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The continuing hesitancy in consumer confidence, along with freighter overcapacity, is hindering business for some aircraft conversion houses. But shifts in the supply chain model are driving demand for narrowbody modifications, and more feedstock of some types is expected to become available soon.
Jack Gaber, corporate deputy vice president at Israel Aerospace Industries (IAI) and general manager marketing and business development for IAI subsidiary Bedek Group, says Bedek is still working on feasibility studies for the possible conversion of B777 aircraft to freighter configuration.
Noting the lack of available B777-200ER (Extended Range) feedstock right now, Gaber remarked: "We think that there will be enough aircraft available for conversion by around 2016 and 2017, which gives us time to continue with our research. But we have now released some budgets and we're looking for sub-contractors and providers."
He pointed out that there is an "entrance barrier" to conversion of the B777, given the technological and financial strength that is required to set this up. As such, only large companies such as IAI (or Boeing itself) are likely to be able to provide this service.
Bedek is already active in the conversion of B747-400s, B767s and B737s. Of these, Gaber feels the B747 is a particularly attractive aircraft, given its ability to carry a high payload over a long range.
"The only problem with the 747 is that it is very much affected by high fuel prices," he admitted. "But fuel is coming down now and if it drops further that would boost conversion of this aircraft," while the cost of feedstock has already decreased significantly. Due to the fall in fuel prices and the B747's "unique" capabilities, Gaber anticipates that Bedek will be converting a number of these aircraft in the near future.
As for the B767-300ER, there is a different story to tell. Feedstock is hard to come by and, consequently, is expensive, making conversion of this aircraft type less attractive.
However, more of them are now being released for conversion, so Gaber expects that their price will drop over the next few years. "The B767-300 is an excellent aircraft for integrators," he noted.
With the air freight market currently suffering from "saturation" in terms of widebody capacity, as well as from a generally nervous attitude towards its future, there has been a slowdown in the number of orders for freighter conversions this year.
Considering the past few years, Gaber outlined: "The air freight market had an unprecedented decline in 2008/2009.
"We then had an impressive rise in 2010 - we at Bedek filled our slots for that whole year in the first couple of months. Things then began to slow down around mid-2011 but picked up coming into 2012 and now demand has slowed once again," he added.
"I believe we will see the start of a turnaround (although not a full recovery) late this year or in the first quarter of 2013. Overall, I think the cycles will get smaller and smaller, and less and less dramatic," Gaber concluded.
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