Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR

 
User avatar
KarelXWB
Posts: 26968
Joined: Sun Jul 15, 2012 6:13 pm

Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 9:32 am

olle wrote:
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?


I don't know the numbers, but here's a real-world example: Emirates used to put a 777-200LR on the DXB-LAX route. Later they upgraded to 777-300ER and finally A380. Tim Clark explained that each upgrade resulted in less freight because the aircraft suffer a payload hit, but the additional seats generate significant more profits.

So a 77W with a bit of cargo will generate more profits than a fully loaded 77L.
What we leave behind is not as important as how we've lived.
 
olle
Posts: 2464
Joined: Tue Feb 06, 2007 3:38 am

Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 9:50 am

Special comparing 77W and 77L should then show that 100kg PAX gives more profit then 100kg freight? Then is not the balance of one A380 with more % Pax vs Freight more profit generation compared to let say two 77L?
 
User avatar
Matt6461
Topic Author
Posts: 2989
Joined: Wed Oct 16, 2013 9:36 pm

Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 9:56 am

Just to pile on a few more quotes regarding belly cargo's profit margin:

From 2014:
This can lead to a 60%-70% profit margin on belly freight, according to Aspire Aviation‘s understanding and Cathay’s executives have lamented during the cargo doldrum since 2010 that dedicated freighters can often cover only their cash costs, but not capital costs.

http://www.aspireaviation.com/2014/10/0 ... ke-flight/

Notice the distinction here: Dedicated freighters are operating at a loss; belly freight is operating at a huge profit margin. The cargo market was bad in 2014 too, but belly cargo was still profitable.

Also from 2014:
What is the impact for the freighter business – new builds and conversions? Old fuel inefficient platforms are out and what Fred Smith described as ‘low cost belly space’ is in. Airline cargo managers are moving out of main deck freighters (IAG, JAL, United, American, Delta to name a few) and befriending their passenger colleagues for space below the main deck to accommodate their cargo which they can sell at rates and profit margins not dreamed of before.

https://leehamnews.com/2014/04/13/the-d ... reighters/

Again from 2014:
Roslyn Wilson, author of the annual "State of Logistics Report," whose silver anniversary edition is released today, estimates that airlines generate margins of around 65 percent on their belly cargo.

http://dcvelocity.com/articles/20140616 ... argo-unit/

All of these quotes from 2014 occurred in a cargo market that was deeply troubled. Dedicated cargo hasn't been a good business for nearly a decade.

So you all need to pause before you quote the current state of the cargo market at me as proof that *BELLY CARGO* isn't doing well. The same thing was true in 2013 and 2014, when all these quotes are from.

The only difference between 2013/14 and now is that yield is down maybe 25% and fuel prices are down 50%. But if fuel were about half of belly cargo expense in 2013/14, those yield/cost factors combined give you exactly the same profit in 2016.
 
User avatar
KarelXWB
Posts: 26968
Joined: Sun Jul 15, 2012 6:13 pm

Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 10:06 am

Hold on a minute, I never claimed belly cargo to be unprofitable. It's just that passenger seats create significant more profits than cargo (see the Emirates example above).
What we leave behind is not as important as how we've lived.
 
User avatar
Matt6461
Topic Author
Posts: 2989
Joined: Wed Oct 16, 2013 9:36 pm

Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 10:11 am

That is not the issue we have been debating Karel. Do you really think I believe cargo makes more profit than pax? I have hundreds of posts about the A380X, inter alia, to disprove that.

The issue is whether belly cargo has high profit margin, such that we can drop most of cargo revenue straight to the bottom line. Do you agree or disagree with that statement?
 
PhoenixVIP
Posts: 374
Joined: Tue Mar 18, 2014 12:41 pm

Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 10:14 am

tortugamon wrote:
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


Haha this is getting ugly because of one person alone. Look in the mirror.

No one denies cargo is unimportant for business. But when you have a dedicated freighter arm that gives you significant leverage compared to those airlines that don't deal in that space and many don't.

Of course our Tort forgets that DXB to JFK has enough cargo that one 77W can't fit alone or a 77L let alone an A380. And forgets that while you have to send a 77F you may as well make up lost revenue with more pax. Hey presto! Did that take Einstein to figure out?

The logic in this thread keeps me entertained cause of this one poster. :lol: Loving it!
Inspire the truth.
 
User avatar
KarelXWB
Posts: 26968
Joined: Sun Jul 15, 2012 6:13 pm

Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 10:25 am

tortugamon wrote:
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.


Not sure why you're stating the obvious.

Everyone knows the 77W offers more cargo positions in the belly than the A380. So why the upgrade to the A380? Because the additional seats generate more profits. Plus it allows Emirates to capture growth. As for the 77F, it can carry more freight than both 77W and A380. So clearly there's a market to deploy both aircraft on the same route.

tortugamon wrote:
which must mean they are making solid money on cargo


I never claimed the opposite.
What we leave behind is not as important as how we've lived.
 
PaulDC6B
Posts: 8
Joined: Thu Jun 16, 2016 7:53 am

Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 11:25 am

Matt6461 wrote:
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?


That's the gist of it - I do not. Not in the face of other information I have about profitability difference between cargo and pax and when reading other quotes and reports of non-cargo-only airliners (some were also linked here in this thread).

For example:
Cathay Pacific’s 90 percent increase in 2015 net profit had no help from its cargo division, which after a solid first quarter saw demand for air freight largely fade away for the rest of the year.

Cargo revenue reached $3 billion, a decrease of 9 percent compared to the previous year that was mainly a result of falling fuel surcharges that were forced down by lower fuel prices, the Hong Kong-based carrier said while announcing its annual results.

But more importantly, strong competition, overcapacity, unfavorable foreign currency movements and the reduction in fuel surcharges all put pressure on yields that decreased by 13.2 percent.


This is just an example why it is hard for me to take only that 2013 FlightGlobal article as a proof of huge profitability of belly cargo nowadays. Challenges in cargo market are not small AFAIK.

