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Matt6461
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RE: IATA: A380 Stagnation Part 2

Mon Jun 13, 2016 3:00 pm

Quoting Ncfc99 (Reply 61):
with cargo yields in the toilet recently and only going to stay there with the glut of belly space coming onto the market, cargo will become less important

I don't disagree re cargo yields - I've written extensively that the decline of this factor favors further investment in the A380.

Nonetheless, even paltry cargo yields are highly profitable - the marginal cost of boarding cargo is mostly fuel and not a tremendous amount of that (you're already paying the pilots, en route fees, and capital cost).

For planes that are similar in pre-cargo efficiency (as are 779 and A380), a 5% revenue delta from cargo could easily double a route's profitability. That's huge.

Quoting Ncfc99 (Reply 61):
don't forget the premium the 388 commands over other types and the high amount of premium seating that can be fitted into the 380 to boost the yield.

Don't forget that the nominal revenue premium seen on A380 services is related the plane's low-density configuration. It's not for nothing that A380's have all those bells and whistles - bars and, in EK's case, much more generous seating.

Re premium seating numbers, there's nothing special about the A380 in that category. Any plane can have any seating mix - premium or Y-heavy. EK has been moving away from premium-heavy A380's, increasingly taking 2-class layouts.

Quoting Ncfc99 (Reply 61):
If there is one thing I have learnt on a.net, premium seats is where its at.

This is far overstated on A.net. As TC said today (other thread), business yields are falling. Many airlines are dumping F entirely. The most profitable seating may be flexible Y-seats that sell for, say, half of a J seat but take up one quarter of the floor area. The trend of J seats taking up more space and Y seats less can't continue forever while making business sense. We've probably hit, or are near, that tipping point where, by floor area, airlines are making as much profit off the back of the bus as the front.
 
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Matt6461
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RE: IATA: A380 Stagnation Part 2

Mon Jun 13, 2016 6:29 pm

Quoting speedbored (Reply 69):
Fuel is currently a very small part of the cost base.

I'm talking about belly cargo here - we're comparing A380 and 777-9 after all.

My point is that fuel is the only big ***MARGINAL*** cost of boarding belly cargo, as the plane is already flying so capital, maintenance, crew, and fees costs are going to be incurred anyway. By boarding cargo your costs amount, basically, to the ***MARGINAL*** fuel burn plus handling costs.

I'm not certain what the rest of your reply is about, but it seems to address dedicated freighter ops. Yes, these are in trouble.

No, that does not mean belly cargo is in trouble.

You have to remember to think about marginal costs, not just average or total costs. For a dedicated freighter, the marginal cost is identical to total cost. For belly cargo the marginal cost is a small fraction of that cost.

Now to do som e quick and dirty math on profitability of belly cargo:

One tonne of cargo in a 77W's belly would increase trip fuel consumption by, say, 1% (less than that, but whatever).
EK's average trip length is, IIRC, ~3000nm.
A 77W will burn - very rough guess - 20,000 gallons of fuel on a 3,000nm trip (probably less than that, but whatever).
A 1% fuel burn delta is 200 gallons on that trip.
With $1.50 gas that's a $300 dollar marginal fuel cost - and that's on my very liberal assumptions here.

$300 is ~ one-quarter of the cargo revenue generated, constitutes most of the cargo cost (only handling is additionally significant).

Pre-handling, cargo shows a profit margin of 75%.

...so obviously belly cargo yield could massively decline before it stopped contributing profit. And it surely will as the world's belly capacity comes to set prices more than the maindeck freighter capacity.
 
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RE: IATA: A380 Stagnation Part 2

Mon Jun 13, 2016 7:12 pm

Quoting Matt6461 (Reply 72):
I'm talking about belly cargo here - we're comparing A380 and 777-9 after all.

So am I.

Or do you seriously imagine that belly cargo just turns up at the airport, sorts itself, security checks itself, transports itself to the aircraft, climbs on board itself, secures itself, provides its own environmental control, does all of its own paperwork, .......

Quoting Matt6461 (Reply 72):
Pre-handling, cargo shows a profit margin of 75%.

All you have proved is that it is easy to prove your point if you omit all of the inconvenient numbers from your equations.

Pre-all-costs-except-fuel, passenger traffic probably shows an even higher margin.

There are a lot more costs to belly cargo than just fuel. I fail to see how anyone can possibly believe that, with so much overcapacity in the cargo market (both dedicated and belly), any airline would be able to charge cargo rates that would be anything more than marginally profitable. Or do you seriously believe that the normal rules of supply and demand don't apply to belly cargo?

If it were true that there's high profits to be made from belly cargo then, surely, you would be able to post some evidence to support your claim. Maybe just one CEO quote saying how profitable it is?

Or maybe you ought to do some reading up about just how bad things really are for air cargo (whether belly or dedicated) at the moment. IATA has plenty of good factsheets, for example:
http://tinyurl.com/hydlyqk
http://tinyurl.com/j64x8bj
http://tinyurl.com/gmpxz4e

Quoting Matt6461 (Reply 69):
I looked at that reply from Speedbored and had another one of those moments of - where to even begin?
Quoting Matt6461 (Reply 69):
Were you a professional like speedbored, you'd know:

For someone who is constantly whining about the inability of the rest of us to correctly hold an intellectual debate, you really are a shining example of how to do it properly. So the correct way is: when proven wrong, don't admit it, just resort to personal attacks and insults. Must try to remember that.
 
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RE: IATA: A380 Stagnation Part 2

Mon Jun 13, 2016 10:38 pm

Airlines are price takers in respect to belly freight. Margins continue to fall, a trend that shows no sign of reversing. We are approaching a tipping point where airlines, other than for a few zero aggravation, strategic partners, no longer accept belly cargo. At current pricing, it's increasingly seen as a break even service at best, and a loss-making, distraction at worst.
 
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RE: IATA: A380 Stagnation Part 2

Mon Jun 13, 2016 10:39 pm

Quoting speedbored (Reply 73):
Pre-all-costs-except-fuel, passenger traffic probably shows an even higher margin.

From this quote you're still missing the point about marginal cost versus total cost.
There is no point to looking passenger traffic excluding all but a small marginal fuel cost. Do you understand why? Because the plane is already flying for passenger traffic - especially in a scenario where we start by comparing for passenger economics and then adjust by cargo. Because the plane flies for passenger traffic, the marginal cost of carrying passengers is simply the total operating cost, pre-cargo. The increment between operating cost, post-cargo and pre-cargo, is properly understood as the marginal cost of carrying cargo.

Do you agree with this conceptual framework or not? If not, why not?

I'm not trying to be rude here, I just want to know whether you appreciate the structure of the marginal cost argument and, if so, whether you have some specific disagreement with it. If you just refuse to apply this conceptual framework then we're talking past each other and there's really no point.

Quoting speedbored (Reply 73):
There are a lot more costs to belly cargo than just fuel.

Pray tell, you're the professional. Besides handling and some minor increment, perhaps, to engine maintenance for slightly higher average takeoff weights.

Quoting speedbored (Reply 73):
do some reading up about just how bad things really are for air cargo

Even the current low cargo yields remain tremendously profitable for belly cargo. IATA shows an average yield $1,800 for a tonne of cargo flown SE Asia - Europe. As quick calculation above shows, the marginal cost of fuel for belly cargo on that route will be a very small fraction of that $1,800.

Now, that point will pass you in the night if you don't agree that the marginal cost conceptualization is the proper one.

I await your answer on that issue, and your articulation of what further belly cargo costs would close the gap between fuel and revenue to make belly cargo minimally profitable.
 
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Matt6461
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RE: IATA: A380 Stagnation Part 2

Mon Jun 13, 2016 11:50 pm

Quoting speedbored (Reply 73):
If it were true that there's high profits to be made from belly cargo then, surely, you would be able to post some evidence to support your claim.
Quote:
“Cargo revenue is an important revenue source for Finnair, with approximately 17 % of intercontinental revenue coming from cargo.
http://www.finnaircargo.com/en/cargo...argo-terminal-in-helsinki-850.html

FinnAir has no main deck freighters, having retired its MD-11F's - that 17% of revenue is all belly revenue.

The A350's/340's/330's that carry this cargo are flying anyway. The marginal cost to FinnAir is incremental fuel burn from cargo weight, handling expense, and probably some small delta to engine maintenance and maybe insurance expense.

I outlined above why marginal fuel cost will be a fraction of marginal cargo revenue for belly freight.

Because you asked the question, the burden is now on you to prove that the non-fuel ***MARGINAL*** costs of carrying belly cargo close the gap between fuel cost and cargo revenue sufficiently to make belly cargo low-margin.

I'd appreciate if you either take the foregoing challenge, or clearly explain that you reject the marginal cost conceptual framework (and preferably explain why you reject that framework).

If you're going to repeat your earlier statement about ***TOTAL COSTS*** instead of ***MARGINAL COSTS*** then I am going to have to withdraw from this exchange as you wouldn't be taking the ideas and arguments to heart.
 
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Re: RE: IATA: A380 Stagnation Part 2

Tue Jun 14, 2016 8:54 pm

Matt6461 wrote:
Quoting speedbored (Reply 73):Pre-all-costs-except-fuel, passenger traffic probably shows an even higher margin.
From this quote you're still missing the point about marginal cost versus total cost.

