Air Transport World

Waiting on the turnaround: the future looks bright for the freighter conversion market if only the present weren't so bleak. (Cargo).(Statistical Data Included)

Two conditions must exist in order to create an active market for passenger-to-freighter conversions: Strong demand for air cargo and the availability of sufficient suitable aircraft at prices low enough to justify converting them. Today, however, just one of those elements is present.

Used airplanes are plentiful and cheap, with the world's parked fleet numbering around 2,000 aircraft as of mid-July, according to UK-based Airclaims. Unfortunately, there is little demand on the cargo side, as is illustrated by the fact that freighter aircraft comprise 20% of the desert air force, also according to Airclaims Even if half of these never leave the ground, there still remain some 200 to be returned to service, further depressing demand for both purpose-built and converted freighters. "Right now, the cargo industry is in the dumps and they don't need any more airplanes than they already have," notes Doylestown, Pa-based aviation consultant Jack Feir.

The lack of demand is the result of the calamitous air cargo contraction that began in December 2000. This downturn, which grew dramatically worse following Sept. 11, was the deepest since 1970, according to Boeing Regional Director-Marketing Thomas Hoang. For the full year, air cargo traffic was down 9.7% compared to 2000 and it remained depressed through the 2002 first quarter before registering a 5% uptick in April against admittedly depressed April 2001 figures.

The recession has been attributed to a number of factors, beginning with the winding down of the massive Y2K-related technology buys in 2000. This was followed by the bursting of the and telecom bubbles that resulted in substantially less demand for IT infrastructure, the overall economic slowdown and, of course, the impact of Sept. 11. Notwithstanding the depth of this downturn, Boeing does not believe it signals a long-term structural change. "We saw a 10% contraction last year in traffic [but] one year does not a 20-year trend make," declares Hoang's colleague, Tom Crabtree, also a regional cargo director.

Likewise, Airbus Director-Product Marketing Didier Lenormand is confident that the decline is not the harbinger of a realignment of the factors that drive air cargo demand. He points out that following the 1991 Gulf War, it took only one year for air cargo traffic to return to prewar growth rates.

The two manufacturers differ only slightly in their outlook for the future, with Boeing predicting 6. …

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