In any case I do not claim that I am right or that you are wrong, just that your position is/was not supported with good enough evidence IMO. I do see you posted some additional links supporting your position, and that's great! Unfortunately I do not have time to check them now and will read and consider them later. Thanks!
 
User avatar
Ncfc99
Posts: 784
Joined: Tue May 31, 2005 2:42 am

Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 11:50 am

Matt6461 wrote:
Just to pile on a few more quotes regarding belly cargo's profit margin:

From 2014:
This can lead to a 60%-70% profit margin on belly freight, according to Aspire Aviation‘s understanding and Cathay’s executives have lamented during the cargo doldrum since 2010 that dedicated freighters can often cover only their cash costs, but not capital costs.

http://www.aspireaviation.com/2014/10/0 ... ke-flight/

Notice the distinction here: Dedicated freighters are operating at a loss; belly freight is operating at a huge profit margin. The cargo market was bad in 2014 too, but belly cargo was still profitable.

Also from 2014:
What is the impact for the freighter business – new builds and conversions? Old fuel inefficient platforms are out and what Fred Smith described as ‘low cost belly space’ is in. Airline cargo managers are moving out of main deck freighters (IAG, JAL, United, American, Delta to name a few) and befriending their passenger colleagues for space below the main deck to accommodate their cargo which they can sell at rates and profit margins not dreamed of before.

https://leehamnews.com/2014/04/13/the-d ... reighters/

Again from 2014:
Roslyn Wilson, author of the annual "State of Logistics Report," whose silver anniversary edition is released today, estimates that airlines generate margins of around 65 percent on their belly cargo.

http://dcvelocity.com/articles/20140616 ... argo-unit/

All of these quotes from 2014 occurred in a cargo market that was deeply troubled. Dedicated cargo hasn't been a good business for nearly a decade.

So you all need to pause before you quote the current state of the cargo market at me as proof that *BELLY CARGO* isn't doing well. The same thing was true in 2013 and 2014, when all these quotes are from.

The only difference between 2013/14 and now is that yield is down maybe 25% and fuel prices are down 50%. But if fuel were about half of belly cargo expense in 2013/14, those yield/cost factors combined give you exactly the same profit in 2016.


Thanks for the links. IMHO it still does not prove that cargo is highly profitable now and in the near future, which I think is what the main argument is in this thread and the gist of what I was trying to say many posts ago. The many current articles I can find at the moment seem to show cargo profit is low to the point that cargo is called a distraction. It also confirms my opinion that in the future, cargo capability of an airframe will become less important when selecting which type to order.
 
User avatar
Matt6461
Topic Author
Posts: 2989
Joined: Wed Oct 16, 2013 9:36 pm

Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 12:03 pm

PaulDC6B wrote:
Cargo revenue reached $3 billion, a decrease of 9 percent compared to the previous year that was mainly a result of falling fuel surcharges that were forced down by lower fuel prices, the Hong Kong-based carrier said while announcing its annual results.


I don't know from where you pulled this quote but it makes the same mistake as nearly everyone else is here. A really, really basic mistake:

The decline in cargo revenue isn't balanced against the decline in fuel prices to arrive at a profit figure.

Look at Cathay Pacific's Annual Report for 2015:
Cargo profits in 2015 benefited from low fuel prices. Low fuel prices meant lower fuel surcharges. This
adversely affected revenue and yield. Low fuel prices also meant more market capacity. This also
adversely affected yield. So did the depreciation of some currencies.
 We managed capacity in line with demand. We reduced schedules and made ad hoc cancellations
where necessary.
 We carried a higher proportion (57.0%) of total cargo shipments in the bellies of passenger aircraft

http://bit.ly/1sHEYZF (Page 4)
 
User avatar
Matt6461
Topic Author
Posts: 2989
Joined: Wed Oct 16, 2013 9:36 pm

Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 12:14 pm

Ncfc99 wrote:
Thanks for the links. IMHO it still does not prove that cargo is highly profitable now and in the near future


No, for that you're going to have to use a little bit of thought. I'm sorry if that sounds condescending but I've made this point literally dozens of times now and nobody besides Tortugamon has actually grappled with it:

-The only difference between 2016 and 2014 is lower yields and lower fuel prices. 2014 was also a terrible year for cargo generally, yet I have now provided copious evidence that belly cargo was highly profitable in those years.

-Take a 25% decline in yield and a 50% decline in fuel prices. Explain to me how those two factors get you from ~60% profit margin to very low profit margin. Specify what fraction of belly cargo costs you believe is fuel and what is not. This is what you must prove to show that belly cargo went from great to "meh" over the last two years.

Please attempt to do this or someone else attempt it. Otherwise you're just toying with me. I'm an easy mark but have some pity.

Ncfc99 wrote:
The many current articles I can find at the moment seem to show cargo profit is low t


And yet not a single one gives a profit margin for belly cargo. Again, gotta use your own thought here.

Ncfc99 wrote:
cargo capability of an airframe will become less important when selecting which type to order.


I agree. "Less important" can still be very important.

I'm working on a quick model/spreadsheet that will show, depending on various yield and margin assumptions, how much trip cost efficiency (money saved=) a specific plane's cargo revenue is worth (=money earned). I may post it here or, to clear away all the rubbish, start a new thread.
 
PaulDC6B
Posts: 8
Joined: Thu Jun 16, 2016 7:53 am

Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 12:42 pm

Matt6461 wrote:
I don't know from where you pulled this quote but it makes the same mistake as nearly everyone else is here. A really, really basic mistake:

The decline in cargo revenue isn't balanced against the decline in fuel prices to arrive at a profit figure.


The quote is from the links that were posted a couple times in this very thread - I was sure you're aware of them - sorry. I can repost them if you want.

I also do not accept your argument that decline in fuel prices has anything to do with what we are arguing here. My point (and of some other posters here) is that belly cargo operations are simply not hugely profitable for airlines and as such not a big focus for them when deciding on their strategy. They were not a big part of their profits in the past and they are even less so nowadays and as such will only play limited part on fleet decisions with pax operations taking a clear precedence. They are profitable, though, but "hugely" is an overstatement. But, as I said, I do leave the benefit of the doubt on the table for now.

