ISTAT Jetrader - Autumn 2019 - 33

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S$30.8 billion sales in one day! That
was Alibaba's Singles Day 2018, the
infamous online shopping highlight
of the year in China. Undoubtedly,
e-commerce is shaping customer buying
patterns and expectations toward
convenience and overnight delivery,
and is giving air freight a big push with around 9% growth in
2017. According to the International Air Transport Association
(IATA), e-commerce sales are expected to reach US$3.5
trillion this year and US$4.48 trillion by 2021. Further, the
transport of perishables, pharmaceuticals and electronic
devices worldwide heavily depend on air transport due to their
nature (e.g., time sensitive, temperature controlled, etc.). The
transportation of e-commerce goods, which are characterized
by low utilization, overnight services, regional routes, low
densities and volume centric, will be best served by the new
generation converted freighter. When aircraft are coming
off lease, owners or lessors might face the options of selling
the asset, tearing it down or investing significant amounts in
cabin refurbishments. Freighter conversion offers a lucrative
alternative to asset managers, as it potentially doubles the
aircraft operational life by adding 15-20 years of service.
With air cargo expected to double within the next 20
years, the worldwide freighter fleet is expected to grow
by 64% from approximately 1,700 today to approximately
2,900 aircraft. According to Cargo Facts Consulting, 1,240
aircraft of today's fleet will be replaced and 1,140 aircraft
added. Today's fleet is more or less divided equally among
narrowbodies, medium widebodies and large widebodies.
Over the next 20 years, this profile is expected to evolve with
almost half the added and replaced aircraft projected to be
narrowbodies (see Chart 1 on next page).
There are two main options for operators expanding and/
or replacing their freighter fleet: new-built factory freighters
or freighters converted from passenger configuration. While
the former might be more fuel efficient and well-suited for
transporting higher payloads on longer routes with high
utilization, the latter have the advantage of lower capital costs
and are usually the quickest access for potential owners and
operators to freighters. It is expected that one-third will be
production freighters with the remaining two-thirds being
Jetrader

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ISTAT Jetrader - Autumn 2019

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