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Civilian Air Freighters

Canada’s workhorses in for the long haul.


September 26, 2007
By Fred Petrie

392-freight

This is the third in a series on the aircraft that carry the
freight. In the March/April 2006 issue we looked at Canada’s military
airlift requirements, and in the July/August 2006 issue we dealt with
the giant freighters plying international all-cargo routes. This
article reports on civilian air freighters in Canada.

This
report looks at southern and northern operations, each using large jets
– greater than 50,000 lbs payload – and at the turboprops hauling
10,000+ lbs that typically feed to the jet freighters. Keeping to the
day-in, day-out haulers, we will leave out some big charter operators
like Nolinor’s CV- 580s, Voyageur’s Dash 7s and 8s, Arctic Sunwest’s
Buffalo freighters (my favourite!) and anomalies like Buffalo Airways’
DC-4s and Curtiss Commando C-46s.

In large jets, the fleets of
Canadian operators are dominated by the B727-200 (even First Air has
finally parted with its -100 models, the only B727 certified for gravel
runways). There are 41 B727-200s on the Canadian Civil Aircraft
Register, operated by five carriers; 36 are operated as freighters. The
largest operators are CargoJet and Kelowna Flightcraft with 14 and 15
respectively; Morningstar has four and First Air has three. As a
sideline, KF and CargoJet also operate two each as VIP charters.

The
Boeing 737 is a distant second as a freighter; First Air has three,
inherited in its purchase of Northwest Territorial, and Canadian North
has four, along with five all-passenger models. Most of these are combi
models that were purchased new in the early 1970s by regional carriers
like Nordair and Transair; their claim to fame in today’s air freighter
market is their gravel-runway capability. The one other large freighter
in domestic service is First Air’s Hercules, recently joined by a
second. It does specialized charter work in support of mining
developments, and is often at work overseas.

Most of the B727s
are used in the southern east-west market with KF operating for
Purolator, Morningstar for Fedex and CargoJet for UPS and DHL as well
as for general freight customers.

Air Canada must be mentioned
because it recently got back into the all-cargo market with the ACMI
(aircraft-crewmaintenance- insurance) lease of three MD11s. However, it
is not allowed to provide any domestic services with these aircraft due
to antiquated Canadian Transportation Agency regulations. Even though
Air Canada pays for them by the hour, and takes all of the commercial
risk, they are considered ‘foreign’ and any freight between Canadian
points would be ‘cabotage’!

The turboprop sector is like the jet
sector in that the Hawker-Siddeley 748 dominates the freighter fleets,
with the Convair 580 also in significant numbers. The major operators
of the HS748 are Calm Air with six, Wasaya and First Air with five, and
Air North and Air Inuit with four apiece; Air Creebec has one. There
are actually 30 Convairs on the Canadian register but only 10 are
freighters, eight in the Kelowna Flightcraft-Purolator network and two
of Nolinor’s seven are in cargo configuration; the greater number of
Convairs are used as firefighters, 10 with Conair and two with the
Saskatchewan government. The main reason for the Hawker’s greater use
as a freighter is that it can get into the 3,500-ft northern gravel
strips while the Convair needs 5,000 ft for gravel runway operations.
Both the B727 and the Hawkers have given long and useful service, but
they each have drawbacks. The B727 has three engines burning expensive
fuel and three crew. The Hawker has a life-cycle limit, drawing closer
for many, and its Dart engines are getting more difficult to service.
So what aircraft are on the horizon that might replace these
workhorses? We went to the industry to ask.

Ajay Virmani,
CargoJet’s CEO, explained how the B727 will be a mainstay for many
years yet. Most of CargoJet’s B727s are ‘newer,’ as in only 25 years
old. “The B727 is good for 60,000 cycles and ours average only 30,000;
at 100 hours a month average utilization, it will be another 20 years
or more before they technically wear out.” Certainly, the newer more
fuel-efficient engines would be nice but the cost difference cannot be
justified. I asked about the newer B737s. After noting that the – 200
model of the B727, in tonnes of payload per engine, is more efficient
than the B737-200, Virmani told me that a good B737-300, never mind the
latest -700s or -800s, still commands a price of $14 million. As Barry
Lapointe of Kelowna Flightcraft also explained, one can put a lot of
gas into a B727 for that difference in cost. I did a rough calculation
of a difference of $1,000 an hour. As for the extra crew member,
Lapointe reminded me that second officers are an entry-level position
(i.e., junior pilots are cheap).

