Extending the working life with a change FREIGHTER CONVERSIONS


REPORT A


strange side-effect of an aircraft con- version from passenger to freighter (PTF) use can be a lengthening of the service life as a freighter beyond that the aircraft would have had


had it remained in passenger service. That is the observation of Kevin Casey, president of Tampa (US)-based PEMCO World Air Services (PEMCO), which has been converting Boeing 737s for 23 years. He considers that a conversion typically can


extend life beyond the original equipment man- ufacturer (OEM) design threshold. He says: “As a practical matter, PTF conversion and concurrent heavy maintenance do improve the structural and maintenance condition to the extent that real-world life span is greatly enhanced. More- over, since narrowbody freighters are operated far less than they would have been in passen- ger service, life span, largely cycle-limited, is effectively extended. The average age of a nar- rowbody freighter at final retirement is on the order of 34 years.” PEMCO provides conversions at its Federal


Aviation Administration (FAA)-certified, US service facilities and at partner sites in South- east Asia and additional locations in Cincinnati, Ohio (US) and Asia. PEMCO has two multi-role Boeing 737 conversions available, QuickChange and Combi, which both retain passenger capa- bilities, as well as full-conversion programmes. The company works with several aircraft


trading companies and conventional aircraft leasing companies that convert freighters on speculation. However, it does not wish to com- pete with its customers so does not acquire its own aircraft to convert.


Few green aircraft In today’s market, nearly all converted air-


craft have been retired from passenger service by an airline, yet, Casey says: “In the early days, we actually converted a few “green” aircraft straight off of the Boeing production line.” How similar is a converted passenger aircraft


to an original freighter of the same type? Casey says: “There are no production versions of nar- row-body freighters available from Boeing or Airbus. In fact, in a rare moment of agreement, this year’s Boeing and Airbus cargo market forecasts projected that 100 per cent of the com- mercial (non-military) narrowbody freighters produced in the next 20 years will be conver- sions and not new production. “There are examples from the large widebody


freighter market where the new production freighter have some advantages. Sometimes it was payload, maximum weight, sometimes it was a feature such as nose-loading, but in all cases the production version was vastly more expensive than a comparable converted freighter. However, in the 20 to 40 tonne nar- rowbody market, such as Boeing 737 Freighter


to Boeing 757 Freighter, companies have pro- duced products at economics that original equipment manufacturer cost structures have historically been unable to match.” In today’s market, notes Casey, a late-model


newly-converted and C-checked Boeing 737- 300 or -400F can be purchased for $6 million to $8 million. At this level, return on investment can be achieved in most regional freighter mar- kets within three to four years. Considering the post-conversion useful life is at least 15 years, there is a lot of profit to be made with each pro- ductive Boeing 737 freighter.


A profitable life During a conversion, a substantial portion of


the forward fuselage structure is replaced or modified, as are aircraft electrical, hydraulic and environment systems. However, in the case of PEMCO’s conversion, the design was such that the aircraft does not know it is a freighter. The aircraft flight characteristics are completely unchanged, says Casey. On the cargo apron, small, 40 tonne narrow-


body freighters will all be passenger to freighter conversions; medium payload aircraft, such as the Boeing 767 and Airbus A330, with 40 to 85 tonne capacity, will be split equally between converted and production; while large payload aircraft with capacities of 100 tonne or more, such as the Boeing 747, have historically been 20 per cent converted and 80 per cent produc- tion; the outlook is increasingly looking like new build only. A paradigm shift in the air cargo industry is


creating a perfect storm of market forces that is putting the profitability, and in some ways the very existence, of the aircraft conversion sector at risk. That is the belief of industry veteran Cliff Duke, chief executive officer of the Eolia Group. The inexorable rise of belly-hold volumes,


a glut of maindeck capacity on the market, the growing unpopularity of four-engine aircraft and margins in cargo aviation that have gone through the floor, all point to a structural change in the market that it is throwing its long-term future into doubt. Duke says: “At present there are 70 Boeing 747 freighters either parked or on the market, four-engine


CONVEY


We have customers taking air- craft out of the desert


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ACW 14 APRIL 2014


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