Why do aircraft models end their life as freighters?

Question

There seems to be a tendency that aircraft models are more long-lived for cargo than for passenger service.

For example, both the A300 and MD-11 are all but extinct in scheduled passenger service, but FedEx and UPS still fly scores of them.

My understanding is that the reason an aircraft model goes out of service is not that the planes are too old to possibly continue flying, but that it becomes economically favorable to replace them with newer models with better fuel or maintenance economy etc. Shouldn't those considerations apply with equal strength to cargo planes?

Which factors contribute to passenger aircraft obsolescence that do not apply equally well to freight?

Answer 1

Passenger operations are overwhelmingly scheduled whereas cargo is on demand and thus less easy to plan. The upside: A cargo plane crew will fly quite diverse routes. The downside: Capacity utilisation is worse. This shifts the balance of cost such that fixed cost must be lower than what is possible with scheduled services. As a consequence, older aircraft with lower depreciation cost are preferred. With them it is less costly if they don't move for some hours or even days.

_{Caveat: Integrators (freight companies which ship door-to-door like FedEx or UPS) run their freighter fleet like a scheduled service, but still their utilisation is lower. Please see @TomMcW's answer for a detailed analysis.}

Operating cost are more important when the aircraft flies as much as technically possible. Especially low cost airlines need to operate hardware with the lowest operating cost possible so they survive the next price war. Premium airlines also have a need for the newest planes: This makes them look premium and more safe. Cargo operators have no such incentive to prefer the newest airplanes; they profit from the need of passenger airlines to sell their older hardware off.

_{Next caveat: Older airplanes are at least as reliable as new ones when maintained well. The need of premium airlines for newer planes is only to impress their ignorant customers, not to increase real reliability numbers.}

The Economist wrote in April 2013 about Norwegian Air Shuttle:

As fuel prices soared in the mid-2000s, and competition from the likes of Ryanair and easyJet intensified, Mr Kjos realised that the only route to survival was to buy lots of new, fuel-efficient planes to achieve economies of scale, and to base some of them in cheaper countries. Boeing and Airbus are straining to keep up with booming demand for new aircraft, so by reserving a large chunk of their delivery slots NAS is denying potential rivals the chance to refresh their fleets with better planes.

If an airline is large enough, ordering new aircraft has the added benefit of saturating supply and denying the same aircraft to its competitors. If oil prices are high, this airline will have won the price war before it started in earnest.

Answer 2

Freight planes fly less. Since they're not in constant use like a passenger airliner, it makes more sense to pay less up front (fixed costs).

Answer 3

If just like to add to the answers here and address a few inaccuracies made about air cargo. What you ask is true, some of the oldest aircraft out there are flying cargo, and most of the answers here are accurate, but some things are based on false assumptions.

The question mentions full size airliners so I am focusing on that. I use FedEx as an example because I'm most familiar with their system. Some things that apply to a large cargo-only carrier may not apply to other parts of the industry.

To clear up a misconception:

Efficiency and reliability are just as important in freight

Fuel burn and cost to operate are just as important Freight operators are no less concerned with the cost of flying and upkeep of their aircraft than the passenger companies. When fuel costs go up it affects them the same as everybody. When fuel prices soar the carriers often implement "fuel surcharges" on top of their regular pricing to help make up the cost. They want the most efficient aircraft they can fly. It's harder to make money if your planes are gas-guzzlers.

Keeping planes in service is just as important Flight delays are just as costly for freight as passengers. Some have pointed out that the inconvenience to passengers has a higher cost to the passenger industry. Not from the freight operators' point of view. They don't want planes broken down any more than the passenger airlines. Being stranded as a passenger is much more of an inconvenience than not receiving your Amazon order. But when you delay a passenger flight you have hundreds of unhappy customers. When a freight flight is delayed there could be thousands of unhappy customers. Some of those customers are very large shippers. If you screw up too many times they may jump ship for another carrier. Losing a big source of revenue like that can have quite a sting financially.

There's more than just airside. For the passenger airlines that move freight and other airport to airport services mechanical delays impact their schedules. But for freight companies that also deliver the freight there is an entire network of employees, much larger than the airside component, that can be left unproductive. I work as a driver and when one of our flights comes in late for mechanical reasons (or any reason) there are 50 of us and 10 or so handlers and sorters standing around on the clock twiddling our thumbs. Our ramp serves 3 large and 4 small stations, so that one late flight can mean overtime for a couple hundred people.

