Air Transport World – October 2007

excerpts from: Freighter Converters’ “Waiting Game"

“There’s so much demand for passenger airplanes that the feedstock for conversions is very limited,” Air Cargo Management Group Project Director Robert Dahl explains. “There’s not a lot of excess capacity (on the passenger side) at the present time…”

ACMG projects that the worldwide commercial freighter fleet will more than double in size over the next 20 years to 3,900 from about 1,800 currently. Dahl says about 75% of freighters entering the fleet over the period will be converted…

“It’s a matter of dollars and cents,” Dahl says. “In most cases, it doesn’t make sense (for an airline) to buy a new cargo plane. The acquisition cost even with conversion costs is generally 25%-40% less…

On the passenger side you have an image issue (regarding aircraft age). Airlines make a point of advertising ‘youngest fleet in the industry.’ But cargo doesn’t care whether it’s in a new plane or an old plane”…

Dahl notes that most Boeing models that are strong candidates for conversions have three and sometimes four companies able to do the modifications…

Conversions of 737 Classics and 757-200s are expected to be coveted as airlines seek to replace 727Fs, which now comprise more than 25% of he global freighter fleet, according to Dahl…

Though they are generally not as old as 757s, A320 family aircraft eventually also will be prime candidates for conversions to replace 727Fs, Dahl forecasts.

Flight International – 16-22 May 2006

excerpts from: Can The 50-seaters Take on The Cargo Turboprop?

The choice between the turboprop and regional jet is key to the CRJ200 freighter programme, says Air Cargo Management Group project director Robert Dahl. “The 10,000-15,000lb (4,500-6,800kg) range is dominated by the ATRs, with the 42s able to fill the lower end around 12,000lb and the 72 the higher point up to 17,000lb,” says the Seattle-based consultant. “You also have to consider that most of these payloads are only going 300nm (550km), when the speed of a regional jet really does not make that much difference, but the fuel burn—regardless of the cost per gallon—is significant. ” Purchase cost is another significant factor. Dahl notes many of the parked CRJ200s are young, which makes them expensive.

Seattle Times – November, 8 2006

excerpts from: Airbus Blow:  FedEx Pulls A380 order, to Buy 777s

As Airbus’ largest freighter customer, FedEx was intimately involved with the development of the A380 from the early stages of the program, said Ned Laird, managing director of Seattle-based Air Cargo Management Group (ACMG)…

Airbus’ future in the air cargo business now hangs on whether UPS follows its rival FedEx and cancels its A380 order, said Laird, a former Boeing executive and now a well-regarded air-freight industry analyst…

UPS already flies Boeing 747 freighters and could potentially order either the new 747-8 or 777 freighters, Laird said…

On the other hand, UPS might face penalties in cancelling its A380s, since it signed the Airbus order to replace an earlier order for 32 A300s, Laird said…

They’re trying to keep the A380 program from collapsing. It’s ‘all hands on deck,’ said ACMG’s Laird. Until that’s done, no other decisions can be made. “Airbus is in paralysis,” he said.

New York Times – August 2, 2006

excerpts from: Postal Service Finds a Friend in The Internet

…“E-commerce has clearly benefited all the companies in the package delivery business,” said Robert Dahl, the project director of the Air Cargo Management Group, an aviation consulting firm in Seattle…

Mr. Dahl of Air Cargo Management Group warned that the package delivery business alone would not help the Postal Service offset shortfalls in other areas. “If you look at the bread and butter for the Postal Service, those segments have been declining,” he said. “So obviously it’s to their benefit to look for other kinds of opportunities.”

Journal of Commerce – December 3, 2007

excerpts from: Opposite Directions – Growth in International Air Cargo Outshines Stagnant U.S. Market

…In its annual report, Air Cargo Management Group said that the record 2006 revenue for domestic airfreight was due mostly to fuel surcharges. “Traffic volume for the industry, at 15.21 billion ton-miles, was up just 0.5 percent year-over-year, and the number of domestic shipments moving through the major express networks, at 6.767 million per day, was down 1.3 percent versus 2005,” said Robert Dahl, project director. “In fact, the industry remains 2 to 3 percent below the year-2000 levels based on both these performance metrics. Partial-year results indicate that 2007 is following the same pattern as 2006 and 2006, with positive financial results despite flat traffic levels,” Dahl said. “High fuel prices, and the surcharges that result, continue to inhibit air-cargo growth, and encourage shippers to look at less expensive transportation alternatives now available in the form of expedited trucking services.”

