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Re: How Little Cargo Revenue Really Matters For DL And UA

Fri Jul 19, 2019 4:46 pm

drdisque wrote:
I know of one specific example of a route planning decision that is driven by Cargo in the US.

A lot of pharmaceuticals that have to be temperature controlled are produced in Puerto Rico. Because they have to be temperature controlled they can't fly as belly cargo in any narrowbody. UA flies a daily 764 on SJU-EWR in part to be able to serve this cargo market since the 764 can take a refrigerated cargo container.

That being said, if UA didn't think it could fill the 764 with pax reliably, it wouldn't be on the route. They wouldn't be flying around a half-full 764 just for the belly cargo.

I bet there are more routes. But a 763 could carry the container too... So defenately a bonus.

Cold transportation is very profitable. EK specialized in that for flowers to Europe and pharmaceuticals. But it required hundreds of millions in investment to set up. Once they were in place, no regional competitor will gain enough business to pay for the setup. But those cold warehouses are one reason UPS setup in Dubai. LH too.

The issue is that except for a few routes for P2P or to/from islands, only one cold hub can thrive in a region.

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slider
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Re: How Little Cargo Revenue Really Matters For DL And UA

Fri Jul 19, 2019 4:50 pm

The OP is missing the deeper point: whilst overall cargo revenues are minimal compared to total company revenues, the YIELD is significant.

As with Charter flying, it's not a major part of total ASMs, but the margins are significant and important. DL in particular has the Delta DASH product, and many airlines do vigorous time-sensitive shipments, including human organs and such. The yield on such shipments maintains its viability.

It's myopic to look at it strictly from a net revenue contribution standpoint.
 
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Re: How Little Cargo Revenue Really Matters For DL And UA

Fri Jul 19, 2019 5:02 pm

slider wrote:
The OP is missing the deeper point: whilst overall cargo revenues are minimal compared to total company revenues, the YIELD is significant.

As with Charter flying, it's not a major part of total ASMs, but the margins are significant and important. DL in particular has the Delta DASH product, and many airlines do vigorous time-sensitive shipments, including human organs and such. The yield on such shipments maintains its viability.

It's myopic to look at it strictly from a net revenue contribution standpoint.


Exactly. So it brings in $100 million in a quarter, but what if it only cost the company $10 million to support that revenue stream? It’s like if your neighbor needs a ride to the airport and he needs to be there at exactly the same time that you do, and he’ll give you $20 for your trouble. You used $5 in gas that you were going to use anyway, and you’re not delaying or altering your commute. It’s easy money. That $20 pales in comparison to the money you’ll make that day at your job, but money is money.
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Re: How Little Cargo Revenue Really Matters For DL And UA

Fri Jul 19, 2019 5:45 pm

I know that for a much smaller airline like LO cargo can be quite significant. Word has it, bigger belly was a major reason why they chose 787-9 vs. 787-8. Cargo is an important reason why they send 787-9 to Asia despite pax load factors being lower than some of their North America routes (at least initially). In one article, it was said that cargo profit margin for LO is 50%. Cargo won't be a significant part of the revenue for the airline as a whole, but it is important for the profitability of their long haul flights, especially on certain routes.
 
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Re: How Little Cargo Revenue Really Matters For DL And UA

Fri Jul 19, 2019 6:03 pm

It's still a $1.2b revenue stream for UA; fairly consistent through the year but ticks higher in the winter, especially 4Q. 65% of United's passenger revenue is domestic, and there's very little freight in the domestic market (much more economical to ship overland via truck/rail). OTOH, it's more important in the international sector and absolutely vital in a number of markets.
 
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Re: How Little Cargo Revenue Really Matters For DL And UA

Fri Jul 19, 2019 6:10 pm

codc10 wrote:
It's still a $1.2b revenue stream for UA; fairly consistent through the year but ticks higher in the winter, especially 4Q. 65% of United's passenger revenue is domestic, and there's very little freight in the domestic market (much more economical to ship overland via truck/rail). OTOH, it's more important in the international sector and absolutely vital in a number of markets.


Yeah, and it's worth remembering the differences in the networks when comparing to other carriers like Cathay Pacific or Singapore Airlines, both of which are all-widebody and mostly long-haul.

If you looked at just the international/long haul flights with widebodies, I'll bet UA's cargo business looks far more akin to other airlines around the world.
 
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Re: How Little Cargo Revenue Really Matters For DL And UA

Fri Jul 19, 2019 6:26 pm

LOT cargo for 2017 accounted for 4.7% of revenue. Now in 2018 they flew 20% more cargo and should account for 5% of revenues. I read before that LOT broke a record for belly cargo on the 787-9 it was from Chicago to Warsaw and they carried 32 tons including 1 ton of pallets.