No, I understand costs perfectly. You, on the other hand, are stuck in a belief that the real world is some sort of simplistic academic exercise.

Matt6461 wrote:
Do you agree with this conceptual framework or not? If not, why not?

No because you are dismissing costs that are relevant. Even if you only want to look at marginal costs, there are many more aspects than just fuel:

Just for example, a large part of the aircraft structure and many systems are dedicated to cargo. Those all have a cost. If cargo were not being carried, many of those systems could be removed, much of the cargo hold could be re-purposed (e.g. for lower deck galleys and toilets, freeing up space for more passengers, or for additional fuel tanks). Landing and en-route fees could be reduced by paperwork reductions to MTOW, etc.

And if you are going to get a true picture of profitability, you can't just ignore all of the other costs of cargo, such as handling, security, administration, etc.

Matt6461 wrote:
I'm not trying to be rude here

I find that very hard to believe but, regardless, you are succeeding.

Matt6461 wrote:
If you just refuse to apply this conceptual framework then we're talking past each other and there's really no point.

If you insist on using your "conceptual framework" to work out whether or not belly cargo is "highly profitable" then, yes, there really is no point.

But why do you need to even try to work it out? Real airlines are carrying real belly cargo every day. The information is out there - you could prove your "belly cargo is highly profitable" point with one single quote from an airline executive saying so.

Matt6461 wrote:
Even the current low cargo yields remain tremendously profitable for belly cargo.

Then why can't you post a quote from an airline saying so?

There are many articles saying how bad things are:
http://australianaviation.com.au/2016/02/sia-lifts-third-quarter-profit-forecasts-challenges-ahead/
http://www.dcvelocity.com/articles/20160414-airfreights-belly-ache/
https://aircargoeye.com/air-cargo-profitability-hits-seven-year-low/
http://theloadstar.co.uk/analysis-things-must-change-cargo-pressure-big-three-us-airlines/
And this one also contains a a section on "why belly cargo is not free" - you should read it:
http://centreforaviation.com/analysis/air-cargo-few-other-industries-would-tolerate-its-structural-overcapacity-192139
 
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Re: RE: IATA: A380 Stagnation Part 2

Tue Jun 14, 2016 9:17 pm

Matt6461 wrote:
Quote:“Cargo revenue is an important revenue source for Finnair, with approximately 17 % of intercontinental revenue coming from cargo.http://www.finnaircargo.com/en/cargo... ... i-850.html

I fail to see how an article stating that Finnair get some of the revenue from cargo proves that belly cargo is "highly profitable". The article doesn't even contain the word "profit" (nor even "margin" or "yield").

Or is your logic:
Finnair earn some revenue from belly cargo
Matt says belly cargo is "highly profitable"
Therefore, Finnairs belly cargo must be highly profitable.

Matt6461 wrote:
FinnAir has no main deck freighters, having retired its MD-11F's - that 17% of revenue is all belly revenue.

Not true. Look at their last annual report. Finnair run dedicated cargo operations in a joint venture with IAG.

But even if we ignore that, given that you assert that 17% of Finnairs revenue is "highly profitable", how do you explain why their overall profit was so low? Were they making big losses on all of their other operations? If they were, then surely those losses become marginal costs of the belly cargo operation, don't they?

Matt6461 wrote:
The A350's/340's/330's that carry this cargo are flying anyway. The marginal cost to FinnAir is incremental fuel burn from cargo weight, handling expense, and probably some small delta to engine maintenance and maybe insurance expense.

And quite a few other things. And a number of non-marginal costs.

Matt6461 wrote:
Because you asked the question, the burden is now on you to prove that the non-fuel ***MARGINAL*** costs of carrying belly cargo close the gap between fuel cost and cargo revenue sufficiently to make belly cargo low-margin

No, it isn't. I didn't even ask a question - I asked you to provide evidence to support your assertion. The onus is still on you to show any evidence at all that belly cargo is, as you claimed, "highly profitable". Show us a quote, not some made up numbers derived from your conceptual frameworks.

Planesmart wrote:
Airlines are price takers in respect to belly freight. Margins continue to fall, a trend that shows no sign of reversing. We are approaching a tipping point where airlines, other than for a few zero aggravation, strategic partners, no longer accept belly cargo. At current pricing, it's increasingly seen as a break even service at best, and a loss-making, distraction at worst.

:D
 
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Re: IATA: A380 Stagnation Part 2

Tue Jun 14, 2016 11:30 pm

speedbored wrote:
I fail to see how an article stating that Finnair get some of the revenue from cargo proves that belly cargo is "highly profitable". The article doesn't even contain the word "profit"


No speedbored, you just refuse to follow an argument with anything approaching intellectual seriousness. It's really, really tiresome. I laid out (1) 17% cargo revenue, (2) a reasonable approximation of marginal cost from carrying such revenue, and (3) the obvious inference from 1 and 2 of profitability. You simply ignore (2) because your strategy is always to present a version of my arguments that would be stupid. I'm guessing that most folks here see what you're doing - if they're paying attention. I'm also guessing that part of your strategy is often to just run up the word count so folks throw up their hands and don't come to conclusion.

speedbored wrote:
And this one also contains a a section on "why belly cargo is not free" - you should read it:
http://centreforaviation.com/analysis/a ... ity-192139


Let's look at what your article says:
Some airline managers argue that, since the passenger aircraft are flying anyway, any volume of freight makes a contribution to the costs of operating the passenger aircraft (provided the freight revenue generated covers its handling costs).


...so there's your quote from an airline for you about the low marginal cost of belly freight (via CAPA). CAPA disagrees with these managers, but we'll use our own independent thought to evaluate its grounds for disagreements (something I'm sure will offend you):

This ignores the impact that belly capacity has on the overcapacity situation in air freight markets, placing downward pressure on yields across the industry. Moreover, it ignores the capital costs of acquiring this space. If belly space cannot be filled, it should not be designed into aircraft.


CAPA's first point is irrelevant to our discussion and, frankly, a little dumb. A specific plane contributes negligibly to the dilution of cargo yield and, more importantly, such dilution is not a cost born by the airline filling its belly. It is not a marginal cost of cargo operation, it's something like an "externality" - a cost imposed by an economic actor and born by others. That's not even right though, as one actor's ability to capture business by offering a lower price isn't an externality at all - it's competition.

CAPA's second point - capital cost - is also highly unconvincing. The capital cost attributable to belly cargo capacity is also basically nothing. It's impossible to order a modern widebody that doesn't have space for belly cargo. Perhaps an OEM would cut you a discount if you left that space empty of cargo racks and handling equipment but that would be clearly a tiny part of acquisition cost.

speedbored wrote:
You, on the other hand, are stuck in a belief that the real world is some sort of simplistic academic exercise.


...from the guy who just criticized me for personal attacks. :roll:

What I think you object to is an amateur like me using basic conceptual analysis to reach insights. That's probably "academic" to you. You object to this because (1) you are strongly motivated to seek recognition as an authority here and (2) you are generally uncomfortable with analyzing concepts independently of pre-existing maxims from your knowledge base. If it's not something you've heard before from someone in the industry, it can't be right regardless of the strength of the logic and evidence. That's a sad fact and a sadder thing to see on a forum about ideas.

You'd think you'd reconsider your stance from being wrong where I was right over the years (A380neo, for example).
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 12:32 am

Matt6461 wrote:
CAPA's first point is irrelevant to our discussion and, frankly, a little dumb. A specific plane contributes negligibly to the dilution of cargo yield


However, the 777-300ER offers significant belly cargo volume and the A350, 787 and 777X families offer more belly cargo volume than the A330, A340 and 777-200 families. So while on an individual frame basis it may not be measurable, across the respective fleets, it adds up. lightsaber has noted that the 777-300ER has had a material impact on dedicated freighter utilization because it can lift so much extra air cargo (by volume) that used to have to go by dedicated freighter.
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 8:36 am

Matt6461 wrote:
No speedbored, you just refuse to follow an argument with anything approaching intellectual seriousness. It's really, really tiresome.

Ah so quaetioning unsubstantiated statements is "refusing to follow your argument" now. I follow your argument but it is wrong.

You are clearly labouring under the assumption that "low cost" = "high profit". Well, when it comes to the air cargo market, that is not true.

There is more belly freight capacity out there at the moment than the total air freight demand. For someone claiming to have a degree in economics, you seem to be severely lacking in an understanding of supply and demand.

But why keep making assumptions? If belly cargo was, as you claim, "highly profitable", airline executives would be on the record saying so. Yet you cannot find a single quote to post to back up your assertion.

Matt6461 wrote:
I laid out (1) 17% cargo revenue, (2) a reasonable approximation of marginal cost from carrying such revenue, and (3) the obvious inference from 1 and 2 of profitability. You simply ignore (2) because your strategy is always to present a version of my arguments that would be stupid.

I ignore (2) because it is a far from reasonable assumption and, as I have stated multiple times now, there are far more costs to consider than just the marginal cost of fuel.

Matt6461 wrote:
Let's look at what your article says:
...so there's your quote from an airline for you about the low marginal cost of belly freight

But I didn't ask for a quote about marginal costs. I have not disputed that marginal costs are low. But that does not prove that cargo is "highly profitable", which is the claim you made, for which I asked for evidence.

