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Lessor Jackson Square Aviation enters freighter segment

Japanese company places order for 6 converted cargo jets

The interior of a 737-800 converted for freight instead of people. (Photo: Aeronautical Engineers Inc.)

Another leasing company that previously only dealt with passenger aircraft is expanding its portfolio to include freighters and capitalize on industry projections for sustained growth in air cargo, which is heavily influenced by  momentum from e-commerce sales.

Jackson Square Aviation, an affiliate of publicly listed Japanese leasing company Mitsubishi HC Capital Inc., announced late Monday it will enter the cargo market for the first time by enlisting Miami-based Aeronautical Engineers Inc. to convert six Boeing 737-800 aircraft into dedicated freighters.

The 12-year-old leasing company owns, manages or has commitments to buy 236 passenger jets. Customers include Air Canada, Alaska Airlines, Delta Air Lines and WestJet. Robert Convey, senior vice president of sales and marketing at AEI, said the aircraft to be modified will come from Jackson Square’s existing fleet as the planes exit existing leases.

The 737-800 is in high demand by express operators for conversion to a pure cargo configuration because its fuel efficiency and high capacity for a narrowbody jet make it more efficient than older, standard jets and well suited for daily shuttle runs supporting package networks.

The first two aircraft of JSA’s order are slated to enter modification in May 2024, with the rest of the units successively placed in production through January 2026, the companies said. Commercial Jet, also based in Miami, will retrofit the aircraft for AEI using AEI’s conversion kit. 

The extended timeline for delivery suggests Jackson Square Aviation is confident there will be strong demand for regional freighters well beyond the pandemic-induced boom of the previous couple of years.

“We are delighted to partner with AEI for the first of our passenger to freight aircraft conversions,” Jackson Square CEO Kevin McDonald said. “This is a natural evolution of our fleet and allows us to expand our offering to existing and new customers. The 737‐800 freighter offers improved efficiencies and extends the life of the aircraft which supports JSA’s [environmental] initiatives.”

AEI is an engineering firm that designs and markets conversion kits for a range of smaller jets, including 737 Classics and -800s, independent from Boeing. Its version of the plane offers space for up to 11 full-size containers plus a smaller container with a maximum weight of 52,700 pounds. 

The conversion process includes plugging the cabin windows and adding a large cargo door, reinforced flooring, a rigid cockpit barrier and smoke detection and cargo loading systems.

Airbus recently projected the express air market will grow at an average annual rate of 4.9%, outpacing general air cargo, and that express will make up a quarter of the airfreight market by 2041, an 8-point increase over 20 years. Boeing’s long-range outlook calls for about 1,300 conversions of standard passenger aircraft to meet cargo needs during that period, half of the estimated total requirement combining factory-built and converted freighters of all sizes.  

Analysts say conversions could exceed 110 units this year — more than double the annual pre-pandemic output. Conversions for the Boeing 737-800 are expected to top 80 units in 2022, according to consultant Fortune Aviation.

Airbus two years ago introduced the A320/321 passenger-to-freighter conversion program as a competitor to the 737-800. 

In related news, Atlas Air announced Tuesday it has taken delivery of the second of four new 747-8 freighters ordered in 2021. Boeing will close down the production line after the last Atlas plane is finished. The aircraft has been placed with an existing customer for dedicated carriage.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

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Eric Kulisch

Eric is the Supply Chain and Air Cargo Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals and a Silver Medal from the American Society of Business Publication Editors for government and trade coverage, and news analysis. He was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. He won Environmental Journalist of the Year from the Seahorse Freight Association in 2014 and was the group's 2013 Supply Chain Journalist of the Year. In December 2022, he was voted runner up for Air Cargo Journalist by the Seahorse Freight Association. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. Eric is based in Portland, Oregon. He can be reached for comments and tips at [email protected]