Convert, build, or both: Air Cargo's biggest capital question

In 2026, the air cargo industry is no longer asking whether to convert passenger aircraft or order new-build freighters. Whether it’s an aircraft entering a conversion facility or one rolling off a final assembly line, both are answering the same question: how do you move more cargo across a world that cannot get enough of it? 

To understand why the conversion market surged the way it did, you have to go back to the conditions that made it feel like the only rational choice. When the pandemic collapsed passenger traffic in 2020, it took belly cargo capacity with it. Airlines that had relied on passenger widebodies to carry freight in their lower holds suddenly found themselves without the volume or the aircraft. At the same time, e-commerce spiked in a way that few operators had modelled for. The demand was real, it was immediate, and it required aircraft that could be put into service faster than any new-build programme could deliver.

Conversion programmes offered exactly that. A Boeing 767-300 or an Airbus A330 that had spent years carrying holiday travellers could be stripped, reinforced, fitted with a cargo door, and returned to service in a fraction of the time it would take to receive a new 777 from Everett. Feedstock was cheap because passenger aircraft were parked across deserts in enormous numbers and lessors were looking for any path to revenue.

The economics were, for a moment, almost too clean. Low acquisition cost, strong freight yields, and a market that could not get enough capacity made conversions the trade of the cycle. The scale of that response is visible in the data today: Boeing has delivered more than 90 737BCFs and over 100 767BCFs, with customers including Amazon Air and DHL. On the Airbus side, EFW, a joint venture between ST Engineering and Airbus that serves as the OEM's conversion centre of excellence, has surpassed an estimated 100 total conversions across the A321P2F and A330P2F programmes, serving carriers such as DHL, Qantas, and Lufthansa.

When allocating capital, operators must carefully balance return on investment, asset lifecycle, and risk exposure.
Lee London, EFW

The cost calculation and its limits
The financial case for conversions has always rested on a straightforward comparison. Cameron France, VP of Operations at Mammoth Freighters, puts the numbers plainly: "Acquisition costs for converted freighters are tens of millions less than new builds. Depending on engine specifications, converted 777s can be placed on the ramp for $90–110 million, while new builds can be $185 million plus." That gap is not a rounding error. France makes the arithmetic explicit: "You can deploy two converted aircraft for the price of one new build. This translates into lower risk in a volatile cargo market." Jim Gibbs, President and CEO of Kansas Modification Center, sharpens the point further: "A new-build widebody freighter whether a 777-8F or an A350F demands a nine-figure commitment and a multi-year delivery wait. Our 777-300ERCF conversion puts 93 metric tonnes of certified payload on routes in five months, at a fraction of that cost."

But the cost advantage is not the full picture. A converted aircraft carries the legacy of its original design. Floor reinforcement, cargo door installation, and the reconfiguration of environmental and fire suppression systems are all engineering interventions that add cost and introduce variables that a purpose-built freighter does not have. Lee London, SVP Sales and Marketing at EFW, frames the widebody conversion argument around operating flexibility rather than raw cost. The A330P2F, he notes, "offers a balance between low investment costs and competitive operating costs" with a containerised volume of up to 526 cubic metres and a payload of up to 62 tonnes. For medium-haul routes where absolute range and maximum payload are less critical than flexibility, those numbers are competitive. Conversions can also be realised relatively quickly, whereas commissioning a new-build freighter requires a significantly longer lead time.

Typically conversions win with lower trip costs, and new builds win in efficiency per tonne-kilometre.
Cameron France, Mammoth Freighters

When the boom stopped covering the cracks
The conversion surge that looked so logical in 2021 and 2022 began to show its contradictions as demand normalised. Freight yields dropped back as belly cargo capacity returned with the recovery of passenger flying. The flood of converted aircraft began arriving into a market that was softer than the one that had commissioned them. Some aircraft were parked. Lessors became selective. The boom had, in places, overshot.

The question that now sits at the centre of capital allocation decisions is whether the conversion market had, by 2023 and 2024, become a solution in search of a problem. France acknowledges the trade-off directly: "Typically conversions win with lower trip costs, and new builds win in efficiency per tonne-kilometre." On thinner routes and in developing markets, that is a distinction operators can absorb. On high-density intercontinental corridors, it becomes a structural cost disadvantage that compounds year over year.

