Air Transport World

Cleared for takeoff: with airfreight back on the growth fast track, conversion programs are getting off the ground.(Cargo)

What a difference two years make. When ATW last reviewed the market potential for passenger-to-freighter conversion programs (9/02, p. 48), airfreight was just beginning to claw back from its most severe contraction since the early 1970s. The winding down of high-priority Y2K-related technology shipments, followed by the bursting of the dot.com and telecom bubbles and then 9/11, resulted in world airfreight traffic (FTKs) falling 6.6% in 2001, according to Arlington, Va.-based MergeGlobal.

Unlike developments on the passenger side, however, recovery in airfreight was swift, with 2002 FTKs up 4.9% over 2001, according to the same source. The pace increased last year, although severe cutbacks in passenger flights in reaction to SARS and the war in Iraq resulted in a significant reduction in belly capacity in the first half of 2003, particularly in Asia. Nevertheless, by year end freight traffic had surpassed 2001 levels and data from IATA for the first half of the current year show international FTKs up 13% over the year-ago period and 16.2% over the January-June period in 2000.

The stage is set for a further acceleration of this trend, multiple sources say, and the long-anticipated boomlet in conversion programs appears to be getting underway as well. MergeGlobal forecasts that intercontinental freight traffic will increase at a compound annual growth rate of 6% through 2008, eclipsing the 1999-2003 average of just 1.9%. Within regional markets, such as US-Canada and inter-Europe, airplanes must compete with trucks and therefore traffic is projected to grow at a lower CAGR of 3.7%, which still represents a significant increase compared to the 0.9% rate recorded over the previous five years, says MergeGlobal Principal David Hoppin. This demand will cause the freighter fleet to rise from 1,854 units at the end of 2003 to 1,966 five years later, he estimates, with around 75% of the additions being converted passenger units.

Separately, Boeing's 2004 "Current Market Oudook" predicts that cargo traffic will grow at an average annual rate of 6.2% over a 20-year forecast period, creating a demand for about 3,000 freighters to meet projected growth as well as the retirement of around 1,200 jets. …

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