Matt6461 wrote:
more importantly, such dilution is not a cost born by the airline filling its belly. It is not a marginal cost of cargo operation, it's something like an "externality" - a cost imposed by an economic actor and born by others. That's not even right though, as one actor's ability to capture business by offering a lower price isn't an externality at all - it's competition.

Call it what you like but you are still missing the point that a general increase in over capacity drives down rates without reducing costs. Hence profit suffers.

Matt6461 wrote:
CAPA's second point - capital cost - is also highly unconvincing. The capital cost attributable to belly cargo capacity is also basically nothing. It's impossible to order a modern widebody that doesn't have space for belly cargo. Perhaps an OEM would cut you a discount if you left that space empty of cargo racks and handling equipment but that would be clearly a tiny part of acquisition cost.

Again, you are missing the point, aside from the equipment, absent cargo, that space could be used to free up extra space in the passenger cabin, or the aircraft could take a paperwork MTOW reduction. Both of these have to be considered as a cost of being able to fly cargo.

Matt6461 wrote:
(1) you are strongly motivated to seek recognition as an authority here and (2) you are generally uncomfortable with analyzing concepts independently of pre-existing maxims from your knowledge base. If it's not something you've heard before from someone in the industry, it can't be right regardless of the strength of the logic and evidence.

(1) Wrong. Unlike you, I really do not give a damn about recognition.
(2) Wrong - I have no problem with analyzing concepts as long as it is done correctly. The problem I have with your analysis is that it always ignores anything that does not give you the result that you want.

Matt6461 wrote:
...which is something few sane people would dispute. Only someone who thinks his claims to professional expertise insulate implausible views from scrutiny.

Ah so I am insane and now? Any sane person could see that I have not actually disputed that.

Matt6461 wrote:
We should lump this speedbored thesis with his "unit costs don't influence profit" thesis under heading, "Crazy things speedbored said to disagree with matt6461."

Again, I have never said that either.
 
Amiga500
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 9:49 am

Cargo profits are in the gutter.

Continued growth of the overall fleet size will only keep it trending downward unless there is a big change elsewhere (like loads of boats sinking - but I consider that unrealistic).

There is no point making highly theoretical arguments (which are based on many assumptions and exclusions) to the contrary when you can wheel out 10 articles citing airline executives stating how bad things are.
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 11:30 am

CAPA's first point is irrelevant to our discussion and, frankly, a little dumb. A specific plane contributes negligibly to the dilution of cargo yield

The ocean is a sum of many small droplets
Any given airplane may appear negligeable in the grand scheme of things, but when all bellys of all airplanes are added together, it does matter.
This ambivalence is difficult to take into account, but that doesn't mean you can simply disregard it

CAPA's second point - capital cost - is also highly unconvincing. The capital cost attributable to belly cargo capacity is also basically nothing. It's impossible to order a modern widebody that doesn't have space for belly cargo.


A cargo hold implies fire-proof linings, fire detection and extinguishing capabilities (with impact on ETOPS), ventilation and temperature control with isolation capabilities, cargo loading systems on the aircraft, qualified handling crews, ground handling equipment....All of which do not come cheap, as anything is the industry. And have to be maintained.
Then take into account potential disruption to operations due to late arrival of cargo, stuck cargo containers, special handling needs and so on...
While they may not be significant compared to other airline cost categories, I'm ready to bet that non-fuel costs for cargo are far from negligeable.
And being obliged to order something does not mean it comes for free.
My goal as an engineer is to fill my soul with coffee and become immortal
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 12:45 pm

speedbored wrote:
you cannot find a single quote to post to back up your assertion.


I don't like spending more time dealing with you - finding quotes - than is necessary to disabuse this forum of your bad ideas. And I already gave you the quote from "airline managers" in the CAPA article you supplied. Nonetheless, I have retrieved quotes that, were you an honest interlocutor, would force you to concede the point. Hold your breath though - first I'll (sigh) deal with your other words.

speedbored wrote:
You are clearly labouring under the assumption that "low cost" = "high profit".


Once again you dishonestly simplify and misrepresent my assertions. Upthread I provided an estimate of the marginal fuel cost versus marginal revenue, showing a big profit margin over fuel. I mentioned there are other costs and challenged you to explain how these other costs come close to matching marginal cargo cost to revenue.

Can you do this analytically, speedbored?

Can you provide a quote showing that ***BELLY*** cargo is not profitable?

Probably not. And I'm fairly certain that you will slink away from the topic once shown to be wrong, rather than conceding as an honest man should.

speedbored wrote:
the point that a general increase in over capacity drives down rates without reducing costs.


I haven't "Missed" that point except that I find it irrelevant. Unless you can show - with a quote - that rates are down to approximately marginal belly cost, then my thesis of high marginal belly profitability remains.

speedbored wrote:
as I have stated multiple times now, there are far more costs to consider than just the marginal cost of fuel.


You have stated this multiple times and provided absolutely nothing to back it up - either analytic or direct quotes. Give me some evidence and/or analysis tied to the general shape of marginal cargo costs and you'll have a point. Until then your "stating multiple times" is worth exactly nothing.

speedbored wrote:
absent cargo, that space could be used to free up extra space in the passenger cabin, or the aircraft could take a paperwork MTOW reduction. Both of these have to be considered as a cost of being able to fly cargo.


This is a configuration decision made upon the aircraft's purchase. It is therefore a past opportunity cost of configuring for cargo carriage. A past opportunity cost (any past cost) is a sunk cost. Once more, I need to remind that we're talking ***MARGINAL COST***.

I agree, btw, that using the belly to free up pax space seems more profitable than cargo. I posted my thoughts on exactly this thought in TechOps a while ago:

Cargo yield per pound is typically 1/5 of pax weight per pound. Say Y pax yield 2/3 of average 3-class pax. At standard cargo densities the 8LD3's we lost would have yielded revenue equivalent to 10 3-cl pax, 15 Y pax. Net revenue gain is 36 Y pax, 24 3-class pax. On ULH flights where the 8LD3 wouldn't have loaded, net gain is 51 Y pax, ~34 3-cl pax. That's a 4-6% revenue gain for ~.5-1% trip cost increment (cabin crew and some extra fuel). Seems like a good idea, no?

viewtopic.php?f=5&t=775473

But, again, this is irrelevant to the ***MARGINAL*** profitability of belly cargo once the plane is configured.

Furthermore, it works against the thread-relevant argument we're having in the background:
If belly space can be used more efficiently than its current predominant use, then the 777-9's belly capacity improves its value proposition relative to the A380 to an even greater degree than cargo does.

speedbored wrote:
you cannot find a single quote to post to back up your assertion.


As promised:

The great thing about belly capacity is that its costs are largely - and in some carriers almost entirely - paid for by the passenger side of the business, with cargo only having to carry extra fuel, sales and handling costs.

Wraight reckons that profitability is between 30% and 60%, while consultants Seabury Group has put it at as much as 65%."The more reality settles in with airline chief executives of the tremendous earning potential beneath their passenger fleet, the more it will be hard for freighters to earn the income they need to sustain operations," Wraight says.

https://www.flightglobal.com/news/artic ... rs-383672/

The Wraight guy is the CEO of AirBridge Cargo. I suppose you won't impugn the credibility of airline consultants as a class either.

Global cargo yield has remained pretty much flat since this story was published in 2013. Industry load factors have declined, but that isn't relevant to the marginal cost of carrying belly cargo.

Got your own quotes and analysis or would you rather spare us all and concede the point?
Last edited by Matt6461 on Wed Jun 15, 2016 1:01 pm, edited 1 time in total.
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 12:58 pm

airmagnac wrote:
The ocean is a sum of many small droplets


And every droplet is a wandering piece of ocean.
Cost and revenue are still different things.

If I invented a machine that mass-produced diamonds for $1 each tomorrow, I would be a fool to think I could sell millions of diamonds for their current market price.
But the decline in the price of diamonds I would cause is not properly considered a cost of my business model. It would affect revenue, not cost.
Call me a stickler but - as this thread proves - there's utility to keeping our categories clear.

airmagnac wrote:
While they may not be significant compared to other airline cost categories, I'm ready to bet that non-fuel costs for cargo are far from negligeable.
And being obliged to order something does not mean it comes for free.


I'm fine with "far from negligible;" I wasn't arguing "negligible." There's a lot of room between cargo revenue and marginal belly cargo fuel cost for non-negligible costs. 75% room in the rough sketch of marginal costs I did upthread. If you want to call your non-neglible costs equal to fuel then we're at 50% profit margin in my example. Well within the 30-60% range cited in the FG article.

Amiga500 wrote:
There is no point making highly theoretical arguments (which are based on many assumptions and exclusions) to the contrary when you can wheel out 10 articles citing airline executives stating how bad things are.


This is a long, convoluted thread so I don't blame you but - I doubt any of those articles specific address the profit margin of belly cargo. I do not doubt that maindeck freight is in bad straights - I've criticized Boeing for the 748 program for precisely this reason.
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 1:17 pm

Matt6461 wrote:
This is a long, convoluted thread so I don't blame you but - I doubt any of those articles specific address the profit margin of belly cargo.


