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Joined: Wed Apr 05, 2000 2:02 am

Cargo Vs Passenger

Tue Apr 30, 2002 7:26 am

This thought crossed my mind as I witness numerous Cargo arrivals at MIA the other day....

Which creates more revenue 1) a fully loaded cargo 757/767 at the going rate or 2) a fully loaded pax 757/767 at the average fare. Both for a transcon flight - say JFK to LAX. Assume a/c acquisition, leasing and maintenance costs are the same.

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Joined: Thu Sep 13, 2001 12:15 am

RE: Cargo Vs Passenger

Tue Apr 30, 2002 7:51 am

Cargo always make more money pound for pound. And a cargo plane is configured to use all the available space.
Fwd to MCO and Placard
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RE: Cargo Vs Passenger

Tue Apr 30, 2002 7:56 am

I would guess that the cargo flights do.
1. You don't have to feed cargo; livestock excepted.
2. Cargo doesn't demand PTVs.
3. It doesn't demand upgrades or accrue frequent flyer points.
4. The airline doesn't have to throw in a free stopover and accomodation along the way just to get its business.
5. Most cargo business represent long term contracts.

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RE: Cargo Vs Passenger

Tue Apr 30, 2002 8:20 am

Having dealt with airline flight costing and profitability analysis in the past let me give you some ideas.

For your particular example of JFK-LAX, a passenger flight clearly would make more as this trancon route has a large amount of high yield business traffic, as compared to the very low domestic cargo yields. (majority of US freight moves on trains and trucks).

However in the international arena the reverse is possible. A good example is for instance cargo traffic coming out of Asia eastbound headed for the US. A few years back when the world economy was much stronger, a full B747F operating out of Japan could generate revenue of about $400-500,000. While on the other hand a B747 passenger flight from Japan to the US would generate revenue of less than $325,000 even with the high amount of first and business class traffic.

With the wide imbalance of trade however many cargo routes are mostly one-way. Using the above example the same B747F headed westbound to Japan would be lucky to generate $150,000 in revenue.

From a cargo profitability point of view the key is to find and operate in markets that have high yields without major cargo flow imbalance, or ensure one generates enough of a high yield in one direction to ensure the round trip becomes profitable. (ie USA-Asia-USA)

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