Introduction
Boeing, the American aircraft manufacturer, is set to establish a facility in India to convert 737 passenger planes into dedicated freighters to meet the growing demand for air cargo. The facility, which will be set up in Hyderabad in partnership with Indian maintenance, repair, and overhaul provider GMR Aero Technic, is part of Boeing’s $1 billion supply chain sourcing from India. The move is expected to support India’s ambition to become a global cargo hub.
Boeing’s expansion in India
Boeing’s investment in the freighter conversion facility in India is part of the company’s expansion in the country. The US aircraft manufacturer has already invested $24 million to set up a logistics center for airplane parts. Additionally, Boeing has secured a record plane order from flag carrier Air India. The company’s chief strategy officer, Marc Allen, said that the investment in the conversion facility would help support India’s ambitions to become a global cargo hub.
Global air cargo market
Boeing’s move comes at a time when the global air cargo market has been affected by the economic slowdown caused by the COVID-19 pandemic. The International Air Transport Association (IATA) reported that global cargo demand in January fell by almost 15% year-on-year. Air freight rates are 28% below the levels seen at the same time last year, according to data provider WorldACD. However, despite the slowdown, there is still demand to convert more than 1,700 passenger planes globally into freighters over the next 20 years, with about 600 coming from Asia, said Salil Gupte, president of Boeing India.
Growing demand for air cargo
The growing demand for air cargo is being driven by the increasing demand for e-commerce and electronics manufacturing in India and other countries. The outlook for freighters is strengthening, according to Gupte, who told reporters that the facility would help Boeing tap into regional and global demand for the service. “So it is only fitting that we have the capability to have a line to make those freighters here in India, not just for India, but for the region and for the world,” he said.
Excess freighters
The pandemic triggered a record-breaking scramble to convert older passenger jets into freighters. However, with cargo rates falling, analysts are predicting that aircraft lessors could be stuck with excess freighters or be forced to cancel conversions. Despite this, Boeing remains optimistic about the long-term outlook for air cargo and is continuing with its plans to establish the freighter conversion facility in India.
Conclusion
Boeing’s decision to set up a freighter conversion facility in India is a significant step towards tapping into the growing demand for air cargo. The move is part of the US aircraft manufacturer’s expansion in India and is expected to support India’s ambition to become a global cargo hub. Despite the global economic slowdown caused by the COVID-19 pandemic, the outlook for freighters remains strong, driven by the increasing demand for e-commerce and electronics manufacturing in India and other countries. With the establishment of the freighter conversion facility, Boeing is well-positioned to tap into regional and global demand for the service.
