Jetrader - May/June 2012 - 17

unsuccessfully against the 767 but conversely enjoyed strong demand as a converted freighter. The conclusion one may draw from these examples is that the make-up of the P2F market is a result of numerous diverse, though predictable, factors and, while demand for certain aircraft types can be predicted with reasonable accuracy, the timing and duration of demand for a speciﬁc model is much more elusive. As a consequence, the P2F industry must weather numerous boom and bust cycles. Not surprisingly, the decision by a conversion provider to spend $30 million or more in non-recurring P2F engineering costs in the hope that the market will be there at the right time and with sufﬁcient volume, is not for the faint of heart.

the combined production capacity. The China air cargo market fuels a large part of the 737 Classic freighter demand. Pemco, together with its Chinese partner, HAECO, has been highly successful in China with an 80 percent market share of the existing conversion ﬂ eet. With declining 737 Classic passenger demand and more than 200 aircraft 15 years or younger, sufﬁcient feedstock exists for a robust market for the foreseeable future. Conversion providers are properly geared with multiple facilities in the U.S., China and elsewhere.

the large FedEx order. To date, ST Aero has converted 49 units. Finally, Pemco, which acquired the dormant Alcoa STC, has focused on the 757 combi market and currently has four aircraft in work.

757
DHL was the launch customer for the 757 P2F with the conversion of British Airways ﬂ eet of 34 aircraft beginning in 2001. After a dormant period, the 757 P2F market accelerated when FedEx announced in 2007 its intention to convert 90 or more units. By the end of 2011, a total of 117 aircraft are ﬂying with 13 operators and three active conversion programs. Precision Conversions has completed 31 conversions with a backlog of seven aircraft including two combis. The company, which has continued to enhance its products with operating weight improvements, is currently seeking regulatory approval to convert 757s equipped with aftermarket winglets. Given the popularity of aftermarket winglets for the 757 and also the 767300ER, the ability to convert a wingletequipped aircraft (or restore the aircraft to its original conﬁguration) will become an important P2F product enhancement feature. Ironically, given the shorter average trip distance of freighters versus the passenger aircraft, winglets provide little, if any economic value to the converted freighter. In addition to Precision Conversions, ST Aero, under license from Boeing, is an active 757 converter due to winning

767
The 767 conversion history occurs in two distinct chapters. In the late 1990s, Airborne Express converted 24 767-200s into their own unique freighter conﬁguration that included a cargo ﬂoor but retained the existing passenger door for loading and unloading. Today all these unique aircraft have now or will shortly have been converted to a standard freighter conﬁguration by IAI. Eventually the 767-200 ﬂeet would grow to 60 aircraft with vast majority now operating in sub-service for DHL and UPS. The second chapter involves the 767-300ER, which despite having excellent prospects as a converted freighter, is struggling to get out of the starting gate. Boeing launched the program with an order for ﬁve units from ANA and the ﬁrst delivery in April 2008. Since that time, Boeing has not converted any additional aircraft, and its competitor, IAI, has only completed seven units. Despite strong P2F demand, the market has stagnated due to a lack of attractively priced feedstock. This shortage is due in part to the long delay in the 787 program. As the 787 program comes up to speed, 767 feedstock should become available and provide a boost for this P2F program. In addition, FedEx, which has ordered production 767-300ERFs, can be expected to ultimately require P2F units to supplement its ﬂ eet.

Conversion Programs MD-80
In February 2010, AEI surprised the industry by announcing the launch of an MD-80 P2F program. Although an abundance of attractively priced MD-80 feedstock has been available for several years, the industry had dismissed the idea of an MD-80 freighter. Conversely, AEI believes that a market exists for a low-capital cost alternative to replace the 727 and 737-200 freighters and to compete against the 737-300. The company now has 15 ﬁrm orders and expects to receive FAA certiﬁcation within the next few months. With more than 270 MD-80s currently parked and an aging (ancient?) 727 ﬂ eet, the opportunity exists for a successful program.

737 Classic
Three companies, AEI, IAI and Pemco, offer conversions for the 737300 and -400 (see Table 2). As of this date, approximately 107 aircraft (excluding combis) have been converted and demand remains steady, although below

Table 2
MD-80 737 Classic 757 A300-600 767 MD-11 747 A330 777 AEI Boeing EFW IAI Pemco Precision Conversions
Launched (2016 1st delivery) Under study for potential 2016 entry into service

A300
As noted previously, the A300-600 is an example of an aircraft that enjoyed a mediocre reputation as a passenger aircraft but has been successful as a Jetrader 17

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