A consortium of aviation companies in Taiwan yesterday signed a US$25 million investment agreement with US plane maker Boeing to convert passenger jets into cargo aircraft.
The project, which as of yet has no scheduled take-off date, could be worth an estimated NT$10 billion (US$3 billion) in revenue per year, aviation officials said.
The agreement comes as a result of Taiwan's effort to establish it self as a regional aviation center.
In addition, Boeing had long expressed the desire to set up an aircraft conversion and maintainence center in the Asia-Pacific region, officials with the government's Committee for Aviation and Space Industry Development (
The consortium, which was recently organized by CASID for the purpose of winning the conversion project from Boeing, is composed of China Airlines (
It is expected that Boeing will need around 2,000 Boeing and McDonnell Douglas passenger jets converted into cargo planes for its clients over the next 20 years. The plane manufacturer has its eye on the booming cargo service market, which is expected to grow at an annual rate of 6.5 percent over the next two decades as e-commerce boosts demand for global logistics.
Yesterday's agreement was signed by Boeing Airplane Service President Joseph Gullion and senior officials from the consortium's four members.
The four companies were reported to have each kicked in NT$15 million toward the consortium's start-up cost, said Chin Hu (
While earlier reports said up to 2,000 planes could be converted in the years to come, Jack Tang (
"The agreement was essentially a confirmation of a mutual partnership without finalizing Boeing's exact investment value," Tang said. "Also, the agreement does not specify number and models of aircraft to be converted."
Aviation officials indicated yesterday that Singapore had also been in the running for the Boeing project.
But R.C. Chu (
Officials note converting a passenger plane into a cargo jet requires just six months, while building one from scratch can take between two and three years. Thus, the shorter time saves airlines about half the estimated US$140 million cost of a brand new cargo jet.
In addition, officials said Asia's cargo market is poised for significant growth, particularly along North American and European routes. This year, CAL and EVA will share 7 percent of the world's cargo shipping capacity.
CASID estimates that in the next 20 years, 2,800 more cargo jets will be needed to meet the global demand. Roughly 2,000 of those planes will be converted from passenger planes.
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