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Sustained Demand for Dedicated Freighters

January 17, 2022

The Omicron variant is sweeping Eastwards and is forcing passenger airlines to cancel flights due to new entry restrictions and because of staff shortages, thus ensuring that dedicated freighters remain in demand.

The data from IATA for November sees further growth but not as great as might be supposed given the number of freighters in service. For November 2021 cargo traffic (domestic and international) was only four percent higher than November 2019 – before Covid. The loss of lower hold capacity on passenger aircraft continues to affect overall capacity such that this in November it was still eight percent lower than two years previously. Load factors for November 2021 were much higher at 56 percent indicating that dedicated freighters are carrying more cargo on each flight. Traffic for the period January – November 2021 was seven percent higher than the same period of 2019. This sustained growth is allowing lease rentals of freighter aircraft to remain strong and is driving the industry to convert many more freighters.

The issue though going forward is whether the airfreight industry will be able to support so many dedicated freighters once the passenger fleet comes back into service, offering considerable lower hold capacity. Load factors for airfreight has traditionally been below 50 percent because of the origin / destination imbalance in demand which suggests that the current load factors can be reduced without affecting the market. For the widebody market, the large number of A380s and B747-400’s that have been retired reduces lower hold capacity which will not be easily replaced. The production rates of widebodies during the pandemic has been low with the hiatus in B787 deliveries all too evident. The retirement of widebodies and limited production of new aircraft will therefore provide some buffer as existing passenger capacity is once more brought back into service. The demand for airfreight stems not only from the contraction of passenger flights but also due to a change in the structure which is increasingly seeing internet shopping and therefore a need shorter delivery times which requires air transport as part of the inter-modal delivery system. The economic growth in many countries continues and again this drives the demand for airfreight for exports, imports and consumers. For perhaps at least another two years the demand for airfreight will likely be sustained even as load factors deteriorate due to increased capacity. The lease rentals for freighters can be characterized as being stable although the effect of inflation on interest rates may shortly see a rise.


IATA data:

Where CTK = Cargo tonne kilometers; AFTK = Available freight tonne kilometers; FLF = freight load factor. Rentals provided by The Aircraft Value Analysis Company Limited,


Freighter Lease Rates (Dry) US$ ‘000s pm – January 2022
Aircraft Age Rental Trend Analysis
A300-600RF 1994-98




The A300-600RF provided Airbus with experience in producing a dedicated freighter. The aircraft was a reasonable success but it is all too notable just how long the B767-300ERF has remained in production. There are some eight operators of the -600RF with FedEx and EAT being the principal users accounting for virtually all those in service. This means that the opportunity for leasing is limited. In the current market though the type should be able to be leased easily.
A310-300F 1985-97 70-90 The demand for the -300SF is very limited and as such placing a lease rental on the type is less relevant than a power by the hour arrangement. The aircraft were mostly converted by FedEx nearly twenty years ago but it is surprising that the aircraft have been withdrawn from service after having been in service for fewer than 30 years. A freighter is supposed to have at least 30 years of life, if not 40. Only 34 -300F’s were only ever produced – all converted from passenger units.
A321-200P2F 1996-04




The conversion of the A321 is an obvious choice but whereas the number of B737-800 conversions is significant the A321 is taking time. Qantas received its third A321 freighter (2001 vintage) in December 2021. The lease rentals of the type have improved slightly given the dynamics of the market. The issue for those seeking to convert passenger aircraft is focus on lower time aircraft as much as possible. The lessors have a significant number of leased passenger A321s which will become increasingly difficult to place in the coming years and these will be the main source of feedstock. The low book value of these aircraft and premium that freighter aircraft attract makes conversion by lessors more likely. The type is of course increasingly viewed as a successor to the B757 and given that the A321 can accommodate freight in its lower hold the type does have some advantage.
A330-200F 2009-20 300-575 The experience of the A330-200F shows just how volatile and fickle the airfreight market can be. The type entered service just as the financial crisis occurred and values fell by a substantial amount and even then it was difficult to dispose of the aircraft. Some customers had switched orders from the passenger A330-200 to the A330-200F but then found that the airfreight market was even worse. There has been some movement in terms of acquisition of used units. There are some 37 in operation although three are not with any operator at the present time. A total of ten aircraft are on operating leases with another ten on financial leases mainly Turkish Airlines. The lease rentals are at their peak.
A330-200P2F 2002-12 290-450 The conversion process is taking time to spool up and as such there are a limited number in service although a number are destined for conversion. The lessors of passenger -200s will be looking at this segment of the market very carefully given the issues going forward with leasing the aircraft in its current passenger configuration. Freighter aircraft tend to be leased in ones and twos which also facilitates higher rentals.
A330-300P2F 2002-12 310-480 The A330-300 was never produced as a production freighter but as a converted freighter the type has much to offer not least as a replacement for the B767-300F. There are only some ten in service at the moment but more are destined to be converted. One of the issues with converted aircraft is that the lease rentals are not so dependent on age. This means that the youngest do not necessarily attract a significant premium. This makes it more attractive to convert mid life aircraft. The lease rentals were originally perhaps conservative until there was more clarity as to demand but such demand is now evident with the type increasingly viewed as the preferred future option to the -200.
B727-100C 1965-71 15-30 A type that is well and truly past its sell by date for all the right reasons. With so many scrapped and in storage there is no upside for lease rentals and the scrappage rate continues such that there are few in service.
B727-100CH 1965-71 20-35 There are a few -100 freighters still in operation even though they were built in the 1960s. The aircraft can be bought for small change but maintenance and operating takes rather deeper pockets and patience even if a more basic toolkit is required enabling the flight engineer to make repairs. The lease rentals are not expected to move but there can be a considerable range in rentals. There are still some operating without hushkits.
B727-200FADV 1972-78 20-45 There are a number still in operation but some are also stored. The type is proving expensive to operate and with the availability of alternatives there has been a move to newer equipment not least because of maintenance costs.
1979-83 20-45
B727-200FHA 1972-78 25-40 There are only some 32 freighters actually in active service with many more parked. The freighter still has considerable utility for many operators. Power by the hour arrangements will be preferable for some. The hushkit – so prominent in the 1980s and 1990s – is a necessity in so many markets but some can still be found without them.
1979-83 35-45
B737-300SF/QC 1986-91