If the profit margins were good, then airlines wouldn't have a problem (if it were, as you say, essentially for little cost overhead).

So in this case, profit may as well equate to profit margin.
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 1:39 pm

Amiga500 wrote:
If the profit margins were good, then airlines wouldn't have a problem


Did you read the FlightGlobal quote? Profit margins are good for belly cargo. They simply are.

When you say "airlines have a problem" you could be mixing belly cargo in with several much larger issues. Do you mean passenger airlines have a problem? Do you mean cargo airlines have a problem? Do you mean mixed pax/cargo airlines have a problem?

Any of these statements could be true while the thesis "belly cargo is profitable" is also true:
-Belly cargo is a small portion of the revenue for passenger and mixed airlines. It won't save an airline from broader problems.
-This entire argument - that belly cargo is marginally cheap for passenger airlines - doesn't apply to cargo airlines
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 2:12 pm

Matt6461 wrote:
Any of these statements could be true while the thesis "belly cargo is profitable" is also true:
-Belly cargo is a small portion of the revenue for passenger and mixed airlines. It won't save an airline from broader problems.
-This entire argument - that belly cargo is marginally cheap for passenger airlines - doesn't apply to cargo airlines


On topic of belly cargo, how does that equation change according to your stats should Airbus adopt a newer wing? Any A380 iteration will never be a decent cargo hauler even if it had increased payload.

tortugamon wrote:


And one day for poor tortugamons feelings there can be 4 A380s daily! Frequency will get you so far before you have limits to face too. :lol:
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 2:18 pm

Matt6461 wrote:
Amiga500 wrote:
If the profit margins were good, then airlines wouldn't have a problem


Did you read the FlightGlobal quote? Profit margins are good for belly cargo. They simply are.



I don't understand how they 'simply are' when most recent articles are stating that cargo yields are on the way down. You've linked one three year old article, and the profit margins may well have been good back then, but since then there has been a decline in yield.

Quite a few articles also state that belly cargo load factor at less than 50% on average. If this is the case, when considering weather to upgrade a flight to the 380 it will carry most of the cargo that needs to be carried. If a 77W has space for 30t but is only 50% full on average, then it stands to reason the 388 can also carry that same 15t, there will be days it has to leave some behind, but it will be less of an issue. I feel when this is being discussed that it is always assumed the belly of a 77w is full, clearly this is not the case.
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 2:20 pm

Matt6461 wrote:
Can you do this analytically, speedbored?

Yes but why waste the time? There are 1001 quotes out there from so many people stating that there is very little profit to be made from cargo, whether belly or dedicated.

Matt6461 wrote:
Can you provide a quote showing that ***BELLY*** cargo is not profitable? Probably not.

Yes, I agree, I probably can't. But why should I? That is not even close to what I have said. I have not said that belly cargo is not profitable - I know exactly how much profit many airlines make on it. I am simply challenging your unsubstantiated, and incorrect, assertion that belly cargo is "highly profitable".

Matt6461 wrote:
I haven't "Missed" that point except that I find it irrelevant. Unless you can show - with a quote - that rates are down to approximately marginal belly cost, then my thesis of high marginal belly profitability remains.

Again, you try to avoid backing up your claims by asking me to prove the opposite. That's not how the rules of this site work.

Matt6461 wrote:
You have stated this multiple times and provided absolutely nothing to back it up - either analytic or direct quotes

Actually, I have backed it up. You have even quoted from some of the articles I linked.

Matt6461 wrote:
This is a configuration decision made upon the aircraft's purchase. It is therefore a past opportunity cost of configuring for cargo carriage. A past opportunity cost (any past cost) is a sunk cost. Once more, I need to remind that we're talking ***MARGINAL COST***.

No, you are talking marginal cost. I'm talking profit. The overall profitability, or otherwise, of belly cargo is not determined only by the marginal cost, regardless of what you seek to exclude from it.

Matt6461 wrote:
I agree, btw, that using the belly to free up pax space
...
But, again, this is irrelevant to the ***MARGINAL*** profitability of belly cargo once the plane is configured.

Ah OK, so you are now changing your argument to "marginal profitability". But you are still wrong about it currently being highly profitable.

Matt6461 wrote:
As promised:
...
https://www.flightglobal.com/news/artic ... rs-383672/
The Wraight guy is the CEO of AirBridge Cargo.

No, he is not. He was once but is not now. Not sure how the ex-CEO of an all freighter airline would know much about belly cargo, but who cares? The article is well over 3 years old. A lot has changed since then, which is why I asked for a recent quote.

Matt6461 wrote:
Global cargo yield has remained pretty much flat since this story was published in 2013.

If by "pretty much flat", you mean reduced by over 25% (from $2300 to $1700 per tonne) then you could be right. Per IATA:
http://www.iata.org/whatwedo/Documents/economics/cargo-chartbook-Q1-2016.pdf
See also quotes about recent trends, below.

Matt6461 wrote:
Industry load factors have declined, but that isn't relevant to the marginal cost of carrying belly cargo.

Maybe not. But it is very relevant to an airlines total costs of handling belly freight. Many of their costs are fixed.

Matt6461 wrote:
OK so evidence asked answered, on top of the request for some specific analysis of how your "other costs" would close the gap between marginal fuel costs and belly revenue yield. Got your own quotes and analysis or would you rather spare us all and concede the point?

No, you have still not posted current evidence that belly cargo is currently highly profitable. All you have shown is that, in the opinion of someone who is, most likely, not in possession of the required inside information (the clue is in the word "reckons"), it might have been well over 3 years ago.

I have already posted links to 5 different articles saying how poor profits are. I really don't see any point in wasting my time posting more links, but here is one again, just 2 months old:
http://theloadstar.co.uk/analysis-things-must-change-cargo-pressure-big-three-us-airlines/
It talks about 3 airlines that are all-belly cargo. Some quotes:
The financials of American Airlines show annual cargo revenue decreased $115m in 2015, down 13.1% to $760m year-on-year, due to falling freight yields.

Or "pretty much flat" in Matts eyes.
...in the final quarter of 2015, ... and cargo yield per ton mile down 15.5%

Recent trends are not particularly encouraging, either. In the three months ended 31 March, cargo revenue fell 16.8%

If anything, cargo activities appear to be a distraction, and I wonder why United retains any exposure at all to cargo

A distraction certainly doesn't sound anything like "highly profitable" to me. Interesting that belly cargo is so profitable for United and Delta that they didn't even mention it at all in their quarterly conference calls.

Matt6461 wrote:
Did you read the FlightGlobal quote? Profit margins are good for belly cargo. They simply are.

Did you read the date on that article? They might have been once. They most definitely are not now.
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 2:27 pm

PhoenixVIP wrote:
On topic of belly cargo, how does that equation change according to your stats should Airbus adopt a newer wing? Any A380 iteration will never be a decent cargo hauler even if it had increased payload.


A full belly would probably make a ~10% adjustment to the profitability analysis between the A380 and 77W/9. For the current A380, which has only a ~10% efficiency advantage over the 77W and close to none over the 779, that's a big deal.

With a new wing, however, the A380 could beat the 779's pax-only efficiency metrics by 20-25%, maybe more. That gives it enough room for airlines to take a hit on cargo profit while still coming out ahead.

Plus I expect belly cargo yields to continually decline as more and more new big twins enter service. So down the line maybe cut the cargo profit differential in half. 5% cargo differential would be easily survivable by a much more efficient A380.

...but as long as the 779 and A380 have nearly equal unit costs, any significant cargo differential (5% is still highly significant) will challenge the A380's business case.
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 2:36 pm

Ncfc99 wrote:
Matt6461 wrote:
Amiga500 wrote:
If the profit margins were good, then airlines wouldn't have a problem


Did you read the FlightGlobal quote? Profit margins are good for belly cargo. They simply are.



I don't understand how they 'simply are' when most recent articles are stating that cargo yields are on the way down. You've linked one three year old article, and the profit margins may well have been good back then, but since then there has been a decline in yield.


AirBridgeCargo is one of those few cargo operators that enjoys growing profits, rather the exception than rule.

I think a better source would be the IATA annual freight report (I have not read the last report yet).
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 2:47 pm

speedbored wrote:
There are 1001 quotes out there from so many people stating that there is very little profit to be made from cargo, whether belly or dedicated.


So it should be easy for you to find one that specifically relates to the profitability of belly cargo. But wait, I guess not:

speedbored wrote:
Matt6461 wrote:
Can you provide a quote showing that ***BELLY*** cargo is not profitable? Probably not.

Yes, I agree, I probably can't. But why should I?


Does anybody else find this maddening and ridiculous?
Why should a person asserting a point provide evidence? Give me a break. You're losing the argument and making a fool of yourself.

speedbored wrote:
No, you are talking marginal cost. I'm talking profit.


Welp that clarifies things. I'm using marginal cost to properly analyze profit attributable to cargo. You're just incapable of and/or unwilling to follow the thread of that logic.

I actually believe it's "unwilling." I'd guess you have a moderately above-average IQ. But you're dead-set on your argument, ready to twist anything to avoid admitting error.

speedbored wrote:
he article is well over 3 years old
speedbored wrote:
If by "pretty much flat", you mean reduced by over 25% (from $2300 to $1700 per tonne) then you could be right.
speedbored wrote:
It talks about 3 airlines that are all-belly cargo. Some quotes:
The financials of American Airlines show annual cargo revenue decreased $115m in 2015, down 13.1% to $760m year-on-year, due to falling freight yields.