[edit] On a lighter note, I think the problem could narrow down to the fact that we might only have completely different definitions of what "hugely profitable" means. ;)

In any case, it would be nice to open a new thread on the matter and continue discussion there. I'd love to read more on A380 future prospects here.
Last edited by PaulDC6B on Thu Jun 16, 2016 12:59 pm, edited 1 time in total.
 
User avatar
Ncfc99
Posts: 784
Joined: Tue May 31, 2005 2:42 am

Re: Belly cargo: highly profitable or not?

Thu Jun 16, 2016 12:58 pm

No, for that you're going to have to use a little bit of thought.

I am using some thought and I get your logic. What I am also doing is taking the quotes from industry insiders as factual, the old ones you've linked and the current ones others have linked. Maybe that's my mistake, but they can't all be wrong. I'm yet to see a current article or quote that confirms your logic, which does not mean I don't follow your logic. At the moment I'm basing my opinion on the industry insiders rather than your good self.
 
User avatar
KarelXWB
Posts: 26968
Joined: Sun Jul 15, 2012 6:13 pm

Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 1:13 pm

tortugamon wrote:
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


Again, not claiming belly cargo is unprofitable. The argument was about belly cargo being highly profitable. So:

Ncfc99 wrote:
Thanks for the links. IMHO it still does not prove that cargo is highly profitable now and in the near future, which I think is what the main argument is in this thread


This.
What we leave behind is not as important as how we've lived.
 
kurtverbose
Posts: 581
Joined: Thu Jun 26, 2014 9:33 pm

Re: Belly cargo: highly profitable or not?

Thu Jun 16, 2016 1:37 pm

Actually, this whole thread is a nonsense because the assumption behind is is the A380 is loosing cargo revenue - however profitable. The ratio of cargo capacity to passenger capacity is a big difference between the double deck A380 and the big twins.

Let's assume all belly cargo is profitable, otherwise it wouldn't be carried - regardless of how profitable, or highly profitable it is. How much of this profitable/highly profitable cargo is the A380 leaving behind?

Given the quotes of only average 50% capacity usage on the 777 it would seem probably not very much. And given the number of big twins being delivered it's likely this isn't going to change in a way that dis-favours the A380.
 
User avatar
speedbored
Posts: 2230
Joined: Fri Jul 19, 2013 5:14 am

Re: Belly cargo: highly profitable or not?

Thu Jun 16, 2016 2:24 pm

Ncfc99 wrote:
At the moment I'm basing my opinion on the industry insiders rather than your good self.

Me too. Just attend any trade fair or conference and talk to anyone in the cargo industry and they are all saying how little money there is to be made at the moment.

But, let's humour him.

Matt6461 wrote:
Take a 25% decline in yield and a 50% decline in fuel prices. Explain to me how those two factors get you from ~60% profit margin to very low profit margin.


Let's use both ends of Wraights "reckoning" (i.e. 30% and 60%) to get the full range.

And for anything where numbers are not publicly available, I will assume the most optimistic (for Matts argument) view.
per Prices, fuel price now is $1.40 per gal, fuel price May 2013 was $2.73 per gal
per IATA avg cargo yield currently ~$1700 per tonne, was ~$2200
per Airbus A380 fuel burn at maximum range is ~128 gals per additional tonne
so, maximum fuel cost per tonne is ~$180 now, was ~$350.
therefore, in May 2013, at 60% profit margin, other costs would have been (2200-60%-350)=~$530, at 30% margin (2200-30%-350)=~$1190
assume those other costs have remained flat (i.e. ignore inflation, ignore reported cost increases due to falling demand).
therefore:
profit today using the 60% historic margin estimate would be (1700-530-180)=$990, or ~58%
profit today using the 30% historic margin estimate would be (1700-1190-180)=$330 or ~19%

Now, if we take a more realistic view of the average trip length (say avg fuel usage was ~50% of the max range value), and allow, say, a 10% increase in other costs for inflation and the reported (see many of the linked articles) impact of lower demand, those numbers would be ~49% and ~6%.

So the answer is - take your pick, anywhere between 6 and 50%. It's all down to which estimate you want to believe. Even then, it's all based on accepting Wraights opinion of what margins might have been more than 3 years ago.

The only thing that working it out by "analysis" proves, is that you cannot work it out by "analysis". You simply cannot make up for an absence of data by guessing. Unless you have an agenda, that is.

Unless you can find someone who is brave enough to post actual numbers from a real airline (and I doubt you will now that all those real names are out there), it's all down to judgement based on what the real airlines are currently saying.

Having read many articles, and spoken to quite a few people in the business, I know which end of the scale my money is on, though.
 
User avatar
SomebodyInTLS
Posts: 1868
Joined: Wed Jun 15, 2016 12:31 pm

Re: Belly cargo: highly profitable or not?

Thu Jun 16, 2016 2:53 pm

speedbored wrote:
The only thing that working it out by "analysis" proves, is that you cannot work it out by "analysis". You simply cannot make up for an absence of data by guessing.


But but but...

That's Matt's whole modus operandi you're shooting down! :shock:

Put it this way; from where I'm sitting - all those endless discussions about how awful the current A380's wing is and how easy it would be to revamp to a vastly superior wing look more than a little silly.

(And my own experience is that when people start using the word "intellectual" it's code to initiate the rapid degeneration of a discussion into a bigoted slanging match.)
"As with most things related to aircraft design, it's all about the trade-offs and much more nuanced than A.net likes to make out."
 
User avatar
sunrisevalley
Posts: 5392
Joined: Tue Jul 06, 2004 3:26 am

Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 4:18 pm

Matt6461 wrote:

The issue is whether belly cargo has high profit margin, such that we can drop most of cargo revenue straight to the bottom line. Do you agree or disagree with that statement?


