keynote feature
freighter conversion market is improving. “We have seen an increase in interest and are starting
to see commitments,” he went on. “Over the last two years, cargo demand fell sharply, this at a time when the investment banks were also experiencing problems. These two issues combined made it extremely difficult for leasing companies and cargo operators to purchase and convert aircraft. “Since demand has returned and banks and private
equity are more willing to lend or invest money, we are starting to see movement in aircraft transactions and conversions,” McCarthy revealed. But he also sounded a note of caution: “It is obvious that
some of the players are playing it safe and this is where we are seeing people pause when looking at widebody aircraft investments and aircraft designed for growth markets. “We see many potentials opting for conservative
approaches to fleet planning and some plans more tailored towards recovery of lost ground, rather than a plan that might leave them with overcapacity or too many aircraft in these uncertain times.” McCarthy added his predictions: “When speaking about the entire freighter fleet, the forecast over the next eight
years is for roughly 2,600 aircraft to be converted and over the next 18 years the forecast is for just over 3,900 units to be converted. When reviewing forecast numbers like this, it makes sense that the demand for freighter capacity will be serviced mainly by conversions and simply augmented by new-build freighters. “In my opinion,” he said, “we may even see more after-
market conversions than newbuilds because of the desperate yield situation that is unfolding, as well as the competitive pressures of other transportation modes that may not support the cost of new aircraft – regardless of the reliability that newer aircraft represent. “Fuel pricing stability may ultimately dictate a further
shift towards after-market conversion, unless some sort of spike in fuel price changes the game,” McCarthy commented. “This scenario would require a much more efficient, new generation of engines that could offer 15 percent or more fuel savings to support the high cost of new-build freighters. “In the narrowbody freighter game, I see virtually no newbuild freighters in a ‘dollar per pound’ world,” he announced. McCarthy believes that the industry is becoming tougher
AIR LOGISTICSCHINA 15
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