace, orders and deliveries of the 747-400F and ERF variants continue to grow at more than double that rate, with 144 on the books from 21 customers. “It’s a really exciting time. It’s the first time in the history of air transport when any manufacturer has the potential to launch two widebody freighters in one year,” says Crabtree, referring to the 777F and – all being well – the 747AdvF.
However, modifications will still play a vital part in the make-up of the large-capacity fleet, and Boeing is poised to take full advantage of its large installed base of 747-400s with the recently launched -400SF (special freighter) programme. “There are a number of carriers that do not have access to the same capital as others, and we think the -400SF option offers them an economical solution to augment the MD-11,” he adds.
For those with access to enough capital, the other obvious option to the MD-11 is the 777F. “It works well for those not married to the 747 and is a supplemental growth aircraft for the MD-11,” says Crabtree. The two aircraft share the same-size lower hold, but the 777 is larger on the main deck, “which is cool because it means it can carry 3m-tall pallets on the main deck”, he adds. “This means interline capability between the 777 and 747 and vice-versa.” The first 777F is scheduled to be delivered to launch customer Air France in the fourth quarter of 2008.
It is the potential size and diversity of the conversion market that interest most of the air cargo industry and its suppliers. Apart from the 724 new-build aircraft expected to contribute to the growing fleet over the next two decades, Boeing predicts 2,148 conversions will make up the rest.
Of these, some 1,066 conversions will be in the standard-body sector, which comprises mostly 737s and 757s coming into the market to augment and replace 727Fs. Although Boeing expects an A320 conversion programme to be launched, it believes modifications of “Classic” 737s and later 757-200s will come to dominate this market sector.
The medium widebody market, covering the 40t to 65t sector, is expected to see a requirement for more than 780 aircraft, of which 605 will be converted. Airbus has enjoyed its biggest success in this area, thanks to the A300/A310, which together form a big share of the roughly 370 freighters in the sector today. Competing is Boeing’s new-build 767-300F, which has mounted a relatively late sales rally in 2005, as well as two 767-200 conversion programmes along with a 767-300SF potentially waiting in the wings.
Boeing conversions
737
Busy times beckon for the companies working on 737 Classic freighter conversions. Long seen as the heir apparent to the 727, the world’s most successful standard-body jet freighter along with the DC-8, more than 1,400 737-300/400s are now over 15 years old and becoming cheaper to acquire for modification.
Although cargo market demand is growing, the conversion rate is slowed by the availability of suitable aircraft, many being retained for the buoyant passenger market. Large fleets of similar or identical aircraft from the same production batches are also proving hard to acquire for the same reasons.
One of the most significant new deals in the 737 conversion business came earlier this year when Alaska Airlines awarded Pemco Aviation Group a contract to modify up to five 737-400s into Combis. The launch order for Pemco replaced an initial contract agreed with Taiwan’s Inter-Continental Aircraft Services (ICAS) which, as a result, is now looking for a new launch customer for its Boeing 737-300/400 cargo conversion programme.
ICAS acknowledged this year that the deal was in jeopardy because it was having trouble negotiating a contract with Canada’s Cascade Aerospace, which Alaska insisted should be the conversion centre after Taiwanese maintenance company Air Asia failed an Alaska Airlines audit (Flight International, 11-18 January). Air Asia is part of the ICAS consortium, along with China Airlines (CAL), EVA Air maintenance arm Evergreen Aviation Technologies, and Taiwanese aerospace manufacturer Aerospace Industrial Development Corporation (AIDC). ICAS says the four companies and Taiwan’s ministry of economic affairs have agreed to keep funding the consortium for at least several more months.
Pemco plans to deliver the 737-400 combis in 2006 and 2007, replacing Alaska’s fleet of seven 737-200Cs. The aircraft will be configured with space for up to four pallets and seating for 70 passengers. “The -200Cs have an average capacity for three pallets so, per aircraft, we should increase cargo capacity by 15-20%,” says the airline. Together with its existing -300 conversion work, the Alaska order will raise the combined 737-300/400 conversion rate at Pemco’s Dothan, Alabama site to 10-15 a year for 2006-7.
The Alaska work also came as something of a consolation for Pemco, which had been tipped to win further 737 conversions from China Postal Airlines. The Chinese operator, which runs two GE Capital Aviation Services (GECAS)-owned -300Fs converted earlier by Pemco, selected instead Israel Aircraft Industries (IAI) to convert into freighters at least three Boeing 737-300s operated by sister company China Southern Airlines.
The first 737-300 was expected to be delivered to new IAI partner Guangzhou Aircraft Maintenance Engineering (GAMECO) in the third quarter and will be redelivered to China Postal in early 2006. IAI has signed GAMECO as a subcontractor to install 737 conversion kits for potential Chinese and overseascustomers using the IAI supplemental type certificate (STC).