I would agree with Matts assertion. I have a particularly accurate model for the 789 in Piano-X . I have run a 6000nm flight at max passenger load and another at max volume limited payload. The fuel burn for the first was 65866kg and for the second, with 12t of cargo, 70244kg a spread of 4378 kg. With fuel at about $400m/t the incremental cost was about 15c a kg . I have to think the margin is extremely generous and probably greater than the reported CX 60%.
 
olle
Posts: 2464
Joined: Tue Feb 06, 2007 3:38 am

Re: Belly cargo: highly profitable or not?

Thu Jun 16, 2016 7:29 pm

From another thread;

/*The traditional end-of-year peak season for air cargo could disappear this year, according to Emirates SkyCargo vice-president Ravi Mirle.

...

“There may be a peak, but it could be for a couple of weeks or shorter, or it might even be flat.”

“Nobody makes money in the first half, everybody is waiting for the last three months of the year. It’s a very, very challenging market at the moment but we hope with some capacity being reduced, and with the high season coming, we will see stabilisation by the end of the year.”
*/

Where is the 60% profit ?
 
User avatar
speedbored
Posts: 2230
Joined: Fri Jul 19, 2013 5:14 am

Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 7:48 pm

sunrisevalley wrote:
With fuel at about $400m/t the incremental cost was about 15c a kg .

... or $150 per tonne, which is well within the $90 - $180 per tonne I used in my "analysis", resulting in between 6% and 49% profit margin. The actual profit all depends on what the non-flying costs of belly cargo are.
 
User avatar
Stitch
Posts: 27308
Joined: Wed Jul 06, 2005 4:26 am

Re: Belly cargo: highly profitable or not?

Thu Jun 16, 2016 7:49 pm

olle wrote:
From another thread;

/*The traditional end-of-year peak season for air cargo could disappear this year, according to Emirates SkyCargo vice-president Ravi Mirle.

...

“There may be a peak, but it could be for a couple of weeks or shorter, or it might even be flat.”

“Nobody makes money in the first half, everybody is waiting for the last three months of the year. It’s a very, very challenging market at the moment but we hope with some capacity being reduced, and with the high season coming, we will see stabilisation by the end of the year.”
*/

Where is the 60% profit ?


Probably when it's time to ship those scores of millions of newly announced iPhones each Fall.
 
User avatar
sunrisevalley
Posts: 5392
Joined: Tue Jul 06, 2004 3:26 am

Re: IATA: A380 Stagnation Part 2

Thu Jun 16, 2016 7:53 pm

speedbored wrote:
sunrisevalley wrote:
With fuel at about $400m/t the incremental cost was about 15c a kg .

... or $150 per tonne, which is well within the $90 - $180 per tonne I used in my "analysis", resulting in between 6% and 49% profit margin. The actual profit all depends on what the non-flying costs of belly cargo are.


My view is the non-flying costs are the same whether dedicated freighter or belly cargo. The pallet has to be assembled and loaded into the plane. The process for both types of cargo is virtually identical. What I don't know is any sort of typical rate that belly cargo commands. It is a big joke how fuel surcharges are applied at some ridiculous rate when the cost is only 15c a kg.
 
User avatar
sunrisevalley
Posts: 5392
Joined: Tue Jul 06, 2004 3:26 am

Re: Belly cargo: highly profitable or not?

Thu Jun 16, 2016 8:04 pm

Where is the 60% profit ?[/quote]

I would not be surprised if EK is not making this on their belly cargo. The context of the 60% was CX's belly cargo HKG-JFK where they typically haul in 10 to 14 t on each 77W flight . Five flights a day into NYC , significant total margin.
 
frmrCapCadet
Posts: 4418
Joined: Thu May 29, 2008 8:24 pm

Re: Belly cargo: highly profitable or not?

Thu Jun 16, 2016 10:52 pm

There are upwards of 200 777s, 787s, 350s coming on line each year. That is one hunk of belly cargo capacity increase per year. I don't doubt that those in the industry are concerned. High profits even this year may not be that high after the next few years. I have not read any stories of big economic growth in the near term.
Buffet: the airline business...has eaten up capital...like..no other (business)
 
Flighty
Posts: 9963
Joined: Thu Apr 05, 2007 3:07 am

Re: Belly cargo: highly profitable or not?

Thu Jun 16, 2016 11:23 pm

Profitability of belly cargo depends just as much on allocated costs as it does on revenue.

So, the profitability is probably negative (fully allocated) to 1,000,000,000% margin (if not allocated enough).

Airbus and Boeing likely want airlines to believe that fuel and load/unload costs alone cover it. Maybe some engine and brake maintenance related to loading. On this basis (zero pilot labor, zero overhead, zero capital costs) belly cargo is likely both very low yielding, and very profitable.
 
Planesmart
Posts: 2891
Joined: Sun Dec 05, 2004 3:18 am

Re: Belly cargo: highly profitable or not?

Thu Jun 16, 2016 11:36 pm

Whatever the industry reported profitability of belly freight, it's actually much lower. The freight industry, like many others, rewards with retrospective discounting, based on volume / weight formulae. These discounts may not even appear as freight-related in accounts, but as marketing or promotion.

Airlines are in a race for quality freight. Well packaged, low risk, excellent documentation, consistently on time, no hassles. The race for those customers, has seen a race to the bottom in terms of retrospective discounting. Freight rates for others, have held up well, but who wants to hold up 300 passengers, lose a slot & gate, waiting for freight issues to be resolved.
 
User avatar
sunrisevalley
Posts: 5392
Joined: Tue Jul 06, 2004 3:26 am

Re: Belly cargo: highly profitable or not?

Thu Jun 16, 2016 11:44 pm

[quote="Flighty"]Profitability of belly cargo depends just as much on allocated costs as it does on revenue.

I would argue that an operator needs to look at the spread between incremental revenue and incremental costs. In addition to fuel I would agree that the increased TOW's need to be evaluated for engine , tire and brake wear.
 
olle
Posts: 2464
Joined: Tue Feb 06, 2007 3:38 am

Re: Belly cargo: highly profitable or not?

