Singapore's ST joins Airbus attack on Boeing's high cargo market share
2012 03 13
- Details
SINGAPORE's big aviation engineering company is playing a central role in helping Airbus reduce Boeing's air freight dominance by converting redundant A330 passenger aircraft into cargo carriers to compete with converted versions of Boeing 767s, reports Bloomberg.
According to the agreement with Singapore Technologies, the Asian company's ST Aero unit will develop the model with Dresden-based Airbus Group unit EFW, that already does Airbus conversions. Conversion work will be split between the two, with most work done in Germany.
The EFW facility already does A300s and A310s, which are up to 40 years old and expensive to fly though they are about the same size as the A330s. "The converted planes offer fuel-efficiency at a relatively low price.
While Airbus SAS (EAD) dominates the civil aviation sales worldwide, Boeing has 90 per cent of the dedicated freighter market. Airbus had no model to match Boeing's products and would face prohibitive costs to produce one.
"This makes good sense," said Oddo Securities analyst Yan Derocles in Paris. "Given the size of its order backlog, Airbus is in no position to do something like this on its own, so partnering with Singapore Technologies avoids cannibalising its own resources. Plus a freighter conversion extends the life of the A330 passenger model and protects residual values."
Airbus estimates a demand for 2,731 cargo jets through 2030, according to the company's first ever market forecast solely for that sector, published last month.
Airbus CEO Tom Enders said the converted aircraft - known as the A330P2F (passenger to freight) - won't affect sales of the purpose built A330 cargo aircraft as they appeal to different markets.
Purpose-built freighters are mostly deployed by carriers with high-intensity cargo operations and minimal downtime, said Andreas Hermann, who heads the Toulouse-based company's freighter unit, whereas converted aircraft are preferred by airlines that have lower utilisation and are not willing to pay high prices for new planes.
The Airbus plan was influenced by Qatar Air CEO Akbar Al Baker's announcement last year that he planned to switch a batch of the planes to cargo use by 2016 and would buy converted 767s if the Airbus could not do the work.
Qatar Air, which has expanded its cargo business after buying a 35 per cent of Cargolux, Europe's biggest air freight carrier, now wants to convert twenty A330s. The carrier is also looking at converting 777-200ERs.
"We will not buy new freighters," said a Qatar executive. "The cost of ownership is so high that there's no way we'd make money."
But Emirates thinks conversions are over-rated. Ram Menen, the Dubai-based carrier's cargo chief, is adding nine new 777 through 2014 to double its freighter fleet and will consider placing an order for 747-8Fs once traffic picks up.
"I'm not keen on those converted airplanes, especially when you have oil prices where they are right now," he said. "They tend to be a bit more inefficient because they tend to be heavier, and their payload capabilities are a bit challenged."
Source Shipping Gazette - Daily Shipping News
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