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 emptyEvaluation 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.
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.