Fri Jun 17, 2016 5:28 am

For EK flying to for example LHR or CDG how much is a normal load?

Some one here had the question how much leaves the A380 behind an this routes?
 
User avatar
Matt6461
Topic Author
Posts: 2989
Joined: Wed Oct 16, 2013 9:36 pm

Re: Belly cargo: highly profitable or not?

Fri Jun 17, 2016 6:03 am

speedbored wrote:
therefore, in May 2013, at 60% profit margin, other costs would have been (2200-60%-350)=~$530, at 30% margin (2200-30%-350)=~$1190


Thanks for getting into some actual arithmetic. I have a potential exception to the fuel burn figure used* but this seems good enough to draw out the important issues - you know well that I appreciate sketched modelling and won't make a row over an approximation that gets to the core issues.

*You say A380 at "max range." Do you mean from the payload-range chart with 1t payload? Or do you mean max pax+bags range? The fuel burn figure seems a bit low.

The thing that jumps out at me about your analysis: "Other costs" costs vary between a low of ~$310/t (using the 70% profit margin quoted in another of my linked articles from 2014) to ~$1300 (using your calculation from 30% profit margin in 2013 plus 10% increase since 2013).

That's a huge range and would create all kinds of uncertainty for us data-starved forumers, but I'm not ready to give up on analysis yet.

A full LD3 at 11 lb/ft3 weighs ~.68 tonnes, thus its high-range "other costs" would be ~$890. Does $890 make sense for simply accepting and loading an LD3? If baggage LD3's carried similar loading/handling costs, that would imply that filling a 77W's belly costs ~$43,000 before the plane leaves the gate. That's ~30% of Leeham's modeled 6000nm trip cost for a 77W at current gas prices. That seems way too high, right? Even if the airline is warehousing LD3's, a couple nights in a warehouse can't cost nearly a thousand dollars.

Loading and handling at the airfield have to be a very small fraction of the potential "other" costs for belly freight - at least the high scenario.

Here's a theory about those high-range "other" costs: this would include the airline acting like an integrated shipper - instead of relying on freight forwarders and other middlemen to aggregate and prepare containers and pallets for delivery, the airline would take on more of that work itself. In doing so, however, the airline would presumably capture whatever value traditionally goes to a forwarder/aggregator earlier in the supply chain. I don't imagine that freight forwarding has huge margins, so the overall margin picture for the airline would decrease even if its total profit went up compared to a shipment that lost revenue to more middlemen along the supply chain.

So we should probably narrow even further the scope of the question we're asking: what is the profit margin of shipping belly freight from the point of aggregation/collection to point of delivery? Framing the question this way emphasizes transportation costs (mostly fuel), airfield handling/storage costs, and some overhead for the cargo division.

sunrisevalley wrote:
I would argue that an operator needs to look at the spread between incremental revenue and incremental costs. In addition to fuel I would agree that the increased TOW's need to be evaluated for engine , tire and brake wear.


I generally agree. Per my response to speedbored, we should probably have two concepts of belly profit margin:

(1) The "airport to airport" cost. This concept is similar to how passenger DOC is usually modeled to the exclusion of corporate overhead, marketing, and other costs.

(2) The "cargo division" cost. This would include marketing, aggregation, and corporate overhead.

Concept (2) would always be lower than (1), and would vary greatly depending on the intensity of the airline's efforts to market and conduct its cargo business in-house. This is the same with pax ops, where it's useful to consider a plane's DOC but we have to remember that there's another level of the business occurring before/after those pax get onboard. Just as it would be possible to have a higher-margin DOC pax operation within a money-losing airline, it would also be possible to have a high-margin belly freight operation within a lower-margin cargo division.

I remain committed to seeing (1) as high-margin. There's simply not enough cost beyond fuel to make airport-airport belly cargo low margin even at $4 gas and lower yields than today.

It may be, however, that airline efforts to fill more of the belly cost more than they gain in revenue. Wraight remarks that airlines don't recognize the potential of their belly freight ops, but maybe airlines just aren't good - yet or ever - at being freight aggregators.

EDITED for an arithmetic mistake.
Last edited by Matt6461 on Fri Jun 17, 2016 8:36 am, edited 2 times in total.
 
User avatar
Matt6461
Topic Author
Posts: 2989
Joined: Wed Oct 16, 2013 9:36 pm

Re: Belly cargo: highly profitable or not?

Fri Jun 17, 2016 8:19 am

One more thought...

While we can all agree that actual airline data and internal analysis would be best, nonetheless we can by "analysis" see some useful things - if only in the big picture.

What I see: AFAIK only one plane in recent years, LH's A346, exchanged belly space to increase passenger revenue.
Image

LH has five loos and a large galley in the hold. Compared to, e.g., EY's A346, this allows ~20 more Y seats (from the seat map minus 6 for the stairs, not from nominal numbers). Or look at it this way: 5 loos would replace ~10 seats, a big galley would replace would replace at least two full pax rows (16 seats). Minus 6 seats for the stairs and we're back to ~20 Y seats gained.

This comes at a cost of 10 LD3 slots. (the underfloor compartment is ~26ft long per LH's drawing - http://www.lufthansa.com/mediapool/pdf/ ... 542683.pdf)

-at 11lbs/ft3, 10LD3's could hold ~15,000lbs, ~6.8 tonnes cargo.
-If typical pax load factor is 80%, typical belly cargo is 50%, LH's typical tradeoff ratio of Y seats for cargo tonnes is ~4.7.

Now only LH has made this tradeoff, which could work on the A330/350 and 777/787 as well (bellies are at least as big).
So every other airline has, so far, judged the tradeoff not worth it - they make more moving a tonne of cargo than selling 4.7 Y seats.

For a 77W with ~25t volume-limited cargo capacity, 12.5t carried at 50% load factor, that implies an expected minimum profit equivalent to selling ~59 Y seats (implying a capacity increase by ~73Y seats - an ~8-row stretch of the 77W)

...which is big deal. And remember that's just the deal that almost every airline is turning down, not the the amount of Y seats they'd have to gain to start shedding cargo space for pax capacity.

