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lightsaber
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Re: P2F Conversion Costs

Fri Nov 20, 2020 9:22 pm

There were 17 orders placed for conversions last month:

https://cargofacts.com/allposts/busines ... nsactions/

We should temper our expectations. That was a spike in demand.

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lightsaber
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Re: P2F Conversion Costs

Mon Nov 23, 2020 1:12 pm

It is worth noting how recent the new conversions are:

https://aviationweek.com/air-transport- ... eet-demand

EFW, a joint venture of the manufacturer and ST Engineering, says demand for the A320/A321P2F is “very strong,” with conversion capacity booked out until the second quarter of 2022. The company obtained FAA validation for the type back in February, based on existing approval from EASA.

Israel Aerospace Industries delivered its first Boeing 737-700 passenger-to-freighter conversion to Tianjin Cargo Airlines in early October. Credit: Haite Group

First A330F was end of 2017:
https://www.aircargoweek.com/dhl-expres ... 30-300p2f/

With how cheap stock is, including old conversions such as the 767 and 757, I expect quite a change in the freight market.

A crisis accelerates trends, the online package market, will only accelerate. e.g., moving pharmacies more online.

Lightsaber
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GSOtoIND
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Re: P2F Conversion Costs

Fri Nov 27, 2020 4:26 am

lightsaber wrote:
It is worth noting how recent the new conversions are:

https://aviationweek.com/air-transport- ... eet-demand

EFW, a joint venture of the manufacturer and ST Engineering, says demand for the A320/A321P2F is “very strong,” with conversion capacity booked out until the second quarter of 2022. The company obtained FAA validation for the type back in February, based on existing approval from EASA.

Israel Aerospace Industries delivered its first Boeing 737-700 passenger-to-freighter conversion to Tianjin Cargo Airlines in early October. Credit: Haite Group

First A330F was end of 2017:
https://www.aircargoweek.com/dhl-expres ... 30-300p2f/

With how cheap stock is, including old conversions such as the 767 and 757, I expect quite a change in the freight market.

A crisis accelerates trends, the online package market, will only accelerate. e.g., moving pharmacies more online.

Lightsaber

It's worth noting that Bedek's 73G conversion is older than Avweek claims in that article. Alaska got theirs starting in 2017. I'm assuming the author meant to say that Tianjin's first 73G-BDSF was delivered in October.
 
wjcandee
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Re: P2F Conversion Costs

Fri Nov 27, 2020 6:52 am

lightsaber wrote:
I found this interesting. The flood of available 757s is slowing A321 conversion demand:
https://cargofacts.com/allposts/busines ... sion-boom/

Or put another way, 752 conversions are so cheap, the A321s need to get cheaper. ;)

I personally expected a lot of 757s to be 'used up' in passenger duty, not parked in 2020 and made available for conversion.


I agree with this. I was quite surprised to see AerSale talking glowingly about the future of their 757 conversion line at the former Aeroturbine (where they do the Precision conversion). They snapped up a large number of retiring 757s recently, and given that they have businesses that do anything you could want to do with them (convert planes, harvest parts, refurbish parts, warehouse and resell parts, scrap planes, store planes, etc.), they can convert as many as demanded and figure out how best to use the others. For folks who are flying 757s that are getting rattier each year, it may be a good economic decision to keep flying the type, as long as affordable parts will be available from the large number of frames that are gonna get parked, and buying some newer conversions. This instead of migrating to and retraining everyone on the A321. Looks like SF, for example, is continuing to buy converted 757s from AerSale, and it's possible that AerSale has an indication that SF wants even more.

Longer term, however, the 321 is the move, as much as I love the 757.

If I'm ATSG, this doesn't particularly bother me, because I'm racing to get my A321 conversion into smooth production, and if the inevitable demand is postponed a little bit, it lets me enhance my competitive position vis a vis the P2F before the orders really start flowing in.
 
wjcandee
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Re: P2F Conversion Costs

Fri Nov 27, 2020 7:26 am

lightsaber wrote:
A crisis accelerates trends, the online package market, will only accelerate. e.g., moving pharmacies more online.


I have a dog in the hunt on the pharmacy stuff, and we've seen the threat from the mail-order guys for over two decades, and it has never really taken hold, for two primary reasons. I hope that it does not now, and I don't think it will, because nothing has changed about the reason it hasn't.

First, a whole lot of medication gets prescribed for immediate use. You see your doctor, you feel like crap, she orders the meds, and you head over to the pharmacy to pick it up. You don't want it tomorrow. You want it right freakin' now. The methods by which doctors order meds has completely-changed with electronic medical records. Now, the electronic script precedes you, and it's one trip to the pharmacy to pick it up rather than one to drop it off and one to come back and get it (or a long wait).