Look at the yield graph in the upper right hand corner on page 4 of your IATA document. The curve for "Global Total - LHS" is flat since 2013. The curve for global total, inclusive of other charges, is declining.

But even if yields declined by 25%, this would be miles from proving the unprofitability of belly freight - something you no longer seek to prove anyway. Why?

-if cargo was 30-65% profit at 2013 yields and costs, then it's still profitable at 2016 yields and 2013 costs
-but the collapse of fuel prices means that 2016 costs are much lower than 2013 costs. Because most marginal belly fuel cost is probably fuel, belly cargo probably has about the same profit margin at 2016 yield/cost as at 2013 yield/cost

...I was going to write the foregoing cost/yield analysis in my former post but I figured readers here would think of this fact themselves. I should have known better of you though.

Regarding declining yields at the Big 3 US airlines (all belly): once more you have failed to:

(1) ask whether costs or yields are declining faster in a cheap fuel environment
(2) ask whether, regardless of (1), the decline in yield is greater or lesser than the pre-decline profit margin

For someone who pedantically reminds everyone that profit is all that matters, focusing solely on the revenue side of things to reach a profit conclusion should be embarrassing.

speedbored wrote:
Did you read the date on that article? They might have been once. They most definitely are not now.


You haven't provided one scintilla of evidence or analysis for this assertion yet you get "most definitely." You haven't addressed whether even a 25% decline in yield would make belly cargo unprofitable at 2013 costs, and haven't thought about whether 2016 costs are lower than 2013 costs. Declining yields don't mean declining profits in a lower-cost environment. EK, for example, saw both declining yields and higher profit. You know this. I would be embarrassed to write something so superficial.

But it's what we should expect of someone who says "Why should I" when asked for evidence of the assertion he is making.
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 3:06 pm

Matt6461 wrote:
Amiga500 wrote:
If the profit margins were good, then airlines wouldn't have a problem


Did you read the FlightGlobal quote? Profit margins are good for belly cargo. They simply are.


The 2013 article you linked up? The one talking about dedicated freighters?

It barely mentioned belly cargo beyond in passing references!
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 3:10 pm

Amiga500 wrote:
It barely mentioned belly cargo beyond in passing references!


What difference does it make whether a reference is passing, passed, or past? And whether it was in an article about maindeck freighters or a review of Jane Austen? The quotes are directly on point.
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 3:21 pm

Come on guys give us a rest, just accept belly freight is not highly profitable, nor it is unprofitable and be done with it. They are plummeting, that's a given.

All started when Matt included the higher 777 belly capacity for a comparison with A380. But knowing that WB belly's are flying 2/3 empty you will not pocket any more money (at whatever yield) with your 777 than with an A380 before you manage to give a real boost to your load factor. And as we all know, WB belly capacity will increase dramatically in the coming years, making the task harder.
Therefore I think the arguing about A380 belly cargo capacity for a reason why it would sell more or less is wrong.
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 3:26 pm

Just to remind you all of the superficiality of assuming that lower yield means lower profit:

Deeply involved in the profitability/yield mix is fuel and carriers are enjoying the benefits. Even though yields have declined, they have not fallen enough to offset the strong gains in fuel, with profits continuing to improve.

“Fuel used to be 36 percent of total costs, but if the single biggest cost halves in price, yield declines can still be consistent with growing profits,” Herdman said.


http://www.joc.com/air-cargo/asia%E2%80 ... 51112.html

...it would also be superficial not to recognize the connection between lower yield and lower cost: with lower cost, more capacity stays in the market, driving down yields.

Grizzly410 wrote:
just accept belly freight is not highly profitable, nor it is unprofitable and be done with it. They are plummeting, that's a given.


See above.

Maybe I should just accept that a two-step thought is difficult for many here. Even one as simple as profit = revenue - cost.
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 3:27 pm

Matt6461 wrote:
When you say "airlines have a problem" you could be mixing belly cargo in with several much larger issues. Do you mean passenger airlines have a problem? Do you mean cargo airlines have a problem? Do you mean mixed pax/cargo airlines have a problem?


The argument is about belly cargo in pax aircraft. Any statements made by anyone with any sense will be about belly cargo in pax aircraft. I don't appreciate attempts to shift goalposts into areas of irrelevance to disguise an eroding position. Airlines have a problem with belly cargo as its just about paying for itself.

http://theloadstar.co.uk/whopping-yield ... o-markets/

Yields in the air cargo market fell by a “whopping” 15% year-on-year in 2015, according to the latest data by WorldACD.



In the wider context of this thread, which is really what this whole cargo argument is about, no airline is going to make a decision on a passenger aircraft on the basis of one taking more cargo than the other in todays (and in projections of tomorrows ) world.
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 3:37 pm

Matt6461 wrote:
Amiga500 wrote:
It barely mentioned belly cargo beyond in passing references!


What difference does it make whether a reference is passing, passed, or past? And whether it was in an article about maindeck freighters or a review of Jane Austen? The quotes are directly on point.


This quote - which is one line, has a margin of error of over 100% and is 3 years old in a rapidly changing marketplace.
Wraight reckons that profitability is between 30% and 60%, while consultants Seabury Group has put it at as much as 65%.



Yields in the air cargo market fell by a “whopping” 15% year-on-year in 2015, according to the latest data by WorldACD.


At that rate, yield is down a full 40% since 2013. That is only going to decrease with increased fleet size.
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 3:42 pm

Grizzly410 wrote:
Come on guys give us a rest, just accept belly freight is not highly profitable, nor it is unprofitable and be done with it. They are plummeting, that's a given.


I'm a bit annoyed that a certain poster is trying to argue the equivalent of "the temperature at the surface of the sun is actually rather cold" and thinking people are going to buy it due to an argumentative equivalent of "well, we know its cold in space, therefore its obvious that the sun must be fairly cold".


Unfortunately it tells me to give little heed to any numbers or facts presented by them as part of an argument in the future as they are likely to be heavily "sanitised" to further the argument of that poster. Even if they don't remove any evidence to the contrary, the doubt will now always be there.
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 3:58 pm

Amiga500 wrote:
I don't appreciate attempts to shift goalposts into areas of irrelevance


How in the world is the following quote irrelevant:

The great thing about belly capacity is that its costs are largely - and in some carriers almost entirely - paid for by the passenger side of the business, with cargo only having to carry extra fuel, sales and handling costs.

Wraight reckons that profitability is between 30% and 60%, while consultants Seabury Group has put it at as much as 65%."The more reality settles in with airline chief executives of the tremendous earning potential beneath their passenger fleet, the more it will be hard for freighters to earn the income they need to sustain operations," Wraight says.


You've got to be kidding me.

Amiga500 wrote:
no airline is going to make a decision on a passenger aircraft on the basis of one taking more cargo than the other in todays (and in projections of tomorrows ) world.


Well we know it made the difference in 2010:

Cathay Pacific opted for the Boeing 777-300ER as its primary long-haul aircraft both for its superior fuel efficiency and lower running costs over the aging Boeing 747 fleet as well as its greater cargo capacity compared to the A380.

http://www.ausbt.com.au/cathay-pacific- ... irbus-a380

...and your point, I guess, is that with declining cargo yields it has ceased to make a difference.
That's an assertion that requires some evidence or at least a credible analysis of when a cargo yield decline would fundamentally change that picture.

Does a 5% yield decline change the picture? 10%? 20%?
Why do you choose these numbers and what explains the tipping point at which an airline CEO no longer like belly cargo? I have some theories but I'm doing all the serious work in this thread already. Maybe someone else could attempt some analysis.

Is EK stupid? I ask this because EK currently sacrifices 28 Y seats in its long-range A380's compared to its shorter-range 3-class A380's. Those seats are given over to a crew rest that many A380 operators put under the floor in place of cargo space. EK has not, to my knowledge, stopped taking the 489 seat A380's in preference 517-seat 3-class.

EK gives up 5% of seats, maybe 4% of pax revenue to save - what 6 LD3 slots?
If cargo is so unprofitable, someone needs to tell Tim Clark how to run his airline.

Amiga500 wrote:
I'm a bit annoyed that a certain poster is trying to argue the equivalent of "the temperature at the surface of the sun is actually rather cold" and thinking people are going to buy it due to an argumentative equivalent of "well, we know its cold in space, therefore its obvious that the sun must be fairly cold".


I'm very, very annoyed to ask repeatedly for:

(1) any direct evidence of belly cargo's current profitability, or
(2) any analytical reasoning that would support a fundamental change in profit margin given:
(3) the presence of both a decline in yield and cost

I've also asked for:
(4) any analytical reasoning or direct evidence that would counter my
(5) direct evidence of belly cargo's high profit margin (dated but the most recent I could find - nobody has done better) and
(6) analytical reasoning of belly revenue and cost components

Instead of providing any evidence or reasoned analysis, you all say, "Hey yield is declining!" As if that's the whole story.
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 4:09 pm

I suspect the real question is what 350s and 787s, as well as 777s are going to do to the cargo market. As has been mentioned earlier prices to fly cargo are going to approach costs to fly cargo plus acceptable profit margins. A lot will be happening in the next several years.

