Flying Freight

Lecture Objectives:

What makes air freight attractive to shippers?

Cost structure is majority fuel and equipment
What kind of equipment is used?

Lecture Summary:

Air Freight Service Characteristics

When importance of speed outweighs cost, then air is attractive for freight!

Emergency shipments
Typical commodities include mail, communications products, racehorses, etc.

Speed of service considerations

Speed, travel time advantage can be off-set by flight frequency and timing
Smaller communities have experienced reduced frequencies
In-direct routing due to hub and spoke networks

Cost Structure

The industry operates at: high variable costs (70-90%), low fixed (10-30%)

Government support of highway structure

Terminals not too capital intensive

High variable costs (about 60% of total, but can be as high as 80%)

About 30% attributable to flight operations

About 12% for maintenance
About 17% for aircraft and traffic servicing

How to deal with fuel costs:

Increases have major impact on operating costs

More fuel efficient aircraft and smaller planes on low-density routes

Types of Equipment

We need different planes for different purposes.

All cargo

Extra-large planes
Wide body
Narrow body

Belly cargo

Existing airliners
Smaller loads � maybe a few containers