Reasons why older aircraft remain in freight service longer:

Longer life span due to different patterns of use

Cargo aircraft spend more time on the ground. On average passenger airlines have an easier time keeping their aircraft busy. The difference may not be as much as some suspect, though, at least in the case of FedEx. It's hard to find solid numbers on this. Taking a look at flight histories on flightaware of a random sample of FedEx planes and comparing them to similar passenger airliners I found that the passenger aircraft made about 6-8 flights per day whereas the FedEx planes were making 4-6 daily flights. An aircraft on the ground is still not making money. This is no less true for a freighter than a passenger plane.

Fewer short hops The advantage of air freight is that it can cover long distances in a short time. For shorter distances freight can be moved by truck in a similar time for a lot less money. Airlines often make several short hops to keep the seats full. Inter-continental transport is where the air advantage is truly significant. Air is often the only way to move freight in a timely manner. The wear and tear on a plane depends much less on the time or distance it flies. The biggest factor for airframe longevity is pressurization and depressurization cycles. The most wear and tear on engines, brakes, undercarriage, etc come at takeoff and landing. So the longer the flights the longer a plane will last.

Passenger comfort

Passengers prefer newer planes Whether it be the perception of more safety or the greater comfort of newer, quieter aircraft or the bells and whistles often built into newer planes, passengers would rather fly on newer aircraft. Freight doesn't care so much.

Interior wear and tear One place where aircraft have a lot of wear is the interior. This is mostly cosmetic, but seat cushions sag, upholstery wears out, windows get scratched and yellowed. These things can be repaired, of course. But there comes a point when it's time to retire it, but the airframe still has many years left in it. Freighter conversion is often the best option.

Growth and availability

Regulation Up to the 1970's the air freight industry was almost an afterthought. Airlines were heavily regulated by the Civil Aeronautics Board. The board controlled routes and pricing. They also regulated who could fly airliners. Many believed the CAB was overly focused on passenger service and air freight in the US floundered. Even in this situation, the airlines began buying dedicated freighters. The 747 was designed around the concept of being a freighter. The cockpit was put on top to make it easier to load freight containers resulting in the famous "hump."

Deregulation When FedEx was formed in the early 1970's as a freight only airline they started out with a fleet of small Dassault Falcon 20 jets. By the late 70's they had outgrown the Falcons, but were still not able to move to bigger aircraft due to regulations. In 1977 the air freight industry was taken from CAB control and deregulated. There was suddenly a need for larger freighters. The handful of companies manufacturing airliners can only make so many planes a year, so they began buying passenger 727's and DC-10's as they became available and converted them to freighters. Fortunately for them deregulation hit Branniff Airlines hard and they soon folded making their large fleet of 727's available for freight conversion. FedEx flew these 727's long after the passenger services retired them. Several of the DC-10's are still flying today.

Rapid growth FedEx fleet of dedicated freighters is the 5th largest in the world, including passenger lines. The industry expanded rapidly and the passenger airlines had a head start on aircraft purchasing. The freight services joined the new aircraft purchase game. FedEx was the launch customer for the newly minted MD-11, getting the first six aircraft off the line. They have orders still pending for new 777's and were one of the first to order the A-380, although the economic downturn of 2008 caused them to cancel that order and change it to 777's. But aircraft are built slowly and there are a lot of airlines needing them. To keep up with the needs for large freighters they can't afford to let go of the DC-10's in the fleet. The need for efficiency still affects freight operators so they had their DC-10's upgraded to MD-10's which only require two pilots. As they are able to replace them with newer, more efficient aircraft they will eventually be able to send the DC-10's to their retirement homes in New Mexico.

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Unable to find any good data on number of flights and flight hours, I got creative. This is really unscientific, but I looked up flight histories month to date on 6 random similar aircraft (B777) from United Airlines and FedEx. Here is a table of the results:

I was a bit surprised that the number of flights were so close. The UA aircraft spent slightly more hours in the air and the FedEx aircraft spent slightly more time on the ground

Like I said, such a small sample from two airlines is not very scientific. I'm not sure if this would bear itself out over the entire fleet, but I can't find numbers anywhere.

Answer 4

Aircraft models are longer lived in their cargo versions because that is where they end up. Most of the cargo aircraft are older passenger aircraft that have been converted into cargo aircraft. As a result, the capital costs are lower compared to that of the passenger aircraft. Your aircraft is cheaper, and as a result, you have more leeway in direct operating costs (compared to passenger aircraft, that is).

As a World bank report notes:

The average operating cost of an aircraft in flight is computed by dividing the direct operating costs plus capital costs by the number of hours of aircraft operation.