Covid has affected this, for sure, but the effects manifest mostly in two ways. First, a lot of pharmacies have drive-throughs if you don't want to go in, or many will bring it curbside. Second, local delivery in a couple of hours. A lot of pharmacies in the big cities deliver, and many more in the 'burbs do now as well. And you have new players like Capsule, which is still just a local pharmacy with bicycle delivery and no store, albeit one with an amazing electronic interface and incredibly-friendly people. (I use them in NYC instead of Duane Reade, because their operation is beyond-crackerjack.) For me, after seeing the doctor I want to go straight to the pharmacy and get my medication. Capsule gets it there in about two hours, and sometimes I don't want to wait even for that. Telemedicine may change this a bit: since I'm not going out to see the doctor, I then face the question whether crappy-feeling-me wants to drag my butt out to get the meds. If they can be delivered in two hours, maybe I will wait. But I'm not waiting until tomorrow to start feeling better.

Second, the other big tranche of medications are maintenance meds that your doctor may vary at your checkup but otherwise you're on basically for life. These are more-susceptible to mail and other overnight/2-day forms of delivery because it's predictable when you're going to need a refill. Insurance companies love these systems for maintenance meds because they can be dispensed from a giant sweatshop of a central pharmacy in Podunk where they can pay licensed pharmacists peanuts and work them to death, and mail out the stuff. Now, the claim is that the error rate is no higher than a local pharmacy. Uh-huh. Maybe. Knowing how these places operate, I don't personally believe that, but whatever. Numerous insurance plans tried to force mail order on their policyholders for maintenance meds, and there was an enormous backlash, and most (but not all) retreated. Couple of reasons for this. A major one is that a huge percentage of older folks actually like making the trip to the pharmacy and interacting with the pharmacist. It's a social event and human contact. It gives them confidence in the appropriateness and quality of what they're taking. In any town, if you wonder why that Rite-Aid (for example) is patronized by so many more people than the competing, say, CVS (or vice-versa), it is 100 percent who the lead pharmacist is. I have a relative who could save more than a couple of bucks by changing her scripts to CVS from the local Rite-Aid, because CVS is preferred in her plan. Won't do it. That pharmacist at the Rite-Aid is someone she likes and trusts, and she won't move them over. Mail order? Hahahaha. Forget it. During Covid, the pills she gets come by local delivery from the Rite-Aid after a phone call with the nice pharmacist. And when Covid is over, she will go right back to picking them up. The other reasons fall along the lines of being able to discuss their meds with their pharmacist, or trusting that this is a "good" generic, or concerns that their new supply of shipped medication might not arrive on time, and they worry about it. To me, all three concerns seem silly, but they don't seem silly to many older folks who comprise the primary consumers of maintenance meds. People who know and use Amazon do trust it to get them things reliably and on-time, and they may get some penetration out of that. But they shouldn't look at Capsule and assume that they can duplicate that success, because Capsule puts in place a front-end that Amazon would have difficulty doing; at Capsule, you really feel like you have a personal pharmacist who is looking after you. They put enormous effort into maintaining a very-personal rapport (which is why they use texts primarily instead of the website or app). And Capsule is lucky because all New Yorkers HATE Duane Reade, the most-conveniently-located pharmacies. It's a little harder when you're competing in the hinterlands with the a local person who is known in the community and will go out of her way for you.

We'll see what happens, of course, but I'm pretty confident that local pharmacies will continue to be the primary source of distribution of meds for the foreseeable future.

So I'm not sure that an airlifted package of meds from somewhere else is going to replace the current system of local dispensing of meds that arrive locally in bulk primarily by truck. I don't see this as appreciably-increasing the demand for airlift. In fact, the current system of local prescription drug supply is kind of like what some folks like Walmart/Target are trying to put together for more general deliveries to reduce their dependence on air.



(And I'm not concerned that Amazon wants to move beyond PillPack and enter the market more broadly. They're not afraid to try new ideas, and thus they fail a lot. As a case-study, everybody quaked when Amazon started looking at setting up a marketplace to supply hospitals, possibly at lower costs. They did their due diligence, and spoke with a lot of hospital purchasing folks about wouldn't it be great if you could save money by picking from different brands through an online interface, blah-blah? Overwhelming answer: Nope. Reason: the purchasing person isn't the end-user. The end user is the doctor or nurse. Keeping them from complaining is Job One of the purchasing person. To do that, tens of thousands of familiar supplies need to be in the exact same place in the expected quantity every hour of every day. Turns out doctors and nurses complain if the manufacturer changes the color or logo on the box. When you're grabbing for something in a high-stress situation, you want to know that the thing you're about to use is the thing you're expecting it to be, that it's the quality that you expect it to be, and that it's going to work the way you expect it to work. In short, they resist change. So telling me that I can choose among brands of latex gloves (or some intubation thingamajig) and save a few bucks, forget it. I have no idea from looking at a picture online whether they're "the same" as what the staff is used to. And switching brands of things requires significant buy-in from the affected parties, which is a big deal. So it turns out that the current vendors are giving the purchasing managers exactly what they want: reliable deliveries of the precise item they want, in the quantity that they want, on-time. Cardinal and other companies that serve hospitals have incredible systems and amazing visibility into what their customers have in stock and what they need, and they get replacements there with extraordinary reliability. So the potential penetration into this area turned out to be a lot lower than an outsider would have expected.)
 
