MIAMI – Airlines’ line of action related to jet conversion into freighter has been rushed amid the pandemic and the rise of cargo demand. As a result, the value of used planes has fallen, especially, due to a medium-term scenario in which cargo operations increase while passenger services decline.
In the middle of all this, passenger-to-freighter (P2F) conversion companies have found several opportunities. According to aviation analytics firm Cirium, P2F conversions will rise by 36% to 90 planes in the next year, then to 109 planes in 2022. Accordingly, Cirium Head of Market Analysis Chris Seymour said most slots are sold for 2021 and around 40% for 2022.
Adding more fuel to this forecast, advisory firm Ishka states that the 15-year-old aircraft market value went down by 20% to 47% throughout 2020 or less than hallf of that in 2019.
Extended Impact of Freighter Conversion Operations
Amid the pandemic, several airlines have opted for removing passenger seats to carry more cargo. P2F conversions are on the other hand considered a long-term financial risk. While the air freight demand was weaker before the current crisis, e-commerce is tomorrow’s trend. Amazon Air knew this and built up its own 70-aircraft fleet.
In normal demand circumstances, passenger planes’ bellies are the chosen space for shipments, but this year has set a precedent. In fact, CDB Aviation Chief Executive Patrick Hannigan states the pandemic has accelerated what he says is a “long-term structural shift” towards higher e-commerce demand.
Despite Boeing having major record losses throughout 2020, it reported its cargo yields increased by 40% in September. As such, it now predicts an increase of more than 60% for freighter deliveries over the next 20 years. These will most likely be P2F conversions rather than new widebody freighters.
According to Reuters, other consequences of the “conversion boom” include maintenance, repair and overhaul groups’ business recovering despite 2020 losses within the industry. Moreover, several P2F companies have declared that all or at least the majority of their aircraft conversions for 2021 were booked. This means these operations have allowed them to keep employing most of their staff amid the crisis.
Featured photo: Boeing 747-8 Freighter. Photo: Boeing.