Spectacular flight displays, a string of aircraft orders, and even an eye-catching, newly painted Dreamliner showcased by the Middle East’s newest airline, made headlines at the latest edition of the Dubai Air Show, held in November 2023.
Two aircraft were also shown on a static screen, but kept at a noticeably lower profile, two aircraft that embody one of the hottest trends in the market at the moment.
The presence of not one, but two Airbus A321 aircraft transporting passengers to cargo at such a major air show can be seen as a sign of the interest that this class of aircraft attracts in the industry.
AeroTime had the opportunity to hop on board one of these aircraft, operated by Omani airline Salam Air, and have a look around.
Passenger-to-freighter aircraft, or “P2F” in industry parlance, are aircraft originally designed for the passenger market, often serving only a few years as passenger aircraft, which have undergone a comprehensive transformation to be converted into dedicated air cargo aircraft.
In the past five years, this market segment has not only seen double-digit growth, but a flurry of activity from major original equipment manufacturers (OEMs) and an entire ecosystem of specialist MRO (maintenance, repair and overhaul) companies executing this transformative work.
The Coronavirus (COVID-19) pandemic has been a major factor in accelerating the P2F conversion industry. When the almost complete cessation of passenger flights coincided with a sudden jump in demand for air cargo, many operators considered the possibility of reusing part of their aircraft fleets that had suddenly become idle.
In an article published in July 2023, Gediminas Zemelis, CEO of Avia Solutions Group, said [the parent company of AeroTime – Ed. Note] It is also a major P2F operator through its SmartLynx subsidiary, and has detailed how the freight market has boomed during the pandemic, which has seen prices essentially double.
The industry responded by increasing capacity. In the article, Ziemelis, citing industry data, explained how the number of P2F aircraft conversions is expected to peak at 180 per year in 2025, up from about 70 per year before the pandemic.
But this dramatically increased capacity, combined with a plateau and then decline in air freight demand and rates in the wake of the pandemic, has led many to question whether the P2F industry’s growth can be sustained for much longer.
“There is no oversupply on the market at the moment,” explained Jordi Botto, CEO of Elbe Flugzeugwerke (EFW), one of the world’s major players in the global market for P2F remittances. “The pandemic has accelerated some trends that were already in place.”
A long-time partner of Airbus, which holds a 45% stake in the company, EFW has nine maintenance, repair and overhaul facilities around the world where it performs conversion from passenger to cargo aircraft.
Boto identified three main factors driving the P2F market, all of which are likely to persist over a long period of time.
The first and main driver, according to Bhutto, is the demand to replace aging fleets of Boeing 737 Classic aircraft as well as Boeing 767 and 757 freighters.
Boeing has traditionally held a dominant position in the freighter market, but these models, still the workhorse of many freighters, are starting to show their age.
In 2016, Boeing introduced the Boeing 737-800 BCF (“Boeing Converted Freighter”), a freighter conversion of its best-selling 737-800, and although the type has performed well commercially so far, That other OEMs are willing to challenge its best-selling aircraft. Hold in the market.
To compete in the narrow-body cargo market, Airbus, which until recently did not have an aircraft in this category, launched the A320 and A321 P2F versions of its popular aircraft family. This opened up the P2F route to a large group of active A320ceo family aircraft that had become obsolete and retired from passenger service.
In this regard, Bhutto noted that the rate of conversions may slow due to the supply constraints that the industry is currently experiencing, as many airlines are choosing to retain old aircraft in response to the recovery in passenger demand, rather than converting them to freighter aircraft.
“We started looking at air cargo operations a few years ago as it was the natural growth path for the airline, but it was only when an aircraft like the Airbus A321 P2F became available that we decided to jump into it,” Edvinas Dimenius explained. , Commercial Director at Riga-based SmartLynx [also part of the Avia Solutions Group – Ed. Note] . “Until then, narrow-body freighters on the market were mostly versions of the Boeing 737 Classic series or older Boeing 757s. But as a major Airbus operator, the A321 offered commonality with the rest of our fleet. Payload capacity is almost the same as a Boeing 757, but consumes 30% less fuel.
As of January 2024, it has 11 aircraft of this type in its fleet and is awaiting the arrival of three more soon (bringing the total fleet to 68 aircraft).
Embraer will also launch its P2F program for its E190 and E195 aircraft at the Farnborough Air Show in 2022.
The move came at a time when the Brazilian OEM was in the middle of a sales campaign to promote the latest generation of fuel-efficient E2 aircraft to existing E-Jet operators. As airlines begin converting to the new E190 and E195 E2 aircraft, it is likely that some older airframes will become P2F aircraft as well.
At least one E-Jet carrier, Brazilian airline Azul, did not wait for Embraer’s move and converted several of its E190s into freighters in 2021 in collaboration with engineering firm LHColus Technologia, also from Brazil.
The conversion of these aircraft, which the Brazilian carrier called the “F-series freighter”, was made in response to the needs of Azul’s air cargo division, which serves hundreds of cities throughout Brazil, providing mostly courier services, and mostly trade deliveries. e.
This phenomenon is not limited to Brazil. Both Botto and Demenius agreed that growing demand for express delivery services is another key driver of the P2F market.
Demenius acknowledged that the market is not as tight as it was two years ago, but said continued growth in e-commerce and delivery services has led to a rise in demand for narrow-body cargo aircraft.
In contrast to the long-haul and wide-body freighter market, where both Boeing and Airbus are introducing new, purpose-built factory-built aircraft such as the A350F or the new B777-8F, demand for narrow-body freighters is met through aircraft conversions.
Another aspect that distinguishes the widebody and narrowbody markets, according to Botto, is the longer waiting times for the former. EFW is also active in the wide-body aircraft market, handling aircraft such as the A330.
This is due not only to the completion time (three months for a narrow body versus six months for a wide body) but also to market dynamics.
Because narrow-body P2F aircraft require much lower capital commitments, the market is more vulnerable to short-term and more speculative movements by a variety of operators. While the much higher capital commitments for wide bodies limit the market to a small number of large operators who plan their fleet commitments at least five to ten years in advance.
Bhutto also highlighted another factor driving demand for cargo aircraft, especially wide-body aircraft. It has been expected that within a decade the belly capacity of regular aircraft will be less than it is at present. This is because parts of the long-haul passenger market, especially in the North Atlantic, have been taken over by extended-range narrow-body aircraft, such as the A321LR and XLR, with less cargo capacity.
Production cycles in the industry are long. For example, the capacity at EFW is fully booked until 2026. However, this is something that has already been anticipated by big players in the shipping and logistics industry, prompting them to invest accordingly.
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