I could go into some more arithmetic about the implied profit margin of those extra tons, but I don't think we need that to see that the clear ability to increase pax revenue by using the belly - compared to most airline's refusal to do so - implies a prevailing business judgment that belly space brings in substantial profit. They're not going to break that down for us in any publicly-available disclosures but the inference is unavoidable.

Now, I have been predicting years that this will change - that belly cargo yield will converge towards belly cargo marginal cost, and that this will favor the A380 (specifically more investment in the A380 beyond a simple NEO). Basic economics dictates that extremely high profit margins won't last forever. Airlines will start to compete for belly freight as its predominance in the total cargo market increases, and belly yields will come down. I don't see clear evidence that this has already happened.

That would improve thing for the A380 and it's one reason I think it could have a bright future with a little investment.

But if cargo becomes decreasingly profitable, the 777 could always be configured to fit additional pax by moving lavs and galleys to the hold. And/or by adding "sleeping cabins" down there. Who knows.
 
Chaostheory
Posts: 1158
Joined: Wed Mar 06, 2013 2:09 am

Re: Belly cargo: highly profitable or not?

Sun Jun 19, 2016 8:22 pm

I think many underestimate the distribution and warehousing costs of cargo, especially where refrigeration for produce is involved.

For pax fleet, we earn .22USD/ctk and costs .206USD/ctk.

Our 777/A330 belly cap is flying half empty at the moment and we've recently terminated a fixed price fixed space contract with DHL.

My last flight to Pakistan, we flew out with 6t of massey ferguson parts and on the inbound 11t mangoes and 2t cotton yarn.
 
User avatar
sassiciai
Posts: 1121
Joined: Mon Jan 07, 2013 8:26 pm

Re: Belly cargo: highly profitable or not?

Sun Jun 19, 2016 9:44 pm

Our 777/A330 belly cap is flying half empty at the moment and we've recently terminated a fixed price fixed space contract with DHL.

My last flight to Pakistan, we flew out with 6t of massey ferguson parts and on the inbound 11t mangoes and 2t cotton yarn.

My first reply in the new site, so sorry if it's wrong!

I'm so pleased to read some real-world numbers here, in a thread started by and kept alive by someone with a real bit between the teeth on a topic that without such refreshing figures is just more masturbation of the same old same old!
 
User avatar
sunrisevalley
Posts: 5392
Joined: Tue Jul 06, 2004 3:26 am

Re: Belly cargo: highly profitable or not?

Sun Jun 19, 2016 10:33 pm

[quote="Chaostheory"]I think many underestimate the distribution and warehousing costs of cargo, especially where refrigeration for produce is involved.

For pax fleet, we earn .22USD/ctk and costs .206USD/ctk.

But these costs apply to all cargo. What is the ctk. unit?
 
User avatar
AirlineCritic
Posts: 1771
Joined: Sat Mar 14, 2009 1:07 pm

Re: Belly cargo: highly profitable or not?

Mon Jun 20, 2016 3:08 am

FWIW, I really dislike the tone in this thread.

I also dislike that we take specific issues and somehow turn them into A380 vs. 777 debates.

Also, to me it is obvious that in most business ventures, costs come from a combination of complex factors. Even on airlines, fuel cost alone is a small part of the overall costs. Any complete discussion of cargo profitability needs to look at the full picture.
 
User avatar
seahawk
Posts: 9750
Joined: Fri May 27, 2005 1:29 am

Re: Belly cargo: highly profitable or not?

Mon Jun 20, 2016 5:06 am

Belly cargo is easy extra revenue in practical terms. If you need it to make a route work, the route does not work. If the the airplane has space for extra cargo and the passengers alone make the route work it is highly profitable, as it causes nearly no extra costs and the whole money is revenue. Therefore a plane with lots of cargo space can be at a serious advantage for belly cargo heavy routes even more so if the CASM for the passengers is competitive or even class leading.
 
User avatar
AirlineCritic
Posts: 1771
Joined: Sat Mar 14, 2009 1:07 pm

Re: Belly cargo: highly profitable or not?

Mon Jun 20, 2016 5:30 am

seahawk wrote:
as it causes nearly no extra costs and the whole money is revenue.


Uh... methinks personnel, loading equipment, storage, marketing, contracting, insurance, dangerous good monitoring are going to cost. Personnel in particular.
 
User avatar
seahawk
Posts: 9750
Joined: Fri May 27, 2005 1:29 am

Re: Belly cargo: highly profitable or not?

Mon Jun 20, 2016 6:05 am

It is not much, considering that you usually load the bags in containers anyway, it is just the cost for loading a few extra containers. Sure marketing, security measures, cost for extra containers, insurance, etc. come into play, but it is not much extra compared to pure pax ops.
 
User avatar
CARST
Posts: 1556
Joined: Tue Jul 25, 2006 11:00 pm

Re: IATA: A380 Stagnation Part 2

Mon Jun 20, 2016 6:20 am

KarelXWB wrote:
olle wrote:
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?


I don't know the numbers, but here's a real-world example: Emirates used to put a 777-200LR on the DXB-LAX route. Later they upgraded to 777-300ER and finally A380. Tim Clark explained that each upgrade resulted in less freight because the aircraft suffer a payload hit, but the additional seats generate significant more profits.

So a 77W with a bit of cargo will generate more profits than a fully loaded 77L.


Your examples only work if you can fill a 77W or an A380. Otherwise the 77L is perhaps the best aircraft for a given route if you can only fill that many seats.
 
PanHAM
Posts: 9719
Joined: Fri May 06, 2005 6:44 pm

Re: Belly cargo: highly profitable or not?

Mon Jun 20, 2016 7:00 am

seahawk wrote:
It is not much, considering that you usually load the bags in containers anyway, it is just the cost for loading a few extra containers. Sure marketing, security measures, cost for extra containers, insurance, etc. come into play, but it is not much extra compared to pure pax ops.


