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MARCH 2019

Week 10

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China Southern adds freighters, Korean Air relies on bellies

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March 8th 2019

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Conversion to two 777Fs ends a freighter dry spell in Asia. Read More »

China Southern has converted two 777-300ER orders for two 777Fs due for delivery in 2020. The order was originally placed in 2017. The freighters add to China Southern’s existing fleet of 12 777Fs. The aircraft appear to be for growth. China Southern’s only other freighter aircraft are two 16-year-old 747-400Fs that Flightradar24 shows have been under-utilised, only flying between Guangzhou and Vietnam on some days of the week.

Some observers are encouraged the order signals renewed interest from combination carriers following cargo’s recent bounce back. Air China Cargo has not added freighters since 2015 while China Eastern's China Cargo Airlines last added freighters in 2011. These are the only disclosed 777Fs from Asian customers in Boeing’s freighter backlog, which also includes DHL, FedEx, Ethiopian, Lufthansa/AeroLogic, Turkish Airlines and Qatar Airways. ANA is introducing two 777Fs in 2019.

Korean Air presented its management plan through 2023, which does not forecast growing its freighter fleet beyond the current 23 aircraft. But freight capacity will grow due to an increase in passenger belly space. Korean Air projects AFTKs to grow 7.7% from 2018-2023 (CAGR 1.5%) while revenue per AFTK will grow 5.7% (CAGR 1.1%). The airline says it will develop new routes in Vietnam, India, Mexico and South America.

The plan curiously calls for Korean Air to “strengthen marketing for global customers” including Amazon. Korean Air also wants to collaborate with UPS and FedEx.

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