And of course another thing is the affect of the new Panama Canal. West Coast US ports are worried.
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 5:01 pm

Matt6461 wrote:
Yes, I agree, I probably can't. But why should I?
Does anybody else find this maddening and ridiculous?
Why should a person asserting a point provide evidence? Give me a break. You're losing the argument and making a fool of yourself.

Because, as I said in the part of the quote that you omitted, I am not making and never have made such a claim.

Still waiting for your evidence to support the claim you have made about belly cargo being highly profitable.

Matt6461 wrote:
Welp[sic] that clarifies things. I'm using marginal cost to properly analyze profit attributable to cargo.

No, you are using marginal cost to improperly analyse cargo profitability.

Matt6461 wrote:
I'd guess you have a moderately above-average IQ

Keep up the insults.

Matt6461 wrote:
Look at the yield graph in the upper right hand corner on page 4 of your IATA document. The curve for "Global Total - LHS" is flat since 2013. The curve for global total, inclusive of other charges, is declining.

It's not flat - it shows a clear decline since March 2013, albeit less than the inclusive curve. But, as the real world includes those "other charges", I'll stick with that curve.

Matt6461 wrote:
But even if yields declined by 25%, this would be miles from proving the unprofitability of belly freight - something you no longer seek to prove anyway. Why?

I have never sought to prove that as I have never claimed it. But, if we go with Wraights "reckoned" 30% profit figure from the article you posted earlier, a 25% decline in yield would render belly cargo loss making.

You made the original "highly profitable" claim, which I am contesting. The onus of proof is on you.

Matt6461 wrote:
Regarding declining yields at the Big 3 US airlines (all belly): once more you have failed to:
(1) ask whether costs or yields are declining faster in a cheap fuel environment
(2) ask whether, regardless of (1), the decline in yield is greater or lesser than the pre-decline profit margin

For someone who pedantically reminds everyone that profit is all that matters, focusing solely on the revenue side of things to reach a profit conclusion should be embarrassing.

What is embarrassing is accusing someone of all of that when the quotes are to disprove your claim of "pretty flat yields". Why would I even need to consider costs?

Matt6461 wrote:
You haven't provided one scintilla of evidence or analysis for this assertion yet you get "most definitely." You haven't addressed whether even a 25% decline in yield would make belly cargo unprofitable at 2013 costs, and haven't thought about whether 2016 costs are lower than 2013 costs. Declining yields don't mean declining profits in a lower-cost environment. EK, for example, saw both declining yields and higher profit. You know this. I would be embarrassed to write something so superficial.

Again, you try to divert attention from the fact that you cannot support your "belly cargo is highly profitable" claim by accusing me of not providing evidence to support things I have not claimed.

Just one current quote from one passenger airline executive about how profitable belly cargo is. That's all you need to post but, seemingly, can't. If it was as highly profitable as you claim, there really ought to be hundreds of such quotes out there.

Matt6461 wrote:
But it's what we should expect of someone who says "Why should I" when asked for evidence of the assertion he is making.

Because I am not making any such assertions. You are. All I am doing is questioning it.

Matt6461 wrote:
Just to remind you all of the superficiality of assuming that lower yield means lower profit

We don't need the reminder, thanks. None of us are assuming that.

Amiga500 wrote:
I'm a bit annoyed that a certain poster is trying to argue the equivalent of "the temperature at the surface of the sun is actually rather cold" and thinking people are going to buy it due to an argumentative equivalent of "well, we know its cold in space, therefore its obvious that the sun must be fairly cold".

:lol:

Matt6461 wrote:
EK currently sacrifices 28 Y seats

Wrong again. It's 16 - look at the seat maps. And that's a configuration that was decided upon many years ago when belly cargo was highly profitable. Just read the recent comments by TC about the mistakes they made (in hindsight) with their A380 configurations to know what he thinks of that layout now, and whether or not it will be changed in future.

Matt6461 wrote:
I'm very, very annoyed to ask repeatedly for:
(1) any direct evidence of belly cargo's current profitability, or

You are annoyed? That is all I asked for in the first place. You made the claim, you prove it.
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 5:20 pm

Matt6461 wrote:
How in the world is the following quote irrelevant:


That is not what that quote was a response to and you know it.


Amiga500 wrote:
no airline is going to make a decision on a passenger aircraft on the basis of one taking more cargo than the other in todays (and in projections of tomorrows ) world.

Matt6461 wrote:
Well we know it made the difference in 2010:


Which is neither today or tomorrow.



Matt6461 wrote:
...and your point, I guess, is that with declining cargo yields it has ceased to make a difference.
That's an assertion that requires some evidence or at least a credible analysis of when a cargo yield decline would fundamentally change that picture.
Does a 5% yield decline change the picture? 10%? 20%?
Why do you choose these numbers and what explains the tipping point at which an airline CEO no longer like belly cargo?


The margin from cargo must be less than passengers, otherwise airlines would not be talking about making profits despite the cargo market (see later links). Which means its already low enough to be a sideshow.

Furthmore; average cargo load factors are under 50%. The active fleet is ever growing. While this won't apply to all routes, no CEO is going to worry about acquiring belly capacity when its already a saturated market.



Matt6461 wrote:
I have some theories but I'm doing all the serious work in this thread already. Maybe someone else could attempt some analysis.


HAHAHA. Your pontificating with little basis beyond a throwaway sentence or two in old online articles. Don't even try and insinuate this counts as "analysis".


Matt6461 wrote:
Is EK stupid? I ask this because EK currently sacrifices 28 Y seats in its long-range A380's compared to its shorter-range 3-class A380's. Those seats are given over to a crew rest that many A380 operators put under the floor in place of cargo space. EK has not, to my knowledge, stopped taking the 489 seat A380's in preference 517-seat 3-class.

EK gives up 5% of seats, maybe 4% of pax revenue to save - what 6 LD3 slots?
If cargo is so unprofitable, someone needs to tell Tim Clark how to run his airline.


You do realise the cost (and time) required to redo the interior of A380s?


Matt6461 wrote:
I'm very, very annoyed to ask repeatedly for:

(1) any direct evidence of belly cargo's current profitability, or
(2) any analytical reasoning that would support a fundamental change in profit margin given:
(3) the presence of both a decline in yield and cost


http://www.joc.com/air-cargo/cargo-airl ... 60428.html
http://www.arabiansupplychain.com/artic ... o-decline/
http://www.joc.com/air-cargo/cargo-airl ... 60309.html

http://www.joc.com/air-cargo/air-freigh ... 60603.html

But sure all these airlines and the last article don't use the word "profit" to discuss cargo - thereby from Matt's criteria, they are invalid.

Which of course means cargo must be highly lucractive. :lol:


Matt6461 wrote:
I've also asked for:
(4) any analytical reasoning or direct evidence that would counter my
(5) direct evidence of belly cargo's high profit margin (dated but the most recent I could find - nobody has done better) and
(6) analytical reasoning of belly revenue and cost components

Instead of providing any evidence or reasoned analysis, you all say, "Hey yield is declining!" As if that's the whole story.


No one is saying yield is the whole story. Point to any single post that says yield is everything.
But yield is one indicator of what profitability may be and where it is going.

But don't take my word for it - take all the articles talking about airline profitability and how it will be reasonable despite the cargo market.

If you want numbers, no chance. Airlines do not seem to publish their margins on cargo - probably due to competitive pressures.


Anyway - I think this post (of mine) is pointless. You are going to continue in your own little bubble despite what the rest of the world knows and is saying. If you want to present more theoretical arguments or play on the semantics of words, to "verify" cargo capacity is a deal breaker for an aircraft in the current market, you go ahead. I'll let you have the final word on the matter. I've lost interest.
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 5:32 pm

speedbored wrote:
if we go with Wraights "reckoned" 30% profit figure from the article you posted earlier, a 25% decline in yield would render belly cargo loss making.


Almost, if you ignore a 50% decline in fuel expense.

So if you take the absolute lowest range of 30-60% figure quoted by a cargo executive, ignore the cost side of the profits issue, you're almost correct: belly freight would have a 5% profit margin, not be loss-making.

speedbored wrote:
evidence to support the claim you have made about belly cargo being highly profitable.


You have made a claim that belly cargo is only slightly profitable. Nobody knows what you mean by that because you don't specify. You don't back it up. You lack the courage of your supposed convictions so you won't even admit that you're making a claim. As I so often suspect with you, you're just sidetracking a discussion because the obvious conclusion - that cargo hurts the A380's sales appeal - is something you want to avoid.

I, on the other hand, make a claim based on the best of available knowledge. Which does not, unfortunately, include a current statement on belly cargo profitability that anybody can find. Yet we have data from 2013 and we have our rational faculties to analyze how yield deterioration or cost improvements since then have changed the picture. We have a direct quote stating that lower yields don't necessarily mean lower profits. We know that cargo was in trouble in 2013 too.

I was going to go back and restate those arguments in more detail in response to this post but I won't.

I'm done with you on this issue. You're not an honest person. You don't take any positions, you don't give serious attention to any opposing arguments, you're a complete waste of time.