Nevertheless, Virmani advised
me, fleets would see new aircraft in three to five years, even while
many of the B727s continue to operate. The B757 and B767 are the most
likely contenders. UPS operates B757s as package freighters despite
their low utilization in the integrator role where the premium rates
make up the difference; the common fuselage section makes the
containers compatible with the B727 fleet, saving handling. The B767 is
a widebody with a larger cube but uses different containers so either
need repacking or waste cubic space. On the other hand, the B767 has
the legs to fly international sectors which provides an opportunity to
increase utilization to justify higher capital costs. Looking at
freighter aircraft as simply so much capacity, Virmani estimated a
fleet of eight B767s would cost $170 million; the same capacity could
be provided with 12 B727s at a cost of $30 million. Virmani bought his
newer B727s at the right price after 9/11; he seems content to wait
until the next-generation aircraft come down to the right price as
well. And he predicts that as more B777s and B787s and A330s arrive in
world carrier fleets, the cost of B757s and B767s will become more
affordable for cargo operators. In the meantime, CargoJet’s
international services will be limited to shorter hauls like its new
service to Bermuda, and in being a feeder to 22 international alliance
carriers.

As for northern jet operators First Air and Canadian
North, their needs are dictated by their combination markets of
passengers and freight. Both use the B737 in combination mode as the
mainstays of their networks. Only First Air has a dedicated freighter
in one of its three B727s, and a combination B727 for backup for peak
freight needs. However, its booth at last fall’s Air Cargo Forum in
Calgary featured a B767 on the backboard. First Air’s marketing VP, Jim
Ballingall, insisted that no orders had been placed yet, and that both
the B757 and B767 were under consideration for the future fleet. As the
north develops, I could see either aircraft meeting the market demand
on trunk roots like Edmonton-Yellowknife or Montreal-Iqaluit; one
larger aircraft in combi configuration could be economic if replacing
two B727s.

What is on the horizon for new turboprop freighters?
Continuing with the northern networks first, we are seeing conversions
of aircraft that have been in service in the south as commuter
aircraft. First Air has done a major program with the ATR 42 to make it
a C-class cabin freighter that can operate in combi mode connecting
northern communities to its jet service hubs. Air Inuit has updated
Dash 8s to operate on gravel runways with fewer seats and a larger
cargo area. Calm Air uses Saab 340s but these are strictly passenger.
While HS748s remain important in all of these carriers’ fleets, these
40-year-old aircraft are being replaced with 20-year-old aircraft
retired from southern commuter fleets.

Turning to southern cargo
services, trucks may be the replacement for many communities’
connections to the integrator hubs. Some clients, however, such as
banks, want even faster service so there will continue to be an
assortment of smaller aircraft, from Morningstar’s Caravans (wearing
Fedex colours) to a host of 703/704 operators providing connecting
services with various Beech and Metro models.

As for the larger
turboprops, the economics are much the same as for the jets that will
see B727s continue to be operated for many years. Kelowna Flightcraft
is now the OEM for the Convair models. It developed its own CV5800, a
stretched, re-engined, glass-cockpit freighter that can haul much more
than a standard 580. Yet it continues to operate the older models in
its own operations for Purolator because the rates of utilization in
the southern cargo market will not justify even the $4-million cost of
the CV5800.

I earlier lamented the lack of the DHC-5 Buffalo in
today’s civil fleets; military operators just won’t part with them.
Arctic Sunwest was able to snag two civil Buffaloes and is reportedly
cleaning up with them, but there are simply no more available. The
venerable DC-3 updated as the Basler BT-67 has failed to find more than
a couple of customers in Canada, and these use them mostly for their
highly specialized Antarctica contracts. Eastern Europe makes some
interesting freighters such as the Antonov 26 & 32 models but would
never get certified for North American operations.

The only
chance I can see for a ‘newer’ cargo aircraft in the 10,000- to
20,000-lb payload range would be if some operator can combine daily
northern resupply operations to remote communities with night courier
services for the utilization needed to cover the higher purchase cost.