Traffic World – March 17, 2008

excerpts from: Conversion Aversion

…”That certainly is a problem,” said Robert Dahl of the Air Cargo Management Group. “We see it as a feed stock issue.” What’s happened, Dahl said, is that passenger growth has outstripped cargo demand, a reversal of the usual trend over the 15 to 20 years. This has caused airlines to hold onto their aging passenger aircraft to meet that demand instead of making those planes available for conversion. Exacerbating the situation, Dahl said, has been the holdups in building the new Airbus A380 and Boeing 787, aircraft that so far have shown more promise than production. This has put more pressure to keep 767s, 747s and A330s in operation and out of the conversion pool, he said. The dearth of conversion available aircraft has even reached down into the smaller fleets as well, Dahl said…

Although some of those efficiencies are bound to figure, in some way, in the fuel surcharges carriers have been imposing on shippers, there’s no way to pass along the total charges in such a way to make it equitable, Dahl said. However, he said the higher costs could force carriers to take some of the worst aircraft out of service, which could cut into capacity and raise rates. “The fact is that there’s adequate capacity to satisfy demand now,” he said. “It’s a short-term issue. But there are more slots than aircraft to convert.” Some of the proposed airline mergers could send some aircraft to the sidelines, said Dahl, and the conversion companies would welcome them with open hangars.

Seattle Times – January 17, 2007

excerpts from: Airbus Enters Boeing’s airspace – New A330 Freighter

Ned Laird, managing director of Seattle-based consulting firm Air Cargo Management Group (ACMG), said the new Airbus freighter will be “a pretty good airplane”. There’ll be no problem selling it, he said, because of a pent-up demand among Airbus customers that want new freighters but don’t want to mix Boeing cargo jets and Airbus passenger jets…

Laird said U.S. leasing company Guggenheim Aviation Partners is close to sealing firm orders for six of the A330 freighters and that Etihad Airways of the United Arab Emirates is likely to order seven. Laird also said Intrepid paid less than $75 million per aircraft, well below the $95 million standard discounted purchase price of an A330 estimated by aircraft-valuation from Avitas. Boeing’s 777 freighter, he said, is “a more capable airplane, but it also costs twice as much to own”…

Laird estimated that Airbus will have to invest about $100 million to develop the airplane.

Seattle Times – November 8, 2006

excerpts from: Air-freight Screening To Be Tested at Sea-Tac

Worldwide, about half of all air freight is carried on passenger planes, with the rest on cargo-only planes flown by FedEx, UPS and many major airlines, said Ned Laird, founder and managing director of the Air Cargo Management Group, a Seattle-based research and advisory firm…

But Laird said the security benefit of screening all commercial cargo likely wouldn’t be worth the extra time and expense. “If somebody comes up with something that really works and is affordable, I don’t think anyone would object to screening all air cargo,” Laird said. “But we’re spending an inordinate amount of taxpayer money to see if, by screening all freight, we could eliminate all risk. “It’s like saying we could never have another airplane crash if we just designed the planes better. There’s always going to be some risk.”

Journal of Commerce – November 26, 2007

excerpts from: Double Trouble

…Airlines worldwide are profitable for the first time since 2000, according to Ned Laird, managing director of the Air Cargo Management Group and publisher of Cargo Facts newsletter. IATA has predicted $5.6 billion in net profit this year for global airlines. That will increase to $7.8 billion in 2008 “despite high fuel prices combined with turmoil in the credit markets,” Laird said. “New and more efficient aircraft are coming,” he said…

The fear of a U.S. or global recession is real, Laird said. The questions on that issue appear to be not necessarily if, but when, where and how deep. Then there are record oil prices, environmental mitigation requirements and costs, as well as looming security issues, with the industry facing the prospect of 100 percent screening of belly cargo. These underscore the fact that “not all of the news is good,” Laird said. Robert Dahl, Air Cargo Management Group’s project director, said there currently are about 385 firm orders for wide-body freighters, including 272 new freighters and 113 passenger-to-freighter conversions. Based on projections of 6 percent annual growth in demand over the next 20 years, he said more than 3,200 freighters will be needed for fleet growth and replacement through 2026. Dahl also conservatively estimated that the world freighter fleet will grow to nearly 3,900 freighters by 2026 from 1,800 in 2006. Other projections see the freighter fleet growing to more than 4,100 over the next 20 years. In addition, the fleet will transition overwhelmingly to large and medium-sized wide-body freighters in 2026. He estimated that by then the fleet would comprise 2,500 large and medium-capacity wide-bodies, with 1,381 small and medium-sized narrow-body freighters. There is the threat of overcapacity, Dahl said. There may already be too many large wide-body freighter deliveries in the pipeline, he said.