LOT averages out 12.5 tons of cargo on the 787-8 and 13.5 on the 787-9.
 
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Re: How Little Cargo Revenue Really Matters For DL And UA

Fri Jul 19, 2019 6:59 pm

I think the difference would quite possibly be seen where an airline has mostly widebodies and not mostly narrowbodies and regional jets.
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Re: How Little Cargo Revenue Really Matters For DL And UA

Fri Jul 19, 2019 7:17 pm

ElroyJetson wrote:
I was looking at both DL and UA's second quarter earnings statements and it was a bit surprising how little cargo contributes to the bottom line. For example, DL had revenues of 12.5 billion dollars and cargo only added 186 million dollars to that total. Put another way, cargo represented approximately 1.5% to DL's total revenue.

For UA the story is slightly better. UA has gross revenue of 11.5 billion dollars of which cargo contributed 295 million. Cargo added roughly 2.5% to UA's overall revenue.

Basically cargo is for many airlines the equivalent of green stamps. It's pocket change. Sure, it's something and something is better than nothing, but realistically cargo is a tiny fraction of many airlines business.

I make this point because many a.net enthusiasts make passionate arguments about how airlines make aircraft purchase decisions based in the cargo lifting ability of various aircraft.

Like "sure the 787-10 might be super efficient but plane X can carry 5 tons of cargo another 800nm."

Well, if cargo is 2% of your revenue and you as an airline are making multi-billion dollar decisions on aircraft purchases, listing cargo carrying capacity as a major consideration is pretty stupid. In fact, I can think of about 10-15 factors that are more important.

Again, my point is the revenue from cargo is nice, but for many airlines it is a tiny piece of their business. Not something that should be a major driver in deciding which frames to purchase, all other factors being equal.


The US3 are larger than any other airline in the world. 2% is very significant bottom dollars. The planes are already dispatched and flying the routes.
 
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Re: How Little Cargo Revenue Really Matters For DL And UA

Fri Jul 19, 2019 7:34 pm

But but but, A.netters said AA only flies RDU-LHR because of the cargo... :D

ElroyJetson wrote:
I was looking at both DL and UA's second quarter earnings statements and it was a bit surprising how little cargo contributes to the bottom line. For example, DL had revenues of 12.5 billion dollars and cargo only added 186 million dollars to that total. Put another way, cargo represented approximately 1.5% to DL's total revenue.


I've been saying this for years (for US carriers). US airlines realized a long time ago that pax revenue is far more valuable than operating a cargo fleet. There's simply too much competition for intra-US cargo. Heck in a given week we prob have 5 different delivery companies delivering to our house.
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Re: How Little Cargo Revenue Really Matters For DL And UA

Fri Jul 19, 2019 8:16 pm

blockski wrote:
Yeah, and it's worth remembering the differences in the networks when comparing to other carriers like Cathay Pacific or Singapore Airlines, both of which are all-widebody and mostly long-haul.

If you looked at just the international/long haul flights with widebodies, I'll bet UA's cargo business looks far more akin to other airlines around the world.


The OP kind of has a point in what they are saying, just going around it in the wrong way. For some airlines cargo is an essential part of their network, and cargo capabilities are more of a factor that comes into play when selecting aircraft. That is why the fleet that UA and DL has is different to airlines that carry cargo. Even on the narrow body side, airlines that have a high cargo transportation rate may look at narrow body aircraft that accept containers.

Besides, we have been told for so many years the reason why the A380 has not sold is it does not have room for cargo, and now we are being told that cargo is not important. Both generalisations do not hold water.
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Re: How Little Cargo Revenue Really Matters For DL And UA

Fri Jul 19, 2019 8:27 pm

Also don't forget, corporate pax contract can also come with downstairs contracts aswell. Look at Astra Seneca and MAN-PHL
 
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Re: How Little Cargo Revenue Really Matters.

Fri Jul 19, 2019 8:43 pm

EBT wrote:
The Cathay's, SIA's and other Asian carriers that derive 35-40% of their revenue based on cargo also have sizable dedicated freighters that pay their way, rather than relying on bellyfreight.

eta unknown wrote:
+1
Exactly. Take the Asian freighters out of the equation and the cargo revenue won't be anywhere near around 25%.


Why take dedicated freighters out of the equation? The mere fact these primarily passenger airlines have dedicated freighters shows how great the demand for their cargo services are.