If anybody besides speedbored would like to continue this discussion, would like to discuss whether yields or costs have fundamentally altered what was true in 2013, I will likely oblige.
 
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Matt6461
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 5:49 pm

Amiga500 wrote:
The margin from cargo must be less than passengers, otherwise airlines would not be talking about making profits despite the cargo market (see later links). Which means its already low enough to be a sideshow.
Furthmore; average cargo load factors are under 50%. The active fleet is ever growing. While this won't apply to all routes, no CEO is going to worry about acquiring belly capacity when its already a saturated market.


NO!Margin and profit are totally different concepts.
You could have 5% margin on pax and 50% on cargo yet cargo could be the less-profitable sideshow.
How? If pax revenue were 10x cargo revenue. Get it? That's simple math; I had higher hopes from an engineer.

The thoughts that begin with "Furthermore" delineate no standard by which the questions I asked of you could be answered. It's conclusory language offered as obviously true.

By analysis I mean nothing more than delineating the conditions under which a thing can be true, and then reasoning as to whether those conditions have been met. It's not a high bar but can you even delude yourself into thinking you've met it?

Amiga500 wrote:
But sure all these airlines and the last article don't use the word "profit" to discuss cargo - thereby from Matt's criteria, they are invalid.
Which of course means cargo must be highly lucractive
Amiga500 wrote:
Point to any single post that says yield is everything.


Then they don't even address the thing we're talking about - belly cargo profit margin. I haven't even read them, but if they don't address profit then they're not relevant to a broader class of concepts of which the issue being debated here is only a subset. So you're not even close to relevance. And I don't care if the verbal construction of the foregoing sentence is above your reading level.

I'm sure you saw the words "cargo" and "bad" and thought - "meh close enough."

Then you end with a smiley face. Then I remind myself why I feel bad about spending time on this forum.
 
tortugamon
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 9:04 pm

Amiga500 wrote:

In the wider context of this thread, which is really what this whole cargo argument is about, no airline is going to make a decision on a passenger aircraft on the basis of one taking more cargo than the other in todays (and in projections of tomorrows ) world.


I disagree. Although yields are decreasing the shear fact that they are still transporting the billions of pounds of air freight that they are is testament to the fact that it is profitable because they would not take on the weight if they weren't going to make money on it. Plus, this conversation has been about EK which has shown strength ad profitability in this area and DWC has shown considerable investment in this space; none of which would be true if cargo was irrelevant to the aircraft purchasing decision

tortugamon
 
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 9:39 pm

speedbored wrote:
if we go with Wraights "reckoned" 30% profit figure from the article you posted earlier, a 25% decline in yield would render belly cargo loss making.

Depending on how its used that 25% decline could mean the profit is 25% lower than the 30% profit margin (also, low end of range) profit figure...meaning still achieving 22.5% profit. Much higher than most airlines' profitability from operations.

Regardless, even if that was not true, as Matt stated above, and even if they meant it the way you took it, the strong decline in fuel price is even larger than that yield drop meaning that the profit from the freight operations could actually have increased.

Taken from the article that Amiga posted above in regards to EK "Emirates SkyCargo, the carrier’s freight division, saw freight tonnage increase by 6% over the previous year to reach 2.5m tonnes"

We know that EK had a huge cargo operation previously and if you guys are to be believed that cargo operations suck, then why would EK's operation be expanding? They took on a bunch of A380s but retired a decent amount of A340s/A330s/773s as well and I wouldn't be surprised if their cargo capacity actually shrank YOY; still cargo operations grew? They wouldn't take on cargo that they would lose money on.

Also, cargo doesn't need feeding and fancy football sponsorships and excellent customer service. The gross margin on cargo drops to the bottom line a lot faster than a passenger's yield does.

It absolutely is relevant to the aircraft purchasing decision.

tortugamon
 
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enzo011
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Re: IATA: A380 Stagnation Part 2

Wed Jun 15, 2016 10:03 pm

Matt6461 wrote:
You have made a claim that belly cargo is only slightly profitable. Nobody knows what you mean by that because you don't specify. You don't back it up. You lack the courage of your supposed convictions so you won't even admit that you're making a claim. As I so often suspect with you, you're just sidetracking a discussion because the obvious conclusion - that cargo hurts the A380's sales appeal - is something you want to avoid.



Hello pot, meet kettle...

Matt, you have made a claim that belly cargo is highly profitable. Nobody knows what you mean by that because you don't specify. You don't back it up. You lack the courage of your supposed convictions so you won't even admit that you're making a claim. As I so often suspect with you, you're just sidetracking a discussion because the obvious conclusion - that cargo doesn't really hurt the A380's sales appeal - is something you want to avoid.

Matt6461 wrote:
I, on the other hand, make a claim based on the best of available knowledge. Which does not, unfortunately, include a current statement on belly cargo profitability that anybody can find. Yet we have data from 2013 and we have our rational faculties to analyze how yield deterioration or cost improvements since then have changed the picture. We have a direct quote stating that lower yields don't necessarily mean lower profits. We know that cargo was in trouble in 2013 too.

I was going to go back and restate those arguments in more detail in response to this post but I won't.

I'm done with you on this issue. You're not an honest person. You don't take any positions, you don't give serious attention to any opposing arguments, you're a complete waste of time.

If anybody besides speedbored would like to continue this discussion, would like to discuss whether yields or costs have fundamentally altered what was true in 2013, I will likely oblige.


Wait, are you actually seeing the links that posters are providing stating that the cargo market has had a downturn and that this will probably only continue as more belly cargo haulers enter service with fleets worldwide?

I haven't seen anyone stating that cargo isn't making airlines profit, but it would seem with all the linked recent articles that there is lower than predicted profits because of the struggling cargo market. I don't think any airline is a charity and will transport cargo if it costs them money, yet it seems quite logical that if loads for belly cargo are only 50% there is a over supply at present and that will decrease margins for airlines. This doesn't mean airlines are hauling cargo at a loss.

What effect this would have on fleet choices is anyone's guess, but it would make sense that if the market for belly cargo is soft it would not have as much of an influence if you already have 787s, A350s and 777s on order or in your fleet.
 
tortugamon
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Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 3:25 am

This is getting ugly guys. The level of denial and faulty logic and analysis here is pretty bad.

Of course cargo income is an important part of the long haul airline's finances. I hear that yields are declining....you don't say! Does that have to do with oil being down 30-40%+ for airlines? Despite this EK shipped 6% more tonnes than they did last year and cargo revenue only decreased by 9%...which if you do the math (along with the most basic of assumptions) means that they are actually increased their fuel-based profit margin not decreased it. Cargo represents 14% of EK's revenue - do we really think that it isn't an important part of their business like you guys seem to be implying?

As for cargo not entering into the decision making calculus - are you guys really, honestly serious about that? I have a hard time believing what I am reading. CX chose the 777 for flights to the America's because of its cargo capabilities and obviously chose against the A380....Feel free to not draw that connection.

And back to EK. Now that EK flies A380s to JFK they have to send a 77F there to carry the cargo that the A380 can't take. When they switched from the 777 they lost ~half of their available cargo positions on each flight. I keep hearing about how A380 economics are awesome because you only have one crew and only one flight versus the cost of more frequencies....how about using that same logic here. Sounds pretty weird that you have to send a dedicated freighter to an airport that you already have 4 widebody flights to a day...unless its the A380 and you can't fit that cargo. And wait, that still must be economical or they wouldn't do it, which must mean they are making solid money on cargo.

Anyway, I feel for 'Matt' here. I agree with you Pal.

tortugamon
 
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Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 6:16 am

I'm going to step back and summarize the issues presented in this cargo dispute, the arguments and evidence marshaled by both sides, and a summary evaluation. For those reading along. And for masochism. This will be presented, loosely and satirically, in eminently useful form of a court or agency decision.

Issues Presented

1. What profit margin does belly cargo currently have?

2. Does belly cargo's contribution to profit influence, and will it continue to influence, aircraft purchase decisions?

Evidence/Analysis Presented by Both Sides

-Direct evidence that belly cargo had a high profit of 30-65% in 2013.
-Direct evidence that cargo yields have declined by ~25% since 2013
-Direct evidence that fuel costs have declined by ~50% since 2013
-Direct evidence that, in 2010, cargo capacity influenced CX's preference for the 77W over the A380
-indirect evidence, based on reasoning from basic calculations, that fuel constitutes ~25% of marginal belly cargo revenue at current gas prices

Evidence that we wish we had:
-a current quote from an airline regarding the marginal cost of carrying cargo in a widebody plane, versus flying that belly space empty

Evaluation of Positions

Both sides - A380 Defenders and Haters - appear to agree that belly cargo was high-margin as of 2013. (any value in the range of 30-65% being high-margin. Lower values being high-margin as well - typical airline margins are single-digits.)

Therefore, A380 Defenders are advancing the thesis that belly cargo economics changed dramatically between 2013 and 2016. To support this thesis they'd have to provide direct evidence or an analytically valid reason sufficient to show such a dramatic change.

Their theory, however, is missing an elementary element. They have evidence of declining yields, but ignore - baldly refuse to confront - the fact that a ~50% decline in fuel prices, with marginal belly cargo costs modeled at ~50% fuel*, would mean constant 2013-2016 profit even given a 25% decline in yield. The Defenders' thesis is accordingly missing an element required to make its case: Defenders seek to reach a conclusion regarding profit while focusing solely on revenue to the exclusion of cost.