Further Chinese conversion work is in the pipeline. China Postal plans to add three 737-300Fs next year to replace its fleet of five Shaanxi Y-8s. The carrier also expects to add 10 freighters, mainly 737s, and possibly Boeing 757-200Fs, from 2006 to 2010. China Southern, which is phasing out its fleet of 30 737-300s, is expected to be the source of some of these aircraft.
IAI is deepening its co-operation with Varig Engineering & Maintenance (VEM) in a development that will see 737 and 767 conversions conducted in Porto Alegre, Brazil, at the rate of up to five a year. IAI also has a 737 conversion line established at South African manufacturer Denel’s Bonaero Park facilities outside Johannesburg. Current activity includes conversion work on GECAS-owned 737s destined for Kitty Hawk, Bluebird and Islandflug. Florida-based Aeronautical Engineering (AEI), which had earlier been linked to attempts to establish a 737 conversion operation in Macau, China, is also believed to be continuing to develop a -300/400SF conversion programme.
747
Flight tests of the first Boeing 747-400 passenger aircraft to be converted under Boeing’s Special Freighter (SF) programme are expected to start at the end of September in Xiamen, China. The modification work is being performed by Taikoo Aircraft Engineering (TAECO) and the first aircraft is scheduled to be delivered to Hong Kong’s Cathay Pacific Airways in December.
Cathay became launch customer for the 747-400SF programme with an agreement to have at least six and as many as 12 aircraft converted, and is expected to deliver the second aircraft for conversion around December 2005.
The Boeing-led -400SF conversion effort is rapidly gaining popularity, with at least 33 firm and 29 options for seven operators announced officially by September. “In terms of delivery positions, we’re full through 2009,” says Boeing Commercial Aviation Services passenger-to-freight product marketing manager Clinton Morris. “We will also be delivering kits from 2006 onwards.” These will be delivered to conversion facilities being established for the programme at Korean Air and Singapore Airlines Engineering (SIAEC).
Despite having hit cost and schedule problems with earlier conversion programmes for the 737 and 757, Boeing believes its intimate knowledge of the 747 will stand it in good stead for the market battle with IAI, which is developing a “reversed-engineering” 747-400 conversion. “Knowing the loads and the tolerances and the design so well, there will be no compromises in quality,” says Morris. “By knowing the tolerances, we know how to take weight out of the aircraft.”
The IAI effort received a boost earlier this year when GECAS chose its modification programme to convert four Boeing 747-400s. EVA Airways will lease the first three aircraft from GECAS following a purchase-and-leaseback transaction with the lessor. EVA also holds an option to convert the fourth aircraft. The first is scheduled for delivery in the first quarter of 2007.
Taiwan’s Evergreen Aviation Technologies (EGAT) has also been exploring possible joint partnerships with both Boeing and IAI over -400SF conversions, but in the meantime has its plate rather full with conversion work on the first of at least three -400s into Large Cargo Freighters to support the 787 programme. Singapore Technologies Aerospace (ST Aero) has also signalled its interest in the -400SF, and has voiced its preference for joining the Boeing-led conversion and using the original manufacturer’s conversion kits over those of rival IAI.
757
Another Boeing “Classic” with a promising cargo future appears to be the fuel-efficient and relatively capacious 757-200. Potential cargo conversion estimates vary from the conservative 100-plus of some analysts to almost 550 by the Air Cargo Management Group, with the main surge of activity widely expected to begin in 2007-08. “We expect a big bow wave in 2008, based on 737-800/900s dislodging them in airline service. I think they’ll eventually knock the 757 out of the sky,” says Brian McCarthy, sales vice-president of 757 modification specialist Precision Conversions.
Icelandic freight carrier BlueBird Cargo took delivery of the first Precision Conversions-developed Boeing 757-200PCF freighter modification on 1 July after the hard-won US Federal Aviation Administration (FAA) approval of the conversion. A second was delivered the following month.
The next pair of conversions are International Lease Finance (ILFC)-owned aircraft scheduled for delivery to Shanghai Airlines, says McCarthy. The modifications are being performed at Goodrich’s Aviation Technical Services site in Everett, Washington and took longer to complete and certificate than expected because of exhaustive certification checks and some supplier hold-ups, says Precision.
McCarthy adds: “The FAA held us to the letter of the law, and we were really guinea pigs. We removed the old lavatory and all the plumbing and vacuum waste system in the aft, so we made room for a 15th pallet and we’re chasing weight and volume. We also take 465 wire bundles out of the aircraft.” He says the basic operating weight was confirmed in the STC at 52,535kg (115,720lb). The maximum structural payload varies from 30,400kg to 32,200kg depending on the aircraft’s build standard and vintage.
“Activity has increased considerably since the STC, mostly from smaller operators that need one or two or three aircraft,” he says. “That will probably be the way it is until we see larger blocks of aircraft become available when the ‘legacy’ carriers give them up. They will have to do it eventually.” As with the 737, suitable conversation candidates are “not growing on trees”, says McCarthy, who reckons Precision will aim for a conversion rate of six to eight a year from 2006 onwards.
