6 months was the waiting
time for a candidate
aircraft to be converted
pre-pandemic
12 months is the
typical lead
time for a full
conversion refi t
them so they can continue to
lease the aircraft from us.”
Airlines looking to go down
the leasing route can expect to
pay around 1% of the aircraft’s
total cost, according to Vallair.
Leases typically run between
four and eight years, with an
upfront security deposit as
standard. This equates to two/
three months’ worth of lease,
depending upon the credit risk/
rating of the airline. Leasing
has the allure of offering a
lower risk route into
conversions, as the liability for
the asset is left solely with the
fi nancier, adds Dibisceglia. “If
you lease then you don’t have
residual value risk. Think about
today’s market: some airlines
are grounding aircraft and the
values drop because it’s an asset
that can’t be utilised. Leasing
protects lessees from
impairment.”
When pondering a
conversions programme, new
entrants should come armed
with a long-term vision, advises
Robert Convey, Senior Vice
President – Sales & Marketing
at Aeronautical Engineers.
COVID-19 may have put
conversions back on the
agenda, but it’s an unforgiving
segment for those expecting to
make a quick buck, he reckons.
“A B737 conversion costs
around US$20-30m and will
take us around three years,”
explains Convey. “You look
around and wonder why not
many people have been
doing conversions. First
there’s the cost: three years
of laying money out. Then
you need a year of getting
your production going and
getting up to speed. It could
take you ten years to pay off
the programme for a pure
investor. It’s a very diffi cult
business case and an investor
can make better returns doing a
thousand other things.”
US$20,000,000+
estimated cost of converting a
commercial B737 to carry freight
The A321 enters the fray
with superior fuel economy,
lower maintenance costs, larger
cargo doors and the ability to
hold containerised freight in
both the upper and lower
decks, compared to the B757 or
B737. “That’s the magic,”
enthuses Birke. “It’s a twin deck
freighter which makes it much
more convenient for operators
and integrators. The turn times
are quicker, less manpower is
needed and it’s safer because
cargo can be preloaded in the
warehouse into the container
and protected in the aircraft
belly.”
The A321 will be one to
watch, acknowledges Convey
of AEI, which specialises in
Boeing 737 conversions.
However, the real battle will
not be between the world’s two
biggest aircraft manufacturers
but the different A321
conversion houses, he suggests.
“I think the A321 will make
a decent freighter and it’s the
fi rst narrow-body, fl y-by-wire
freighter. The question I have is
that I’m not sure which
conversion programme is going
to win. EFW has 14 full size
container positions and a small
crew area. Precision has 13 full
size container positions and a
larger crew area. (The
fourteenth position for
Precision is a pallet turned
transversely). And, my even
bigger question is that one
conversion house is OEM
supported (EFW) and one is not
(Precision). Which will be
preferred?”
However, the A321 won’t be
the only Airbus representative
making its way into the
narrow-body market. Its
little brother, the A320 –
Europe’s most popular pax
aircraft – is also bound for a
freighter makeover. “The
prototype conversion will
start soon,” admits Birke.
20+ years’
service is
typical from a
converted freighter
74 commercial
aircraft were
converted to freighters
in 2019
AEI has noted a boom in airline interest, aircraft feedstock and
a subsequent decline in asset prices since the pandemic struck.
Convey declares: “We are benefi tting and will continue to see
increased demand for our B737-800 and B737-400 product.”
However, the AEI chief voices a note of caution over whether the
market is witnessing a defi nitive shift in a passenger airline
business model towards cargo. “I don’t think so,” he says. “I think
this is just a spark. In the wide-body market, there’s a lack of new
freighter models to buy and it’s going to be a lengthy wait to enter.
We’ll see some airlines expanding into conversions (narrow-body
options being the most likely), but not a run. It comes down to
what do you want to be in life: you can’t be the best in
everything.”
A World Fleet Forecast white paper from Avalon (pre-
COVID-19) forecasts the need for more than 2,000 additional
aircraft to be converted to freighters in the next 20 years
(https://tinyurl.com/yaf7d9oz).
“The crisis may improve this,” predicts Gilbert Birke, Head of
P2F Sales at EFW, joint venture of ST Engineering Aerospace and
for Airbus, which achieved supplemental type certifi cation for its
A321 Passenger-to-Freighter (P2F) conversion from the European
Union Aviation Safety Agency this February. “If pax volumes
recover slowly then pax fl ights are less reliable and schedules shift.
The big logistics companies will want the security of dedicated
freighters.”
Narrow-body aircraft will account for 80% of the projected
conversions demand. And, the arrival of the A321 in this segment
to take on Boeing’s dominant 757 and 737 presents a fascinating
sub-plot in the conversions story this year. “With our new product
we’re aiming to eat up some of Boeing’s market share,” says Birke.
“The prototype is certifi ed and we now have to open up new
conversion lines. We aim to convert more than 20 A321s per year.”
BOXING CLEVER: COVID-19
SPARKS CABIN MAKEOVERS
Makeshift conversions have provided a low cost way for airlines to aid in the transport
of PPE and medicines during the pandemic, generate much needed revenue and cover
the operating costs of expensive aircraft assets that would otherwise have been
grounded. However, operators must meet stringent safety compliance guidelines
set out by IATA (https://tinyurl.com/ycc4z6ue) and gain approval from their OEM and
National Aviation Authority for the conversions.
Entrepreneurial airlines have sought two potential routes:
1 Cargo secured to seats and placed in overhead bins:
in this confi guration, packages are strapped to seats
and secured in baggage bins. KLM says that the cargoin
cabin conversion can boost payload by around 40%.
Crew members must be on hand to survey the cabin at
all times.
Removing seats altogether: seating is removed
2 and the cabin stripped, as British Airways has
done with two of its grounded B777-200s, to carry
critical cargo. BA estimates that further 100 cubic
metres of capacity has resulted from the refi t.
www.airlogisticsinternational.com June 2020 25
/yaf7d9oz)
/ycc4z6ue)
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