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03/15/2023

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Boeing Establishes 737-800 Cargo Conversion Facility in India

    Boeing Establishes 737-800 Cargo Conversion Facility in India

    Extra capacity comes amid uncertainty about near-term prospects for air cargo business

    Boeing has converted more than 737-800 aircraft since the program started in 2018. The 100th unit was converted in September for AirLease Corp., whose customer is Gol Airlines in Brazil. Gol is flying the plane for online retailer Mercado Libre (Photo: Boeing)

    New Production Line for Conversions of Cargo Jets in India

    Boeing will establish a new production line in India to convert used 737-800 passenger aircraft into dedicated cargo jets as the airfreight market cools, and some speculate that there will soon be an excess of manufacturing capacity. GMR Aero Technica, a facility for airframe maintenance, repair, and overhaul located at Rajiv Gandhi International Airport in Hyderabad, signed an agreement to perform retrofits in accordance with the well-known Boeing conversion program.

    A Few Specifics Regarding the New Arrangement

    There were few details available regarding the new arrangement, such as the anticipated number of conversions or potential customers. Typically, it takes more than a year for Boeing partners to convert a hangar, acquire the required technology and tools, and train personnel.

    Regional Cargo Operations in India

    Quikjet Cargo Airlines began operating two converted Boeing 737-800 freighters for Amazon Air in January to expedite package delivery between India's major urban centers. Indigo, SpiceJet, and Blue Dart are three other airlines with regional cargo operations in India. The Amazon Air operation is headquartered in Hyderabad, a rapidly expanding distribution center for e-commerce.

    Indian Air Cargo Market and GMR Aftermarket Facility

    According to the Times of India, GMR's aftermarket facility will modify freighters for domestic and international customers. Boeing's commercial market outlook from the previous year predicts that India's air cargo volume will increase by an average of 6.3% per year through 2040. The demand for domestic air cargo is anticipated to increase by 6.9%. The manufacturer anticipates demand for more than 75 freighters, including factory-built models.

    Process of Conversion and Global Expansion

    Boeing prepares a kit of parts for each passenger-to-freighter conversion and partners with airplane modification shops to perform the touch labor. The 737-800 has a cargo capacity of 52,800 pounds. India would be the fifth nation where Boeing subcontractors install its 737-800 cargo modification kit. Five Boeing conversion partners are located in China, Costa Rica, and the United Kingdom. Boeing reports that the number of production lines at each location ranges from one to seven. This year, the aircraft manufacturer intends to establish two conversion lines at KF Aerospace in Kelowna, British Columbia, and begin converting 737-800s.

    Market Share and Rivalry

    Boeing has the largest market share for 737-800 conversions, having begun commercial production earlier than any other manufacturer in 2018. The company reports that it has redelivered over 120 reconfigured aircraft to date and has 130 additional orders pending. Independent 737-800 conversion providers are located in Israel and Miami. The Airbus A321 freighter conversion, which is two years old, also poses a threat. The Airbus joint venture responsible for reconfiguring jets in all-cargo mode revealed plans to add a new production facility in Tianjin, China, last month.

    Aftermarket Demand and Challenges

    Boeing anticipates a global demand for approximately 1,300 standard-body conversions over the next two decades, particularly to support the expansion of the e-commerce and express cargo markets. According to Cargo Facts, the number of narrowbody conversions increased from approximately 55 per year in the decade preceding COVID to nearly 95 last year. Over 130 units of all aircraft types were converted. If not for supply chain disruptions and labor shortages that prevented repair facilities from operating at normal rates, the numbers would have likely been higher.

    Backlogs in the Conversion Shop and Market Concerns

    Cirium reports that conversion shops have a backlog of more than 550 aircraft, more than a quarter of which are 737-800s. According to multiple analysts, lenders have invested in more conversions than the market can support. Despite a year-long decline in air cargo volumes from an international.

     

     

    MintN

    Mint Nguyen

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