The Covid Event has forestalled the deterioration in Classic lease rentals. The market remains strong even as some 100 -800SFs are now in service. Instead of acting as replacement capacity, the -800SFs have filled the demand for extra capacity. The -300/-400SFs are now perhaps filling the gaps left vacant by the retirement of such types as the B727 which suggests that some lessees may not be so strong. Lease rentals are remaining stable, a trend that is expected to continue. The last -400 was produced over 21 years ago and there are age limits on aircraft in some countries.
B737-400SF 1988-97 95-150
B737-800SF 1998-08 190-300 With some 100 -800SFs already in service and many more conversions in the pipeline the demand for the type is all too evident. As the deliveries of the MAX accelerates then the replacement of passenger -800s will increase feedstock. This is a significant program that has implications for the narrowbody freighter fleet. The issue going forward is how long the -800SF will act as growth rather than replacement capacity.
B747-100SF 1969-76 N/A There is no place for the -100F in todays market even though it was once held in high regard.
B747-200SF 1971-78 65-90 There are a few -200SFs in service – perhaps five – but not that many and as a vehicle for leasing. There is attraction even in the context of the current strong market but perhaps the high freight rates can compensate for the fuel and maintenance costs.
1979-84 70-90
B747-400F 1993-98




With rates having previously increased there is now a measure of stability in rentals. The stuttering recovery of the passenger market continues to ensure that the dedicated freighters remains in demand. The Covid Event though is causing problems for crewing with some countries imposing severe restrictions on cargo aircraft crews. Some operators have had to cut services to some countries to avoid the possibility of crews being quarantined. There needs to be a differentiation between the production freighter with the nose loading door and the converted freighters. The -400ERF also has a greater payload so will warrant a premium. The lease rentals enjoyed something of a boost in the latter part of 2020 such that there is little justification for seeing a further increase. Before the Covid Event a good number were in storage and some were even being auctioned off. The market has undergone a 180 degree turn such that there is now something of a shortage and this has allowed lease rentals to rise slightly.
B747-8F 2011-21 620-1450 Production of the -8F is coming to an end and as yet Boeing have not formally launched the B777FX which may be based on the -8 rather than the -9. The lease rentals of the -8F remain strong which is no surprise given the demand. However, operators have to ensure that utilisation is high to cover operating costs.
B757SF 1986-93 90-110 An excellent aircraft that continues to provide essential capacity for so many operators. The type is divided between the PF and the SF. The package freighter (PF) is the production version and as such may have overall lesser utilisation than the SF which will have seen higher rates of utilisation as a passenger aircraft. This could impact the service life of the respective variants. There has been some discussion concerning the maintenance status / cost of the B757 in view of it now having been in service for 40 years. More B757s are still being converted which shows that age is not necessarily a barrier to conversion.
1994-98 105-140
B767-200SF 1981-92 100-130 There are a few -200Fs in service which is a positive but the type is not the most favored of types. Rates have not really climbed even in the context of exceptional times for airfreight.
B767-300F 1995-99






The -300F continues to be in demand which has allowed lease rentals to remain unchanged. More are being ordered and others are being converted. It is difficult to see when such demand will ease. The aircraft has the ability to remain relevant for the rest of the decade. The arrival of the A330 in numbers will be a concern in the coming years though. One of the issues with longevity is that retention by an existing operator is now guarantee that demand from other operators exists.
B777-200F 2009-15




Ever more B777Fs are being ordered. The B777F cannot be produced as of 2027 due to emission restrictions that will into force which makes it necessary for Boeing to launch a replacement product sooner rather than latter. The B777F is now to be joined by the A350F, a variant that is larger than the -900 but shorter than the -1000. Few B777Fs are in storage which perhaps reflects the higher than average lease rentals – the aircraft has to be worked hard to pay for itself.
B777-300BDSF 2003-10 495-800 The momentum for conversions is increasing as the decline in the value of passenger units shows no signs of abating. There are many -300ER passenger aircraft that are leased and these will increasingly be seen as the ideal target for conversion. Lessors who cannot place passenger aircraft will be tempted to undertake the $30-35 million conversion. This is a type that has the ability to displace older freighters such as the B747-400SF. ETOPs rules do not apply to twin engined freighters.
BAe146QT 1984-89 40-50 The market for the BAe146 is still present if only just. The QT has managed to carve a niche for itself.
MD11F 1990-93 70-80 FedEx, UPS and Western Global are the only three operators of the type now that Lufthansa has retired its last unit. The market is therefore very limited at least in terms of finding new lessees but there are still over 100 in operation. More not fewer MD11Fs are now in service as further units are brought back into service.
1994-99 70-150
Commentary reflects change from the last update to Freighter Rentals of October 2021


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