Assuming that a foreign carrier no longer has it's own handling and uses a GSA for the sales of the belly capacity, he still has to pay for all These items, i.e. the sales commission for the GSA that includes the cost of Administration, the pre-transport as well as the delivery of freight to sub-stations. in a Country like Germany that can be MUC STR NUE CGN DUS HAJ HAM TXL , all by truck road Feeder servie. that includes warehousing twice, the build od ULDs, the carriage of the build up ULDs from warehouse to aircraf and the loading. adding to that is the additional fuel for the uplich. Before that carrier makes a Profit on sich belly "fill-up2 freight, the yield MS well exceed 1 USD/€ per Kilo chargeable weight. That under the assumption that the cost of Screening and fuel surcharges are extra added to the actual weight Charge.

The worrying matter for airfreight executives is, the weight charges are ore than often not calculated by adding the costs (the above does not even include the unloading and warehousing at the Destination) but on market conditions whoch do not reflect the actual costs.

OTH 100 kg cargo can yield more than 100 Kilo of passenger, as Long as it is not General cargo but class rates. The human remains in the belly, flwon home, most likely yield a higher rate than the living passenger
Was Erlauben Erdogan!!!
 
User avatar
seahawk
Posts: 9750
Joined: Fri May 27, 2005 1:29 am

Re: Belly cargo: highly profitable or not?

Mon Jun 20, 2016 7:11 am

That depends if you offer the full service or if you just sell your belly space to a cargo operator, who would then handle the transportation to the airport, the storage at the airport and even the security screening and loading.
 
PanHAM
Posts: 9719
Joined: Fri May 06, 2005 6:44 pm

Re: Belly cargo: highly profitable or not?

Mon Jun 20, 2016 7:26 am

That's what LH does with LHCargo. The Szenario I showed is what foreign carriers with one or three daily frequencies to a Country like Germany have. Such carriers used to have their own full infrastructure but the costs drove them to the GSA(GHA model. Whichever way you lokk at it, the costs are there, regardless if the belly space is sold en bloc for pennies or through sales and handling partneer. And the reality is that the yield received from the freight forwarders who generate the volumes for the airlinesis a market rate.
Was Erlauben Erdogan!!!
 
User avatar
zeke
Posts: 15278
Joined: Thu Dec 14, 2006 1:42 pm

Re: Belly cargo: highly profitable or not?

Mon Jun 20, 2016 10:59 am

Anyone suggesting as a blanket statement that belly freight is "highly profitable" is misleading everyone. As with all things in aviation there is always going to be the odd extreme. Fact is on ULH flights that cargo is not "highly profitable", they reason being is the high cost of fuel to carry every additional tonne of freight. On the ULH routes EK was flying to the US they would have cost an extra 500 kg in fuel for every tonne of freight carried. This is already in an area of the payload/range curve where it beyond MZFW range. Up to around 12 hours of range, the 77W will cargo more belly freight than the A380, after that the tables turn. The 77W may have more volume available, it does not have the spare weight. The A380 carries ballpark an additional 50% more payload than a 77W.

Airlines are looking at ways to put more seats, not less onto an airframe to carry more passengers, if belly freight was "highly profitable" we would see the opposite trend of less seats. We would also see the sales of the A380 combi models.

Regional routes is a different matter, when widebodes are flying in MZFW range with light fuel loads a lot of cargo can be carried at very cheap cost, as little as 30kg of fuel per tonnes. However this cargo also is not "highly profitable" due to the overcapacity in the marketplace margins are very tight.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
User avatar
Channex757
Posts: 2416
Joined: Sat Jun 18, 2016 7:07 am

Re: Belly cargo: highly profitable or not?

Mon Jun 20, 2016 11:53 am

Belly cargo isn't a black or white issue. Many airlines will take cargo on the basis of it being urgent, non-urgent or somewhere in between.

Non-urgent can be less profitable as it's sold at lower rates with space allocated as and when available with a cutoff date. It's handy for airlines though as they can use a 'stock' of such freight to fill in the gaps. Urgent is obviously sold on the basis of next available flight and can bump non-urgent off until another day.

Airlines like cargo as it's a revenue stream as well. Maybe it isn't hugely profitable but it is money through the books and cash is king. Declining volumes also will depress yields due to competition, but there will come a stage where an airline won't book freight because the category it's bookable in would incur a loss. A price floor will eventually exist across the industry. Then again, some capacity needs to be there for that just-in-time freight or urgent and high value stuff booked at short notice which can really bring in the cash.

Putting lavs and galleys below deck is a bit of a side issue really. It's expensive to do and incurs extra weight in itself. There is also the point that those extra seats need to be sold to offset the earning potential of having open freight positions.
 
B777LRF
Posts: 2734
Joined: Sun Nov 02, 2008 4:23 am

Re: RE: IATA: A380 Stagnation Part 2

Mon Jun 20, 2016 12:49 pm

[quote="Matt6461"]Quoting Ncfc99 (Reply 61) 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).

You are forgetting one major, if not the largest, cost associated with air freight, namely the human resources needed to accept, check, handle, build-up store, transport, break-down and hand-out the freight. Have a gander round the air cargo centres of the world, and from the filled parking lots you'll find it's a very human capital intensive business.

Granted, in some parts of the world hiring people is cheap. Problem with that is, you only need to look at a map of the largest cargo hubs of the world to find, everybody's who's anybody is based in a high(wish) cost environment.

Nobody's come up with a warehouse robot who can handle boxes of rubber dog-shyte from Honkers, cheaper than a dude and his fork-lift.
Signature. You just read one.
 
PanHAM
Posts: 9719
Joined: Fri May 06, 2005 6:44 pm

Re: Belly cargo: highly profitable or not?