wjcandee
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Re: P2F Conversion Costs

Fri Nov 27, 2020 8:09 am

lightsaber wrote:
For narrowbodies, Precision is working on certifying their A321 conversion to compete with EFW and I'd bet soon an A320 variation (there will be too much demand to ignore the opportunity).
Lightsaber


You're probably right (because you usually are), but I had a different take on this. EFW puts the same crap cramped cockpit on its A321P2F that it does on the A320P2F, for commonality purposes. It doesn't need to put that cockpit on the 321, but it does need to do so on the 320. Hence, it moves the entry door on both for commonality.

Precision leaves the entry door in place, and provides a more-spacious cockpit. It can do that because it isn't converting the 320. So if it wants to convert the 320, it's gonna need to take one fewer container (which is unlikely), or it's going to have to have two different cockpits, and a 320 design where it moves the entry door and a 321 where it doesn't. Maybe that's the plan, but I kind of took it as an indication that they were solely-focused on the 321. They've really never said anything about the 320, and indeed even the name of the joint venture has 321 in it.

I guess the only thing this really shows, though, is what their initial plan was, and plans, as we know, change with the market. So it will be an interesting issue to follow.
 
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zeke
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Re: P2F Conversion Costs

Fri Nov 27, 2020 8:19 am

a2b7 wrote:
There are at least two more companies working on a A321 cargo conversion: Sine Draco https://www.sinedraco.com/ , who are working on MSN 963 - and C Cubed Aerospace https://ccc.aero/ , who are working on MSN 1523, see also planespotters.net


ST Aerospace did the QF A321s.
“Don't be a show-off. Never be too proud to turn back. There are old pilots and bold pilots, but no old, bold pilots.” E. Hamilton Lee, 1949
 
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Re: P2F Conversion Costs

Fri Nov 27, 2020 11:49 am

CDB Aviation has decided to have two of their A330-300s converted into freighter by EFW for delivery in early 2022. From the articles seen it seems these will be ex China Southern birds with no leasing client secured so far. Seems that this line gets tracktion away from DHL orders.
Flown: A319/320/321,A332/3,A343/346, A359, A380,AT4,AT7,B712, B732/3/4/5/7/8/9,B742/4,B752/3, B762/763,B772/77W,CR2/7/9/K,ER3/4,E70/75/90/95, F50/70/100,M11,L15,SF3,S20, AR8/1, 142/143,... 330.860 miles and counting.
 
USAirKid
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Re: P2F Conversion Costs

Fri Nov 27, 2020 12:02 pm

wjcandee wrote:
lightsaber wrote:
A crisis accelerates trends, the online package market, will only accelerate. e.g., moving pharmacies more online.


We'll see what happens, of course, but I'm pretty confident that local pharmacies will continue to be the primary source of distribution of meds for the foreseeable future.



Quite an interesting analysis wjcandee.

It’ll be interesting to watch especially as the generation who had that relationship with the pharmacist dies off. The generations that are coming are all significantly more comfortable with technology.

I’m 40 and I’ve used maintenance medications for well over 10 years. I pretty consistently choose mail order because it’s convenient for me. I started using PillPack earlier this year because the mail order pharmacy my insurer uses has customer service that makes the DMV look like Tiffany’s. That and there was no discount for me to use the mail order pharmacy.

It interesting to me that Kroger and Walgreens are trialing a Kroger Express concept. A majority of the floor space in the Walgreens is managed by Kroger and supplied by them. There are some traditional Health and Beauty items that Walgreens manages. In reading about this, I got the gist that the pharmacy was profitable, but the rest of the store was less so, and perhaps even a loss leader, which surprised me.

Walgreens/CVS/RiteAids tend to be in high traffic and expensive locations. I wouldn’t be surprised to start to see local pharmacies be replaced by centralized ones like Capsule. They can be in less prominent locations as well. Plus having fewer locations could lead to an increase in automation. If you could replace ten retail locations with one more automated location serving delivery, it’d work well.

