Putzger perspective: New alignments – to passenger aircraft
06 / 03 / 2024
Source: Shane Hoggatt/Shutterstock
Some carriers appear to have lost their appetite for freighters with plans to scale back conversions, but is cargo still valued?
Global Crossing Airlines is changing direction. The Miami-based carrier has pressed the pause button on the expansion of its cargo operations in order to fly more passengers. Furthermore, company founder and chief executive Edward Wegel has left the airline.
Global Crossing’s freighter activities took off last summer with converted A321 cargo aircraft. It currently has three, with two more in the pipeline for conversion into all-cargo configuration.
Although, moving forward, the company will halt the freighter fleet expansion to ramp up its passenger aircraft fleet. That’s where management sees the easier path to profitability.
Aircraft lessors would undoubtedly agree there. They were a big driving force behind the dramatic growth in freighter conversions in 2020/21, when rampant demand in the cargo sector drove up lease rates, while rates for passenger planes were headed in the opposite direction.
The recovery of the passenger business has reversed this and sparked a frenzied quest for passenger planes. Inevitably, this has catapulted lease rates to lofty heights.
Demand for planes to meet growth in travel continues to be strong. Aviation consulting firm IBA sees strong demand for pretty much every aircraft type, except perhaps converted 737-800 freighters, which have been the hotbed of freighter conversions.
Conversion specialists have reported a distinct softening of the market for 737-800Fs.
None of this should come as a surprise. Even in the winter of 2020/21 it was obvious that the aviation market was in a temporary state of anomaly. Those days when the tail was wagging to dog, so to speak, are now clearly and irrevocably in the rearview mirror.
So, is it back to the pre-pandemic days, with cargo frequently overlooked adjunct to the passenger business? Some carriers appear to have lost their appetite for freighters, but this includes all-cargo operators that have cancelled orders as it became clear that the frothy days of air cargo were gone.
Yet the experience of the pandemic has taught airline suits that cargo is an important element of their business (although it could be argued that they should have known that all along).
Likewise, some airport authorities have woken up to the importance of cargo. One cargo handler reported recently that some airports have approached it in order to work out strategic plans for cargo development.
If a landlord airport authority sees the light, the outlook for cargo can’t be too dim. And airports plan over decades, rather than a year or two.
