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Airfreight l Part 2 [Mr Basanth Sathabridg, Mrs Lyndelle Sarita Adams, Mr Randal Bruce Adams] on leondumoulin.nl *FREE* shipping on qualifying offers.
Table of contents

Overall U. Fuel and labor were roughl y equal com- ponents of total operating costs in ; but con- tinued price increases now make fuel the largest. After , as shown in.

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Washington, D. C,: U. Civil Aeronautics Board , table 10A, p. Figure l. International air cargo has a greater speed dif- ferential over the ocean shipping industry than domestic air cargo has over the domestic truck- ing industry. This comparative advantage has helped international air cargo operations to show a better operating and profit performance. As shown in figure 2, the international opera- tions of both combination carriers and all-cargo carriers, produced an operating profit—an ex- cess of revenues over expenses—for a sustained period of time.


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By contrast, figure 3 shows that in the domestic market combination carriers showed profits for only one brief period The all-cargo carriers did little better:. Although they were in a loss position when the data ended , the losses were nar- rowing. This lackluster performance has caused many all-cargo carriers to drop out or be absorbed by other carriers. Several combination carriers, most recently TWA, have discontinued all-cargo service. Those remaining in the business have done so for a variety of reasons. Combination carriers flying international routes have gener- ally been able to show a profit and the prevailing.

Figure 2. Figure 3. In the case of all-cargo carriers, Flying Tiger is convinced that the potential for growth is strong in the domestic market and deregulation of both air cargo and trucking opens up the prospect of forging a highly profitable intermodal cargo service. Federal Express has demonstrated that it is not impossible to reap huge profits from air cargo. Since the company turned a profit in its third year of operation.

Prior to the passage of the Air Cargo Deregulation Act of Public Law , the Civil Aeronautics Board CAB was respon- sible for the economic regulation of commercial airlines including both the all-cargo and com- bination carriers. Commuter carriers operating aircraft with payload under 7, lb and airlines operating solely within the borders of one State were exempt from regulation.


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CAB was also responsible for setting rates. A series of congressional hearings on air cargo held in highlighted the precarious state of the in- dustry. Amer- ican and United reduced prime-time overnight. By , that figure had been cut almost in half. There was a movement away from scheduled service as ship- pers increasingly turned to contract charter carriage or to other modes. It has been argued that the regulatory system frustrated the growth of the air cargo industry not only by restricting the routes but also by keeping many rates below costs. Carriers claim that prior to deregulation air freight rates had been too low to support the level of prime-time freighter operations which the market de- manded.

The Domestic Freight Investigation completed by CAB shortly before cargo deregu- lation concluded that regulated freight rates were fully 42 percent below those justified by estimates of long-run costs during Washington, Department of Transportation, Office of the Secretary, , p. Civil Aeronautics Board, , p. This authority was extended by subsequent act to include supplemental char- ter carriers in March Rights under the new authority are granted under section of the Federal Aviation Act.

During the first year under deregulation, Pan American was the only trunk carrier to begin new services. TWA discontinued its all-cargo operations, and there was little activity from other CAB certificated carriers. Six supplemen- tal carriers received section certificates, but only two Evergreen and Zantop began new service. As expected, the all-cargo carriers, Airlift, Flying Tiger, and Seaboard, took advantage of the new route freedom. Flying Tiger has been es- pecially aggressive in expanding the network of cities it serves.

In addition, it has acquired both Seaboard and several regional trucking firms. Federal Express, a commuter airline originally organized to carry express packages and docu- ments in small business jets, has also expanded its route structure since deregulation.

For Fed- eral Express, deregulation meant the right to operate larger aircraft. In November , 1 year after the passage of the deregulation bill, entry to air cargo opera- tions was no longer confined to airlines which had offered prior service. By the middle of September , several ad- ditional carriers received section certificates under these new open-entry rules. These in-.

Liner Shipping Economics

Currently over carriers hold section certificates. There has been no rush of total newcomers to the air freight industry.

Because of high startup costs, most of those entering or expanding air cargo service have been established carriers. Several air freight forwarders are furnishing their own cargo service in markets where belly capacity is inadequate. Often they lease aircraft and pilots—an arrangement called a wet lease.

The major air freight markets remain dominated by the same carriers as before deregulation, The new entrants are primarily operating in local commuter-type markets. Impact on Rates and Service. Although some early proponents of cargo de- regulation had predicted that rates would drop, there has been an increase in air freight rate levels and premium rates charged for commodi- ties requiring special handling.

The rates for some commodities and some markets have increased more than others. Rates for live animals have increased from to percent of general commodity rates.

Airfreight 1970 Part 1

Many car- riers have increased priority rates from to percent of the general commodity rates. Rates in short-haul markets have increased more than in long-haul markets. Short-haul markets have long been unprofitable, while the denser long-haul markets are more compatible with freighter aircraft economics.

Published rates, however, do not tell the whole story. Air freight rate levels and premium. Table 1.

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