First customer
The Royal New Zealand Air Force has emerged as the first customer for ST Aero’s relaunched Boeing 757-200 cargo-conversion programme. ST Aero will convert the RNZAF’s two 757-200 troop transport aircraft into combis at the company’s Mobile, Alabama plant in 2006 and 2007.
ST Aero and Israel Aircraft Industries (IAI) converted 34 757s for DHL from 2001 to 2003 in a programme led by Boeing. But last year the programme was restructured, with Boeing dropping its prime role and the supplemental type certificate (initially covering just the RB211-535C-powered variants) shifting to ST Aero and IAI. ST Aero is now seeking its own STC, with licenced data provided by Boeing.
A third 757 conversion programme undertaken by California-based Alcoa-SIE (Structural Integrity Engineering) Cargo Conversions (ASCC), is optimistic of winning its STC at the end of October and plans to display its first aircraft at the CargoFacts conference static display at Boeing Field, Seattle. ASCC director of sales Richard Gauvin agrees with McCarthy’s view of the supply problem, but says: “It’s not something we’re worried about, but the supply is tightening and getting our hands on 757s is becoming more difficult. Now we have to be more creative.”
The ASCC conversion, dubbed the “14Plus” because it provides capacity for up to 14 main-deck cargo pallets without the need for major modification, comes with a target operating empty weight of around 53,570kg and a payload range of between 29,965kg and 31,780kg. “The STC is not limited to different engine types, but we started out with Rolls-Royce power so we will need additional flutter testing for a Pratt & Whitney-powered version,” says Gauvin. “The STC will be applicable to all weights up to the 255,000lb max take-off weight variant.”
Gauvin says the decision to go for the 14Plus arrangement rather than the 15-pallet configuration of other conversions was driven by the need to reduce cost and risk. “Having 15 pallets does not justify the cost of certificating it, whereas keeping the original structure more intact reduces technical risk and keeps costs low – and that resonates with cargo operators.”
767
The 767, like its standard-body sister the 757, appears to be on the verge of a bright new career as a cargo hauler, with modifications under way and the first IAI Bedek-converted 767s already in service.
Based on the -200 airframe, which provides space for 20 pallets in the Aeronavali/Boeing modification and 19 in the IAI conversion, both groups are promoting the 767 as the ideal DC-8 replacement.
Among the first operators to fly the 767-200SF is Colombian freight carrier Tampa Cargo, which is benefiting from an increase of 1,362kg (3,000lb) in the maximum zero fuel weight (MZFW) as part of the modification. The increase in MZFW allows Tampa to take full payloads out of high-altitude airports in Latin America. Denmark-based Star Air/Maersk is also flying a GECAS-owned, IAI-converted 767-200SF from its main base at Cologne/Bonn airport, mostly on behalf of United Parcel Service. In all, GECAS has signed a 15-aircraft deal with IAI for 767 conversions, with the first by VEM being the final one from an initial order for four from Tampa, and with Star taking 11.
Another freight operator, ABX Air, is also dramatically ramping up preparations for 767SF operations through IAI, having recently increased its initial order from five to 17 aircraft by signing an agreement with Delta to secure 12 -200s between 2006 and 2008.
Tampa Cargo will also be the first operator of the competing Aeronavali/Boeing 767-200SF conversion, which was launched by Capital Aircraft Management with orders and options for up to 10 ex-American Airlines -200ERs. “The first of these is due to be inducted this month,” says Boeing’s Morris, who adds that initial delivery is set for September 2006. Compared to the IAI modification, says Morris, “we are promising higher weights, with a higher MZFW [around 120,770kg] which is around 5,000-6,000lb [2,270-2,725kg] more than the IAI conversion”.
Aeronavali, which is the only licensee for the proprietary Boeing conversion design, replaces the main-deck floor and installs a 767-300F main cargo door, and Boeing retains responsibility for engines and systems certification.
Meanwhile, Boeing says studies of the 767-300SF continue, and Morris adds: “We may retain full control of the modification, manufacturing and support. We’re going through that exercise now and looking towards authority to offer. We should know the results of those studies by the end of the year.”
But as with the 737 and 757, the pace of the -300SF programme could be slowed by the success of the passenger version. “It’s the availability of feed stock aircraft that’s an issue,” he adds. “The -300ER is a very popular aircraft right now, and in stiff demand.”
MD-11
Demand for the ever-popular MD-11 freighter conversion remains as high as ever, with Boeing expecting 2005 to be “a record year in terms of re-deliveries”, says Morris. “We think we’ll deliver at least 20, maybe 21.”
Touch labour for the conversions is conducted under licence from Boeing by Aeronavali and Singapore Technologies’ SASCO division, with most of the aircraft currently under modification destined for FedEx, UPS, Lufthansa or Alitalia. Of the 200 aircraft originally built at Long Beach, only about 36 are still in passenger configuration and “uncontracted”, says Morris.
Would-be MD-11F users include Malaysia-based Transmile Air Services, which is thought to have secured up to four aircraft, Thai Air Cargo, Aeroflot and DAS Air. -
Source: Flight International
