Li Hongxiang, YTO Airlines' president and CEO (right) shows the purchase contract in Shanghai on February 24, 2016. (Photo/Gao Eqiang)
U.S. aviation giant has orders, commitments for up to 55 aircraft
Demand for express air-delivery services is accelerating fast across China, according to officials at U.S. aviation giant The Boeing Company, as they launched its 737-800 converted freighter program in Shanghai, with orders and commitments for up to 55 aircraft.
Rick Anderson, vice-president of sales and marketing at Boeing Commercial Aviation Services, said it already had seven confirmed customers, including five from China.
The new operation will be converting 737-800 passenger airplanes into freight carriers, which will extend their economic life by about 20 years.
The first Boeing Converted Freighter, or BCF, is expected to be delivered in the fourth quarter of 2017.
After conversion, the 737s will be capable of carrying up to 23.9 metric tons of cargo, on domestic routes less than 3,700 kilometers.
"The Next-Generation 737 provides exceptional value to express freight carriers through its superior payload, range, reliability and efficiency," said Stan Deal, senior vice-president of commercial aviation services at Boeing Commercial Airplanes.
Deal said the global cargo market is still in the midst of a slow recovery, but demand for freighters remains bullish.
"Over the next 20 years, Boeing forecasts customers will need more than 1,000 converted freighters the size of the 737, with China's domestic airfreight carriers accounting for nearly one-third of the market," he said.
So far, Boeing has won 30 firm orders and 25 commitments for the 737-800 converted freighters.
Hangzhou-based YTO Cargo Airlines Co Ltd has ordered 10 conversions with commitments for 10 more. A further 10 conversions have been ordered by Beijing-based China Postal Airlines, and five from GE Capital Aviation.
Chen Zhuo, an industry analyst with China Merchants Securities Co, said Boeing's decision to launch the new conversion operation in Shanghai shows the increased importance of the city as a global and domestic logistics hub, which is being driven by an ever-growing e-commerce market.
The most recent official statistics show China's express-delivery volumes overtook those in the U.S. for the first time in 2014, after moving 14 billion packages which generated revenue of 204 billion yuan ($31.2 billion).
"Up to 80 percent of existing packages are delivered by road at the moment, but considering the size of China, it is only a matter of time before demand will rise for longer-distance deliveries," said Chen, which is likely to mean a surge in air-service demand.
Yu Weijiao, chairman of Shanghai YTO Express (Logistics) Co Ltd, the parent company of YTO Airlines, earlier told China Daily that having its own aircraft guarantees speed of delivery, and gives it a competitive edge over rivals.
Yu revealed the company plans to increase YTO's own cargo fleet to 50 aircraft by 2020, and 100 plus by 2025.
Li Hongxiang, YTO Airlines' president and CEO, added that as well as narrow-bodied aircraft, it will also need larger planes to satisfy growing cross-border e-commerce demand.
According to Boeing, initially the 737-800s will take 120 days to covert, but that will shrink to 90 days once the operation is fully up and running.