Mon Jun 20, 2016 1:55 pm

Exactly, the cost of human resources, handling and Office Equipment plus rent, including that of a warehouse, is broken down in Cents per Kilo. Profit depends on the routes flown and the market Situation. But the costs excluding the cost of operating the aircraft add up to over 1 €/$ at least. Belly freight can be profitable when the yield per Kilo exceeds 4 or 4 €/$. Cargo can make the difference between making a route profitable or not. OS once made the mistake when they axed VIE/SYS/MEL which the inherited from Lauda. They completely forgot to add the freight Revenue in their calculation.
Was Erlauben Erdogan!!!
 
strfyr51
Posts: 5091
Joined: Tue Apr 10, 2012 5:04 pm

Re: Belly cargo: highly profitable or not?

Mon Jun 20, 2016 2:06 pm

Belly cargo for a passenger airline is almost pure profit. It's good enough that if the Belly is full of freight? all the passengers are pure profit as the Belly will cover the airplane's costs.
 
User avatar
Channex757
Posts: 2416
Joined: Sat Jun 18, 2016 7:07 am

Re: Belly cargo: highly profitable or not?

Mon Jun 20, 2016 2:27 pm

Belly cargo isn't all pure profit. It also depends on the region.

Rail is starting to eat into east-west flows from Asia to Europe. Linking up rail systems in Russia and China plus the various Stans will mean a lot of non-urgent air freight starts going by cheaper rail in a matter of a few days. Not unlike non-urgent booked airfreight. Competing against the low cost of rail will potentially take a massive chunk of the revenues of the Gulf airlines and carriers like CX (who have already scaled back on their dedicated freighters to Europe).

Just stating that air cargo via belly freight is profitable or not is way too generalising an argument. There are so many factors and each airline will have its own market to sell into (or not) and a whole shopping list of tarriffs and delivery guarantees. For instance, a Mexican and a Canadian airline might both operate the 737-700 but have completely different balance sheets for their freight.

Can you generalise from looking at how both of them operate their freight divisions?
 
frmrCapCadet
Posts: 4418
Joined: Thu May 29, 2008 8:24 pm

Re: Belly cargo: highly profitable or not?

Mon Jun 20, 2016 2:34 pm

Freight on planes can include a variety of services. For determining profit margins we should be comparing the simplest. The customer delivers a container planeside ready to be put aboard at the agreed time, and has made arrangements for it to be picked up and taken through customs at agreed time. The airline delivers from A to B. Likely the airline may provide some services on the way to planeside, but those need to be priced separately, at least for our conversations to make sense. I realize we are having to construct data as it is not released by the parties involved.
Buffet: the airline business...has eaten up capital...like..no other (business)
 
User avatar
Matt6461
Topic Author
Posts: 2989
Joined: Wed Oct 16, 2013 9:36 pm

Re: Belly cargo: highly profitable or not?

Mon Jun 20, 2016 5:12 pm

frmrCapCadet wrote:
Freight on planes can include a variety of services. For determining profit margins we should be comparing the simplest. The customer delivers a container planeside ready to be put aboard at the agreed time, and has made arrangements for it to be picked up and taken through customs at agreed time. The airline delivers from A to B. Likely the airline may provide some services on the way to planeside, but those need to be priced separately, at least for our conversations to make sense. I realize we are having to construct data as it is not released by the parties involved.


Exactly. As I proposed upthread, we should clarify what are "transportation costs" versus the costs associated with marketing, aggregating, and storing freight for transportation. The latter costs will vary immensely between airlines. EK's service to Zhengzhou, for example, can probably load iphones from FoxConn at very low low marketing etc. costs.

The transportation costs will be highly dependent on aircraft fuel efficiency but probably always high-margin at published yield rates.

If, however, the trend that Planesmart identifies is common - carriers providing rebates to dependable, self-aggregating shippers - then the published yield rates will overstate the true profitability of belly freight.
 
User avatar
enzo011
Posts: 1913
Joined: Tue Jun 21, 2011 8:12 am

Re: Belly cargo: highly profitable or not?

Mon Jun 20, 2016 7:31 pm

I still see a lot of statements still that belly cargo is "highly profitable" and no facts or links are given. So I would conclude that this is merely opinions that aren't backed by facts. Let me provide an example and see how people will react.

The A380 is highly profitable. We can see this from one person in the industry and his quotes, Sir Tim Clark, has been vocal that the A380 is very good at making profits. We can infer from this that all A380s are very good at making profits. We don't need to look at load factors or other costs as they are not really significant, all that matters is that the A380 makes profits by the bucket loads.

I am sure even the most ardent A380 supporter would agree that this statement isn't 100 true as there are many factors that influence how profitable operating the A380 is at the end of the day. We have seen airlines struggle with the A380, yet we should take the notion as true that belly cargo is highly profitable with the same one link from someone in the industry as above?

seahawk wrote:
Therefore a plane with lots of cargo space can be at a serious advantage for belly cargo heavy routes even more so if the CASM for the passengers is competitive or even class leading.



We have seen many quotes that have cargo at 50% load factors. Having the potential to sell cargo on a flight is a potential revenue source, but if it doesn't sell it isn't worth anything.

seahawk wrote:
It is not much, considering that you usually load the bags in containers anyway, it is just the cost for loading a few extra containers. Sure marketing, security measures, cost for extra containers, insurance, etc. come into play, but it is not much extra compared to pure pax ops.


Can you supply links to show that it is not much? How much is not much?

strfyr51 wrote:
Belly cargo for a passenger airline is almost pure profit. It's good enough that if the Belly is full of freight? all the passengers are pure profit as the Belly will cover the airplane's costs.


Which is something nobody has refuted, the problem comes in from the statement that belly cargo is highly profitable. I doubt an airline would be a charity and fly cargo around when it costs them money. So you can make a safe assumption that cargo that are loaded do make profits for the airline, it is how much that is in question.

Who is online

Users browsing this forum: 9QCLI, Aquila3, Avgeek21, Baidu [Spider], Bing [Bot], BOSAero, charles022, DLFA, dstblj52, EI320, EY80, f18raider, FlyHappy, frigatebird, GloomyDe, Google [Bot], jamie86, jomur, ktachiya, Mbowlesy, mm320cap, Noshow, Rifitto, santos, ShadowLaw, stefanJ, tonforty, trees, TWA902fly and 154 guests

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos