Freight tonne-kilometers (FTK) for April 2019 fell by 4.7% compared with their level a year ago with all regions showing a deterioration in year-on-year FTK growth, according to IATA. IATA now expects global tonne-kilometers in 2019 to be barely 2% above 2018 levels.
Nevertheless, there is potential for strong and positive growth in specialist products and e-commerce, according Jonathan McDonald, head analyst for commercial and aging aircraft at IBA. And over the longer term, growth and the continued aging out of older cargo jets means there will be plenty of opportunity for passenger to freighter conversions.
IBA looked only at the market for mainline jet freighters and divided these into narrowbodies, mid-size and widebodies.
Boeing 757-200s remain the most popular freighter, but 767300ER freighters have grown substantially. The 737-800SF count is expanding as well, McDonald notes.
Most demand for mid-sized freighters is for 767-300ERs, such that slot availability for conversions is becoming tight. Conversions of Airbus A330s should increase once more of these aircraft become available, the IBA forecaster judges. Among high-capacity widebodies, only the 747-8F and 777F are in production.
Passenger-to-freighter conversions rose steadily from about 55 in 2015 to more than 80 in 2018. Last year, 25 737-400s were converted for an estimated $2.8 million apiece, at a total cost of roughly $70.0 million. Nearly as many 757-200s were done at $5.0 million per jet for a total of $115.0 million, and the popular 767-300 yielded 27 conversions at $14.0 apiece, totaling $378.0 million.
IBA expects the narrowbody freighter market to grow from about 705 in 2019 to approximately 880 in 2024, with most growth coming from 737-800s, 757-200s and Airbus A321s, followed by 737-700s and A320s. A slight decline is predicted for 737-300s, while the count of 737-400s is expected to increase slightly. Boeing 727-200s, 737-200s and McDonnell Douglas DC-9s should decline to minimal numbers by the middle of the next decade.
Mid-sized freighters will grow from about 563 now to about 660 in 2024, in IBA’s view. Most of these will come from A330s and 767-300ERs, both produced and converted. Conversions should outnumber production freighters, as converted freighters are cheaper, and new 767-300Fs are produced in low volumes. IBA predicts the few remaining A310s will be gone 2024.
IBA expects the 573 widebody freighters active now to increase to about 680 aircraft in 2024. Most of the increase will be 747-8Fs and 777Fs. Very few classic 747 freighters will remain in five years.
To frame an owner’s conversion choices, IBA took a look at a typical 19-year-old 737-800 flown 54,902 cycles, with flight hours 2.6 times the number of cycles. IBA estimates the aircraft could be sold for $11.3 million, or parted out for $6.5 million. Leasing for six years would yield $165,000 per month and a value at lease end of $7.0 million or a part-out value of about $3.6 million.
Conversion of this same 737-800 to a freighter would cost $4.0 million, plus $3.1 million for maintenance, loss of revenue, ferrying, management and other items. Add the $11.3 million market value, and the converted aircraft would be worth about $18.5 million, quite attractive to a cargo operator.
IBA reckons there are about 18 737-700s and -800s that would roughly meet these favorable conversion criteria either now or over the next several years.
McDonald thus judges that narrowbody conversions will gradually migrate from 737-300s and -400s to -700s and -800s, with about 300 to 350 of the latter types converted over the next 15 to 20 years. The majority of a total of 775 narrowbody conversions will come from these types, plus A320-200s and A321-200s and 757-200s.