To put all this in context, Qatar Airlines - primarily a passenger airline - just overtook UPS in the global cargo rankings.
https://www.aircargonews.net/airlines/top-25-cargo-airlines-fedex-at-the-top-as-qatar-closes-in-on-emirates/
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Re: How Little Cargo Revenue Really Matters For DL And UA

Fri Jul 19, 2019 8:48 pm

codc10 wrote:
It's still a $1.2b revenue stream for UA; fairly consistent through the year but ticks higher in the winter, especially 4Q. 65% of United's passenger revenue is domestic, and there's very little freight in the domestic market (much more economical to ship overland via truck/rail). OTOH, it's more important in the international sector and absolutely vital in a number of markets.


PSU.DTW.SCE wrote:
There are a few things to consider here for how the US3 view their cargo operations.

1) Cargo revenue is small in percentage to Passenger revenue, but it is actually a high margin business in their current operating model
2) Network / route / fleet decisions are not made based on cargo needs, its low on the scale of decision criteria
3) Dedicated freighter fleet and the supporting infrastructure, particularly building from scratch would add a whole bunch of incremental costs and likely not obtain the margins they receive on underbelly cargo
4) The opportunity now is to grow cargo ops since newer aircraft (777, 77W, 359) have significantly more cargo capabilities that prior generation aircraft (D10, 744, 767)
5) The broad domestic route network has very limited underbelly cargo, and what typically goes is bulk-loaded mail


DL is flying IND-CDG rather than IND-AMS based on cargo:

"Indianapolis Airport Authority Executive Director Mario Rodriguez said of the new Paris flights. “Paris does two main things—it connects passengers and businesses, and it connects cargo.”
"Rodriguez said the airport and Delta have already discussed expanding the airline’s existing cargo operations in Indianapolis because of the new Paris service"

https://www.ibj.com/articles/65287-indi ... is-flights

On a grand scale cargo isn't going to bring in a lot of revenue for an airline like DL, considering Widebody aircraft only make up 15% of DLs fleet.....which the OP glossed over. For certain routes it is important though
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Re: How Little Cargo Revenue Really Matters For DL And UA

Fri Jul 19, 2019 8:50 pm

royroy wrote:
Also don't forget, corporate pax contract can also come with downstairs contracts aswell. Look at Astra Seneca and MAN-PHL


not necessarily, unless Astra is a freight forwarder. Cargo needs to be shipped by a freight forwarder, not an actual company that produces the goods.
 
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Re: How Little Cargo Revenue Really Matters For DL And UA

Fri Jul 19, 2019 9:27 pm

    CALMSP wrote:
    royroy wrote:
    Also don't forget, corporate pax contract can also come with downstairs contracts aswell. Look at Astra Seneca and MAN-PHL


    not necessarily, unless Astra is a freight forwarder. Cargo needs to be shipped by a freight forwarder, not an actual company that produces the goods.


    That is correct BUT a lot of special products like that stipulate direct routing. Pfizer and GSK on LHR-ATL is the same
     
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    Re: How Little Cargo Revenue Really Matters For DL And UA

    Fri Jul 19, 2019 11:33 pm

    FYI
    largest US big 3 carrier cargo ops is only #20 in the world
    https://www.aircargonews.net/airlines/t ... es-higher/
     
    77H
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    Re: How Little Cargo Revenue Really Matters.

    Sat Jul 20, 2019 2:35 pm

    Max Q wrote:
    77H wrote:
    MaverickM11 wrote:
    It depends on the route, but that's why "but the cargo is great!" is usually a red flag for a route's profitability...


    Correct. A few years ago UA was looking into downgauging the HNL-GUM flight from their HD 77A to the 752. I was told the main reason the downgauge didn’t happen was the value of cargo on the route.

    77H




    That flight has always been packed, Continental operated it with the 747 Classic, DC10, 767-400HD and after the merger with the high density triple



    There’s a huge passenger demand on that
    route that no other airline serves


    Cargo is important but not the only reason
    they keep a widebody on it


    Do you actually follow the passenger loads on that flight or are you correlating historic aircraft types used to load factors?

    I was told by a friend who works at fleet planning at UA that they were looking into the feasibility of downgauging the flight several years ago. I was later told that cargo demand was a primary factor in keeping the flight a WB, which by his own admission was surprise, that cargo played a heavy role in the determination.

    77H
     
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    Re: How Little Cargo Revenue Really Matters For DL And UA

    Sat Jul 20, 2019 3:36 pm

    Don’t forget, UA had dedicated cargo 720s and DC8s flying around until the mid 70s or so. One even made a daily appearance in FWA on its way to somewhere else. Whether you think it was short-sighted or not, they got out of the cargo-only operation. I would speculate there was a convergence of several factors in that decision, like fuel costs, replacement aircraft cost, economic downturns, etc.
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    Re: How Little Cargo Revenue Really Matters For DL And UA

    Sat Jul 20, 2019 4:18 pm

    exFWAOONW wrote:
    Don’t forget, UA had dedicated cargo 720s and DC8s flying around until the mid 70s or so. One even made a daily appearance in FWA on its way to somewhere else. Whether you think it was short-sighted or not, they got out of the cargo-only operation. I would speculate there was a convergence of several factors in that decision, like fuel costs, replacement aircraft cost, economic downturns, etc.

