TORONTO, July 16: Customers will ultimately pay the cost of upgrading the world's fleet of converted Boeing Co 727 freighters to alleviate safety concerns expressed by a US Federal Aviation Administration(FAA) order, a leading 727 operator told Reuters.

The cost has been a subject of great speculation, with estimates ranging from $50,000 to $500,000 per aircraft, not counting the lost opportunity cost if an aircraft is pulled from service for the modifications.

Whatever the cost, "we're going to pass it on to our customers", chairman and chief executive of Kitty Hawk Inc M Tom Christopher said by telephone from its Dallas base.

On July 14 the FAA issued a proposed order affecting 321B-727 freighters worldwide -- those converted from passenger to cargo aircraft by companies other than the original manufacturer.

When the order takes effect, operators will have to make structural modifications or reduce overall payload.

"What the FAA has just done affects a substantial amount of airfreight moving on freighters," Christopher said.

Do we expect the airfreight industry to go out of business? No."We're all going to go and put in the modifications the FAA requires... It will not affect the world economy or air freight."

Kitty Hawk operates 15 affected B-727s. FedEx has 120, comprising three-quarters of its 727 fleet.

The FAA action is pre-emptive. Operators said there had never been an incident traced to the structural issues involved.

Estimates for performing the various modifications range up to $500,000 per aircraft. The FAA said just one of the modifications -- strengthening the floors of the 727s -- would cost about $100,000.

Monday's FAA notice of proposed rule-making deals only with the floor integrity issue and will be followed next year with a directive covering cargo doors integrity, understrength cargo restraint systems, door hinges and hydraulic design deficiencies.

Christopher said the modifications were unlikely to affect the economics of 727 freighters.

To meet noise reduction standards, Kitty Hawk and other operators are installing $2.5 million hush kits on its 727s "and life goes on and we're all still very profitable".

As for complying with the FAA order, cost estimates at the high end - like $500,000 - "sound absolutely off the Richter scale", he added.

"It could possibly be that but none of our analysis so far has indicated a number that is even 10 per cent of that number," he said.

Most aircraft will be upgraded, say industry officials.

"I haven't heard anyone say that it would be economically viable" to operate indefinitely under the payload restrictions, said Clayton Hamilton, executive vice-president of Hamilton Aviation, one of several companies preparing 727 modification kits for FAA certification.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.