What the Airbus Narrow-Body P2F Program Means to the Market

At the Paris Air Show, Airbus, through its subsidiary Elbe Flugzeugwerke and Singapore Technologies Aerospace announced a joint venture to develop a passenger to freight (P2F) conversion for the A320 and A321 narrow-body aircraft. This is a significant development and will provide competition for the numerous Boeing P2F programs for the 737 and 757 that already exist.

Airbus forecasts a market of more than 600 small freighters over the next two decades, all of which will come from P2F conversions. Today Boeing has a virtual monopoly on that market, with the 737-300 and -400 comprising most of the conversions, and development of program for the 737-800 underway.

Introducing the A320, and particularly the A321, which comes the closest to the capacity and range of the 757 of any other narrow body, will change the dynamics of the P2F market.

The A320P2F will have 11 main-deck cargo positions, and the A321P2F a capacity of 14 positions, with the ability to carry 27 tonnes over 1,900nm.

Key design characteristics for the aircraft include a main deck cargo door at the left front of the aircraft and a Class E main deck cargo compartment. The lower deck of the aircraft can also accommodate smaller LD-3-45W containers in addition to the main deck pallet positions.

For lessors and owners of A320 and A321 aircraft leaving passenger service, there is now an alternative to re-sale or parting out of older aircraft. Of course, a P2F program requires feedstock of aircraft between 10-15 years old that are conversion candidates.

The following chart illustrates that there will be a more than adequate source of feedstock over the next decade to fully meet the market demand, as only about one in 10 aircraft will be converted. But for some leasing companies, which would like an exit for older A320 family aircraft for which market rates may not be adequate, a P2F program is ideal, providing another potential customer base and alternative revenue stream.

AirInsight asked Airbus’ CFO Harald Wilhelm whether this project would be exclusive, or whether Airbus would support other potential P2F programs with data.   With Airbus owning 45% of EFW and ST Aerospace 55%, the answer was unequivocally that this would be an exclusive program for A320 and A321.

“This is the only Airbus-supported A320-family freighter conversion program, and as such will take full benefit of our inherent design knowledge of the aircraft, our engineering know-how, as well as the extensive operational experience from the thousands of Airbus single-aisle aircraft in service today,” added Tom Williams, Airbus COO.

Unlike Boeing, which has licensed data to several cargo conversion shops, including PEMCO, IAI-Bedek, AEI and Precision Conversions, Airbus has chosen to keep the A320 family P2F within the Airbus family and support only this program.

However, a competing A320 conversion program, launched by PacAvi Group, began work on its first aircraft earlier this year at HAITEC in Germany. The company has indicated it does not require data from Airbus, and expects its STC to be ready in 2017, prior to the completion of the EFW/ST Aerospace program. As a result, there could be two competing P2F programs for the A320 family. PacAvi has indicated that there is a market for 50-60 conversions annually, somewhat higher than Airbus’ estimate of 600 over 20 years.

The question is whether major customers will gravitate towards the brand-name impact of the factory supported conversion program or equally support the non-factory program given its slight schedule lead.   Time will tell, and the jury remains out.

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