The capital costs for air freighters are a relatively small part of total operating costs because of their age. The common practice of all-cargo airlines and combined carriers is to purchase used passenger aircraft and convert them by adding loading ramps. After 10 years of operation, the price of an aircraft will have decreased by at least 50 percent and after 15 years by 65-70 percent ...

In the end, it all boils down to cost efficiency- whether the savings due to improved fuel efficiency of newer models offset the higher capital costs required to acquire them in the first place; as long as this expenditure is not justified, the aircraft will continue to be old and this trend is expected to continue in the near future:

1800 passenger aircraft are forecast to be converted for cargo use over the next 20 years , 60% of which will be narrowbody types, predominantly from A320, 737 and 757 families.

Another thing about cargo aircraft is that the pricing is dependent on the LOS (Level of Service) offered- higher cost for a better LOS. By offering improved LOS, the cargo airlines can improve their direct revenue unlike the scheduled passenger flights.

Also, it is not entirely true that all cargo aircraft are old. Integrators (Companies which manage an operate the entire logistical chain from door to door) prefer newer aircraft as they are more efficient, while pure cargo airliners prefer the other way. For example, the Boeing 767 frieghter line is solely dedicated to FedEx.

Answer 5

As you want to offer your passengers maximum comfort and a quiet airplane which also should be economic and efficient passenger aircraft are replaced by newer models quite often whereas for cargo airplanes the comfort doesn't matter at all. "Fracht motzt nicht, Fracht kotzt nicht" (Cargo doesn't shout, Cargo doesn't spill) as we say here in Germany illustrates this. As long as it's rentable for a cargo airline to use an airplane it'll be used.

After thinking about this it sounds quiet logically to use the replaced passenger aircraft as cargo planes if they are big enough, doesn't it?

Answer 6

I would say that the factor that differs most between passenger and freight is the "Value of Reliability". A passenger flight has a very high cost of unscheduled unavailability. Especially in hub and spoke networks, a plane being late or cancelled causes follow-on problems as passengers miss connecting flights. There is a cost in customer satisfaction, and extra expenses. And, presumably, customers value their own time or their employers do, so time wasted is value lost. In freight, reliability is also important, but the costs of being delayed may not be nearly as high. When it is, newer planes will be used. Factors that make freight reliability worth paying for are: perishable cargo, cost of being out of stock, need for cargo for a production process, and high value cargo which has an intrinsic interest cost. A need for a parcel to make it to a hub on time would also make the Value of Reliability higher.

Transportation analysis uses the Base Cost, Value of Time and Value of Reliability to help determine what trade-offs are more tolerable. The terms "Willingness-to-Pay" and "Willingness to Accept" are used, and market participants are surveyed in a sophisticated way to figure out what values they put on trade-offs.

Older aircraft have more time needed for scheduled and unscheduled maintenance, and can't be tightly scheduled if there is a high cost for not arriving on time. But, they are cheaper. As far as "Value of Time", new and old planes are about the same speed in the air, but the time between flights can be longer for freight -- one per day, not several. Maybe the freight company can schedule your flight when they have a plane in position. Maybe this doesn't work when you're shipping racehorses--expect to pay more.

Some kinds of freight fit the characteristics that the freight's time isn't really valuable and being late won't cause too much of a problem. For these products, customers expect a corresponding lower base cost than the cost of a passenger ticket per pound. Most freight also has a lower Value of Time than passengers -- your package is OK with a 3-day journey, but passengers would not be. To meet the the lower cost necessary to satisfy freight customers, who have a lower penalty (loss of economic utility) for delays, older planes can do the job.

Older planes are not "unreliable" in that safety is not directly related to aircraft age, it's just that some components are going to have to be removed more often than on a new plane, and therefore "availability reliability" will be lower.

Answer 7

The special cargo versions of various aircraft models are even produced longer as the passenger versions. Passengers demand a certain level of luxury, which can't be easily included in older models. Mostly it needs a new wiring plan and some other changes. This makes it cheaper to create a new model and incorporate new technology and other demands of the airlines as well. Cargo isn't very demanding and the interior of cargo planes are much simpler. Older aicraft models are cheaper as the new ones. New aircraft models come with a cargo version after 5 to 10 years.

Answer 8

Usually a passenger aircraft needs a lot of attention and budget to keep it satisfactory for passengers. Besides cleaning and decoration the engine sound also needs to stay smooth.

There is a difference between old engine and new engine sounds. Old engines, may be still running perfectly, yet it is bound to make extra noises.

An older aircraft engine and interior will make some extra sound. (You know if you ever traveled some old crafts from some Asian countries. They keep using the aircraft as passengers careers even after the expiry period is over.)

While these noise and other issues are no problem if the aircraft is carrying cargo instead of passengers.