We have thought through costs-of-ownership, meaning where this aircraft sits in year fifteen and not just at first delivery.
Jim Gibbs, KMC

Why new-build still commands the argument on long-haul routes
The case for purpose-built freighters has never really weakened, even if it was temporarily overshadowed. Boeing positions the 777-8F as "the most capable and fuel-efficient twin-engine freighter," one that will "provide more range, more payload capability and lower fuel use and emissions than any converted freighter." For carriers whose network is built on intercontinental flows and high-value freight, that proposition is difficult to argue against over a 20-year asset life.

London draws the same boundary from the conversion side. The A350F, he notes, "achieves substantially lower costs per tonne on long-haul routes" due to its payload capability of up to 111 tonnes, lower fuel burn, and next-generation aerodynamics. "New-build and converted freighters thus complement each other to meet the future air cargo demand," he says, a framing that refuses the binary choice and instead assigns each type to the segment it is best suited to serve.

OEM backlogs have complicated the new-build case not because the aircraft are undesirable but because they are simply unavailable on the timescales that cargo operators sometimes need. France notes that "the new-build backlog is significant, with shifting availability timelines ranging from the end of this decade to early 2030s," while conversion slots for 777s are available in the near term. Gibbs puts the operator reality plainly: "The cargo market does not wait for delivery lead-times. Operators who can place widebody capacity on routes quickly are the ones who capture value when the window opens." That asymmetry has pushed operators toward conversions even when their long-term fleet preference runs the other way.

How operators are actually segmenting their fleets
The most instructive data point in the current market is not which aircraft type is winning the argument but how operators are actually deploying both. Challenge Group has committed over $100 million to ageing 777-300ERs using IAI's 777-300ERSF programme.

With one aircraft currently active and a target of approximately six in total, the investment signals a deliberate bet on the converted widebody as the foundation of a long-haul network. Or Zak, Group CCO at Challenge Group, frames the rationale in terms of network logic rather than asset comparison: "The 777-300ERSF provides the payload, range, and operational profile required to support our long-haul, end-to-end logistics solutions, particularly across intercontinental flows where consistency and control are critical." On availability, Zak is direct: "Conversion allows us to secure and deploy that capacity in line with market demand and our growth trajectory." For KMC, the feedstock argument reinforces that logic. Airlines are retiring 777-300ERs from passenger service in volume, many carrying strong maintenance histories and significant structural life remaining. As Gibbs notes, "these are not tired aircraft. They are freighters built to go the distance."

In the narrowbody segment, the calculus is different in structure but similar in conclusion. London points out that passenger-to-freighter conversions such as the A321P2F "currently represent the only practical cargo solution" for narrowbody operators, primarily due to the absence of dedicated new-build narrowbody freighter programmes. More than 50 A320P2F Family conversions have been redelivered and are operated by over 20 airlines globally. Operators benefit from Airbus ecosystem support, worldwide MRO network coverage, spare parts access, and cockpit commonality that enables cross-crew operability, all advantages that go beyond the conversion price.

London's recommended approach reflects what most sophisticated operators are already doing: "Many operators adopt a portfolio approach, combining converted aircraft for tactical flexibility and network growth with new-build freighters for strategic, long-term efficiency." Zak describes the same orientation, characterising Challenge Group's investment as part of a broader vision: "building a fleet that supports not just movement of cargo but delivery of complete logistics solutions across global markets, keeping the most essential supply chains alive."

What is critical for us is flexibility and alignment with demand.
Or Zak, Challenge Group

What has changed is the discipline with which capital is now being applied. The pandemic created conditions in which almost any conversion made financial sense. Those conditions no longer exist, and the market is correcting toward a more selective logic. The next phase of the cargo market will not be defined by how many aircraft can be converted but by how many should be, on which routes, for which operators, and at what point in the asset life cycle the returns justify the investment. That is a harder question than the one the boom years were asking. It is also a more honest one.