Freighter Shortage Looming, Executives Warn At ISTAT

Atlas Air 747-8
Credit: Atlas Air

SAN DIEGO—Air cargo operators are going to run into a shortage of freighter aircraft, as a significant portion of the in-service fleet is coming up for retirement and feedstock for passenger-to-freighter (P2F) conversions is becoming scarce, airline executives pointed out at the ISTAT Americas conference March 7.

“Roughly 120 widebody freighters are over 30 years of age,” Atlas Air Chief Commercial Officer Michael Steen told delegates at the San Diego event. “We will see a significant amount of retirements over five to ten years. Converted aircraft alone will not make up for the retirements. We need the new production aircraft in the market on time.”

Atlas is the world’s largest operator of widebody freighters with a fleet of 118 aircraft plus a further 20 under management. Atlas operates 59 Boeing 747s alone and recently took delivery of the last 747 ever built, a 747-8F. Steen argued that the cargo industry has undergone a permanent structural change: Before the pandemic, around half of air cargo tonnage was transported on board of passenger aircraft, a share that moved massively in favor of freighters as most passenger aircraft were temporarily grounded during COVID-19. But even now that long-haul travel has come back in most markets including important segment such as transatlantic routes, the all-cargo aircraft market share is still at 61%, according to Steen, therefore well above earlier trends.

Steen voiced concern that the industry could be faced with “a similar situation as during the pandemic,” when airlines were lacking cargo capacity because of the high demand.

There are currently three widebody P2F programs—the 767-300ER, the 777-200LR/777-300ER and the Airbus A330-200/300. At the same time, production of the 747 has ended, yet two new-built freighters, the 777-8F and the A350F have been launched with entry into service planned for 2027 and 2025 respectively. Production of new 777Fs and 767Fs will have to cease because of more stringent International Civil Aviation Organization (ICAO) emissions standards coming into force in 2027.

According to International Air Transport Association (IATA) data, air cargo demand in January was down 15% over January 2022. But Tom Crabtree, Managing Director of the Trade and Transportation Group consultancy, remarked that this came off a very high level and yields are still above where they have historically been.

In the P2F market, some programs are becoming more active. Air Transport Services Group (ATSG) is converting 20 A330s this year and more than that in 2024, according to CEO Rich Corrado.  Yet, “there is very limited 767 feedstock” as Steen noted. Also, “the P2F reality is that 777s are now very much required as passenger aircraft so the feedstock is not going to be available,” Hani Kuzbari, Co-CEO of lessor Novus Aviation Capital said.

As far as retirements are concerned, Corrado also warned of “pent-up demand.” Over the last three years, only about 15 aircraft annually have left the fleet. 70 would have been normal.

Not only is the sheer availability of a sufficient number of aircraft going to be an issue, the production stop of the 747 is going to be a problem. “Nose loading is absolutely essential for us,” Steen said. “We use the nose door loading all the time, if only for efficiency reasons.” He also pointed at the fact that because of Russia’s war against Ukraine the industry has lost the only other cargo aircraft with nose loading capabilities, the Antonov An-124. With those capabilities going away over time, “at some point the industry will have to adapt the supply chain.” According to Steen, it is conceivable that Atlas might operate its fleet of 747-400Fs longer to retain that capability. However, Atlas’ -400 fleet is currently 22 years old on average and is not coming up for replacement for more than ten years.

Jens Flottau

Based in Frankfurt, Germany, Jens is executive editor and leads Aviation Week Network’s global team of journalists covering commercial aviation.