*The Court notes that, while the Defenders cast aspersion on the Haters modeling of marginal fuel burn attributable to belly cargo, these Defenders have refused to provide their own estimate of the relevant fuel burn. They have also refused to provide their own estimates of any other costs. Defenders' conclusory statements "That's not true" receive no credence in this or any non-kangaroo court. The Court therefore presumes that the Defenders have forfeited their right to assert a contrary value for the relevant parameters, leading to an inference that no reasonable set of facts is available to dispute the Haters proffered cost accounting. The presumption is rebuttable upon a reasoned accounting of costs attributable belly cargo. The Court does not hold its breath for such accounting.

On issue (2), regarding the relevance of cargo profit to fleet selection decisions, the Court finds that Defenders' inability to support its position regarding issue (1) precludes it from establishing its position regarding issue (2) as of 2016. It may be that future erosion of belly cargo yield could, theoretically, render belly cargo a practically negligible aspect of an airline's value proposition. Indeed, the Court notes that plaintiff Matt6461 has made exactly such arguments in the past regarding the wisdom of significant investments in the A380 or other VLA programs. However, the Court notices - as the Defenders seem not to - Matt's argument that for any comparison at approximate passenger unit cost parity - as with the 777-9 and A380 - any non-negligible belly cargo profit delta swings the value proposition in favor of the 777-9 before even accounting for the dilutive effects of capacity and/or frequency on passenger yield and, thus, on profitability.

The Court holds that the only parties to the dispute that have presented both a coherent theory of the case and evidence/inferences to support that theory is the Haters side. The Court specifically adopts the Parties' stipulation that belly cargo was highly profitable in 2013, but rejects as unsubstantiated the Defenders' argument that circumstances have fundamentally changed since 2013. Judgment to the Haters; damages to be awarded in the form of apologies by Defenders for wasting everybody's time.

Before allowing the Clerk to issue the mandate in this case, a few more remarks are warranted in the interests of justice and policing of arguments by the litigants before us. The Defenders party has, before this Court, repeatedly failed - apparently with intent - to understand the arguments put forward by its opponents, has refused to supply evidence to this Court, and has accordingly disrespected the hallowed traditions of intellectual discourse expected in this forum. The Clerk of the Court shall issue sanctions to the respective supervisory consciences of each Defender engaged in this debate, with instructions to come prepared with evidence and reasoned argument to any future litigation.

tortugamon wrote:
This is getting ugly guys. The level of denial and faulty logic and analysis here is pretty bad.


The Court will remind co-counsels T'mon and Matt that the court of reasoned logic, and the supervisory board of conscience, will duly note the improper evasions and forfeitures engaged in by the Defenders.
 
olle
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Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 6:45 am

The true looser of this seems to be dedicated freight not the belly freight. This might be a signal that dedicated freight cannot handle the costs vs belly freight where the flight is already is paid by PAX gives additional profit to the business even lower % compared a few years ago.

What this argument seems to miss is that the A380 can fly longer distance with more freight then most competitors. Yes it has less space for freight after using space for bagfs etc but the space left it can actually use. Even the 777W seems to have restrictions on longer distances and will anyway need to leave space empty or leave PAX behind.

My questions is what is more profitable 1000 kg of PAX plus bags or 1000 kg of Freight? If a flight gets restrictions it will need to trade, or in case of A380 vs B777, A380 has bigger % PAX compared to B777.
 
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Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 7:01 am

olle wrote:
The true looser of this seems to be dedicated freight not the belly freight.


100% agreed. The failure to separate analysis of dedicated versus belly freight explains a lot of the confusion plaguing Defenders in this thread.

That said, dedicated freight is irreplaceable on certain routes that lack passenger volume and/or that produce cargoes that can't be boarded in bellies.

olle wrote:
My questions is what is more profitable 1000 kg of PAX plus bags or 1000 kg of Freight? If a flight gets restrictions it will need to trade, or in case of A380 vs B777, A380 has bigger % PAX compared to B777.


By weight and (to a lesser extent) volume, passenger traffic is always more profitable and it's not even close. Thus we don't see any "777-combi." Or any other combi except a handful produced long ago - trading pax for cargo isn't generally profitable.

Recall, however, the structure of the issue presented - what is the cost of putting cargo in unused space beneath the passenger deck?
Viewed properly as such, the question is no longer one of cargo v. pax, but of an empty versus a less-empty belly.

Also recall that the specific context of dispute is relevance of cargo revenue/profit in comparing an A380 and 777. Because these two types are fairly close in efficiency, a small cargo profit delta is capable of changing the relative value proposition.

This shouldn't be so, IMO, as a double-decker should be so much more efficient than a big single-decker that a small cargo delta doesn't change the relative picture much.

That "shouldn't" doesn't hold with the A380, however, as its a sub-optimal, compromised design whose competition will soon improve by more than Airbus is willing - so far - to invest in the A380. Thus what should be a cargo "sideshow" becomes a critical issue.
 
PaulDC6B
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Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 8:12 am

Well, after all these years of lurking, this is finally my first post here, and it is kinda fitting that I start in "another A380 therad". I am no expert and I enjoy reading a big majority of posts. I agree with some and disagree with others, but find a big majority interesting enough. Thank you all!

Matt6461 wrote:
Because these two types are fairly close in efficiency, a small cargo profit delta is capable of changing the relative value proposition.


That is the reason of this whole "Cargo is highly profitable" debate, and cargo capabilities do seem a completely valid point when comparing both types. As an (wannabe) unbiased observer, I do, however, feel that you did not adequately back up your claim that cargo is indeed highly profitable, but instead got defensive unnecessarily. IATA data and reports from airlines do indicate that cargo is indeed not a big or relevant profit generator nowadays. I feel I should say that admitting or recognizing one's mistake and moving on is nothing bad and would only bolster the quality of debate here.

Regards!
 
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Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 8:58 am

PaulDC6B wrote:
my first post here


Welcome! May our discussions be always civil and our humor always high.

PaulDC6B wrote:
I do, however, feel that you did not adequately back up your claim that cargo is indeed highly profitable, but instead got defensive unnecessarily. IATA data and reports from airlines do indicate that cargo is indeed not a big or relevant profit generator nowadays.


Let me ask you three questions:

1. Do you find the FlightGlobal article sufficient to establish that belly cargo was highly profitable in 2013? Specifically the quotes from the cargo executive and airline consultancy? If you don't, then I can't convince you. If you agree, then I have two other questions:

2. What changed since 2013 to fundamentally alter belly cargo's profitability? If it's just the yield figure, then you have to consider the 50% decline in fuel prices as well to get to profit.

3. Assuming you're convinced re the facts 2013, might you place the burden on my opponents to prove that facts have fundamentally changed? Given that yield and cost declines produce an ambiguous result for profit, wouldn't you need additional evidence from them to conclude that the facts have changed since 2013?

PaulDC6B wrote:
recognizing one's mistake and moving on is nothing bad


Indeed. If you agree with #1, I'd put the same advice to you regarding the rest of the issues - reverse the "burden of proof" and require something more than ambiguity to carry that burden.

But if the FG article wasn't good enough for you re 2013... That's fine, we'll politely disagree.
 
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KarelXWB
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Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 9:04 am

The FlightGlobal article is not sufficient; I don't understand why your are so fixed on a single article with a single quote from a single airline. As I mentioned before, AirBridgeCargo is an exceptional cargo operator, they are not the standard. All you need to know can be found in the annual IATA reports.
What we leave behind is not as important as how we've lived.
 
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Matt6461
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Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 9:11 am

On what pages do the IATA reports specifically address the profit margin of belly cargo?

I already know the answer: they don't.

You're applying a judgment about the general (freighter-inclusive) cargo market to a subsidiary of that market.

Statements about the whole do not apply to statements about the parts.
 
olle
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Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 9:20 am

The next question;

If A380 can add let say 40 seats this will decrease the cargo. How much will revenue gain of the PAX increase and how much will freight revenue decrease?
 
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Matt6461
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Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 9:23 am

KarelXWB wrote:
your are so fixed on a single article with a single quote from a single airline. As I mentioned before, AirBridgeCargo is an exceptional cargo operator, they are not the standard


Two quotes: one from a former exec of AirBridge, one from a consultancy.

AirBridge doesn't even operate pax-belly cargo: they're not a pax airline. This is simply a quote from an industry insider who knows more than you or me about the economics of his former employer and its competitors. The airlines themselves do not publish an analysis of their belly cargo profitability. That would reveal a lot of proprietary information.

So we don't have absolute best piece of evidence but we have darn good evidence on my side from 3 years ago.

You have no directly relevant evidence on your side - old or new - and have asserted only an incomplete theory about why facts have vastly changed since 2013 (again, it relies only on the revenue side to reach a profit conclusion).
 
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Matt6461
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Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 9:28 am

olle wrote:
If A380 can add let say 40 seats this will decrease the cargo. How much will revenue gain of the PAX increase and how much will freight revenue decrease?


Are you moving, say, galleys to the belly to free up main deck space?
Or do you mean simply 40 more pax in the cabin, only their bags in the belly?

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