I wouldn’t be surprised to see Amazon purchase Capsule or a similar service. They have a habit of starting their business in one well understood and simple corner and moving it out. That’s why Amazon Pharmacy isn’t a concern now, but I expect it to become one.

Bringing it back to air freight. As you alluded to, air freight is either too slow or too fast for prescriptions. It’s too fast for those maintenance medications that are ordered in advance and thus can use the ground networks. Or it’s too slow for that “I’m sick now and want the medicine yesterday damnit” prescriptions. In which case the order needs to be fulfilled locally, even if it isn’t at a retail location.

FWIW, my maintenance medications have always come via ground, usually USPS. PillPack usually uses UPS Mail Innovations, but once they opted for UPS Second Day Air since they didn’t fill it early enough. (Capacity issue on their end? Out of stock issue? I dunno.)
 
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lightsaber
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Re: P2F Conversion Costs

Fri Nov 27, 2020 4:40 pm

wjcandee wrote:
lightsaber wrote:
For narrowbodies, Precision is working on certifying their A321 conversion to compete with EFW and I'd bet soon an A320 variation (there will be too much demand to ignore the opportunity).
Lightsaber


You're probably right (because you usually are), but I had a different take on this. EFW puts the same crap cramped cockpit on its A321P2F that it does on the A320P2F, for commonality purposes. It doesn't need to put that cockpit on the 321, but it does need to do so on the 320. Hence, it moves the entry door on both for commonality.

Precision leaves the entry door in place, and provides a more-spacious cockpit. It can do that because it isn't converting the 320. So if it wants to convert the 320, it's gonna need to take one fewer container (which is unlikely), or it's going to have to have two different cockpits, and a 320 design where it moves the entry door and a 321 where it doesn't. Maybe that's the plan, but I kind of took it as an indication that they were solely-focused on the 321. They've really never said anything about the 320, and indeed even the name of the joint venture has 321 in it.

I guess the only thing this really shows, though, is what their initial plan was, and plans, as we know, change with the market. So it will be an interesting issue to follow.

A very interesting detail on cockpit room. I agree when Precision does an A320 conversion, they'll have to do the short cockpit. I don't think buyers will avoid the difference.

As I think IAI will join the A320/321 conversion, that will add competition. The unproven conversions mentioned will join the fray, but I doubt will be in volume conversions this decade.

There are just too many A320CEOs
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jbs2886
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Re: P2F Conversion Costs

Fri Nov 27, 2020 9:58 pm

USAirKid wrote:
wjcandee wrote:
lightsaber wrote:
A crisis accelerates trends, the online package market, will only accelerate. e.g., moving pharmacies more online.


We'll see what happens, of course, but I'm pretty confident that local pharmacies will continue to be the primary source of distribution of meds for the foreseeable future.



Quite an interesting analysis wjcandee.

It’ll be interesting to watch especially as the generation who had that relationship with the pharmacist dies off. The generations that are coming are all significantly more comfortable with technology.

I’m 40 and I’ve used maintenance medications for well over 10 years. I pretty consistently choose mail order because it’s convenient for me. I started using PillPack earlier this year because the mail order pharmacy my insurer uses has customer service that makes the DMV look like Tiffany’s. That and there was no discount for me to use the mail order pharmacy.

It interesting to me that Kroger and Walgreens are trialing a Kroger Express concept. A majority of the floor space in the Walgreens is managed by Kroger and supplied by them. There are some traditional Health and Beauty items that Walgreens manages. In reading about this, I got the gist that the pharmacy was profitable, but the rest of the store was less so, and perhaps even a loss leader, which surprised me.

Walgreens/CVS/RiteAids tend to be in high traffic and expensive locations. I wouldn’t be surprised to start to see local pharmacies be replaced by centralized ones like Capsule. They can be in less prominent locations as well. Plus having fewer locations could lead to an increase in automation. If you could replace ten retail locations with one more automated location serving delivery, it’d work well.

I wouldn’t be surprised to see Amazon purchase Capsule or a similar service. They have a habit of starting their business in one well understood and simple corner and moving it out. That’s why Amazon Pharmacy isn’t a concern now, but I expect it to become one.

Bringing it back to air freight. As you alluded to, air freight is either too slow or too fast for prescriptions. It’s too fast for those maintenance medications that are ordered in advance and thus can use the ground networks. Or it’s too slow for that “I’m sick now and want the medicine yesterday damnit” prescriptions. In which case the order needs to be fulfilled locally, even if it isn’t at a retail location.

FWIW, my maintenance medications have always come via ground, usually USPS. PillPack usually uses UPS Mail Innovations, but once they opted for UPS Second Day Air since they didn’t fill it early enough. (Capacity issue on their end? Out of stock issue? I dunno.)


Interestingly, Amazon owns PillPack.

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