Cargo Attracts Small European Passenger Airlines

Three small passenger airlines new to the air cargo business are deploying temporary and fully converted freighters for the first time in the latest example of niche carriers branching out to take advantage of strong market conditions. The extra capacity is a positive — if small — positive development for an airfreight market that remains woefully short of supply.

Experts say air cargo capacity is at a 13% deficit compared to 2019 while demand for goods is up 3% to 9%, depending on the source. Double-digit growth in online shopping is a key driver of trade growth. On major trade corridors, freighter aircraft are full and shippers are eager to find more airlift. With freight rates 150% above pre-crisis levels and near all-time highs in key markets, more players are investing in all-cargo operations.

Compass Cargo Airlines, a startup joint venture in Sofia, Bulgaria, between U.S. regional feeder airline Mesa Air Group MESA and London-based aviation consultancy Gramercy Associates, plans to start charter service in Europe by the end of the year. The carrier took delivery of its first freighter — a converted Boeing 737-800 — from leasing company GE Telesis in August.

GE Telesis last month contracted with Miami-based Aeronautical Engineering Inc. for six additional passenger-to-freighter 737-800 conversions, bringing its total order for the narrowbody cargo jets to 12. GE Telesis this year also delivered one of the converted planes to Ethiopian Airlines. Over 14 months beginning in March, AEI-licensed overhaul shops will remodel the six aircraft with a large cargo door, heavy-duty flooring to support main-deck pallets, a rigid barrier to protect the cockpit and other features.

Boeing and AEI are the only companies modifying used 737-800s for cargo. The Boeing program is about four years old, with more than 140 planes delivered and about 60 orders in the pipeline. AEI started two years ago and officials say they expect to produce 26 of the converted freighters for customers this year.

The 737-800 is increasingly popular with express carriers and partner carriers operating regular shuttles on short- and medium-haul routes that support e-commerce package networks. AEI's converted freighter offers a main-deck payload of up to 52,700 pounds and incorporates 11 full-height pallet positions, plus a smaller pallet. 

Mesa Airlines, which flies for United Airlines UAL and American Airlines AAL, began as a contract carrier for DHL Express a year ago. It operates two converted 747-400 freighters. 

Mesa originally planned to use Bombardier CRJ-900 converted freighters, according to the March announcement of its international expansion and co-investment with Gramercy. 

SmartLynx Expansion

A promising new competitor to the 737-800 converted freighter is the Airbus A321. A key selling point is its ability to fit small pallets in the lower deck, in addition to the modified main cabin. That gives it extra versatility and loading efficiency. Both planes are more fuel-efficient and produce fewer carbon emissions than older types of cargo jets in their class.

SmartLynx Airlines, a Latvian provider of scheduled passenger charter capacity, last week said it is leasing two more A321 freighters for the cargo division it launched earlier this year. The additions will bring SmartLynx's A321 freighter fleet, registered in Malta, to eight aircraft by the end of 2022. 

Investment adviser Cross Ocean Partners has hired 321 Precision Conversions, a U.S. joint venture between Air Transport Services Group ATSG and Oregon-based Precision Aircraft Solutions, to reconfigure the planes, which are scheduled to enter service in the first quarter of 2022. ATSG is a diversified company that owns cargo and passenger charter airlines, an aircraft leasing unit, a freighter conversion house, and other related businesses.

SmartLynx said it plans to become the largest operator of A321 cargo jets in the near term. Its first A321 freighter is already operating within the DHL Express network, with a second aircraft scheduled to debut very soon.

More Malta Modified Freighters

Another Malta-based carrier, Airhub Airlines, launched widebody cargo operations this month with its first Airbus A340 and plans to have up to six A340s in the sky by the end of the year. Notably, the leased aircraft are not pure freighters but have had their seats removed to allow extra space for light cartons in the passenger compartment. That type of reconfiguration was done on a limited basis by some airlines last year during the height of the pandemic when air cargo capacity was decimated by the removal of most passenger flights. There have been few such modifications this year as cargo rates settled from their peak and airlines resumed more passenger flying.

The modifications were carried out by Aviatic, a maintenance and engineering firm in Lithuania.

Airhub operates three A320 passenger aircraft on long-term dedicated contracts for airlines. 

In related news, Israel Aircraft Industries recently announced on Twitter that it hit another milestone in its development of the first Boeing 777-300 Extended Range converted freighter when it began cutting the opening for the prototype's cargo door. 

The 777 is one of the largest commercial aircraft in regular use and has a cargo payload that exceeds that of the 747-400. The cargo door being installed is one-third the circumference of the fuselage.

Kalitta Air, a large all-cargo operator based in Michigan, is the launch customer for the 777-300 converted freighter program. The first of three aircraft ordered by Kalitta last October is scheduled for delivery in 2023.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.


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