    United States have dedicated freight transportation airlines and I suspect they have better cost structure to handle dedicated cargo operations than others that are not
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    Re: How Little Cargo Revenue Really Matters.

    Sat Jul 20, 2019 5:03 pm

    Faro wrote:
    B777LRF wrote:
    Using US airlines, who are notoriously inept at making cargo a significant part of their portfolio, is not an example giving the correct perspective.

    Lufthansa, for example, derives 7% of their revenue from logistics, for Singapore Airlines it's around 5%, and for Emirates it's around 14%.

    Cargo may very well be the difference between a profitable and loss making route. That US airlines don't wish to invest in the opportunities, or don't understand the market well enough, is not a good example of how cargo generally affects airlines around the world.



    This confirms what I intuitively thought, that cargo is indeed important even if it isn't a make-or-break factor for equipment/route planning. I would hazard a guess that for most Asian carriers cargo is not less that 5% of revenue.

    But surprising that US airlines are inept at cargo ops. Why is this?


    Faro


    It is not that US airlines are inept at cargo. The United States has UPS and FedEx as well as Amazon Prime Air and DHL International. The United States is so large that it can sustain two freight only airlines with high yield express freight. The express freight allows them to build out a network that has significant cargo volume. The overnight express freight is just a fraction in other parts of the world.

    Lufthansa, Emirates, and Singapore Airlines aren’t competing with dedicated freight operators on the scale of UPS and FedEx.
     
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    Re: How Little Cargo Revenue Really Matters For DL And UA

    Sat Jul 20, 2019 5:24 pm

    RDUDDJI wrote:
    But but but, A.netters said AA only flies RDU-LHR because of the cargo... :D

    ElroyJetson wrote:
    I was looking at both DL and UA's second quarter earnings statements and it was a bit surprising how little cargo contributes to the bottom line. For example, DL had revenues of 12.5 billion dollars and cargo only added 186 million dollars to that total. Put another way, cargo represented approximately 1.5% to DL's total revenue.


    I've been saying this for years (for US carriers). US airlines realized a long time ago that pax revenue is far more valuable than operating a cargo fleet. There's simply too much competition for intra-US cargo. Heck in a given week we prob have 5 different delivery companies delivering to our house.


    AA’s RDU-LHR also exists due to corporate contracts with Glaxo Smith Kline.

    I’d be interested to see how AA stacks up against DL and UA for cargo revenue. I know some routes do very well at AA for cargo- LHR-JFK, LHR-LAX broke a company record for the amount of cargo carried on a single flight, on a 77W. Most South American long hauls like GRU and EZE do well with cargo, as does CDG-JFK. When I fly as purser on those flights, the cargo envelope is bursting at the seams and you can tell we’re heavy because the 777s have a really long takeoff roll when the payload is greater. There are also international flights with a lot less cargo- BCN, FCO come to mind.

    I don’t know which routes are big cargo routes for DL and UA, but I would expect similar routes do well for them.
    Last edited by NYCAAer on Sat Jul 20, 2019 5:44 pm, edited 1 time in total.
     
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    Re: How Little Cargo Revenue Really Matters For DL And UA

    Sat Jul 20, 2019 5:28 pm

    lightsaber wrote:
    drdisque wrote:
    I know of one specific example of a route planning decision that is driven by Cargo in the US.

    A lot of pharmaceuticals that have to be temperature controlled are produced in Puerto Rico. Because they have to be temperature controlled they can't fly as belly cargo in any narrowbody. UA flies a daily 764 on SJU-EWR in part to be able to serve this cargo market since the 764 can take a refrigerated cargo container.

    That being said, if UA didn't think it could fill the 764 with pax reliably, it wouldn't be on the route. They wouldn't be flying around a half-full 764 just for the belly cargo.

    I bet there are more routes. But a 763 could carry the container too... So defenately a bonus.

    Cold transportation is very profitable. EK specialized in that for flowers to Europe and pharmaceuticals. But it required hundreds of millions in investment to set up. Once they were in place, no regional competitor will gain enough business to pay for the setup. But those cold warehouses are one reason UPS setup in Dubai. LH too.

    The issue is that except for a few routes for P2P or to/from islands, only one cold hub can thrive in a region.

    Lightsaber

    AA is building up cargo and has built a couple of cold storage capabilities at PHL and I think one more, AA is big in shipping pharmaceuticals.

    Even has cold storage containers for transportation of cold items.

    https://www.google.com/search?q=america ... ld%20chain

    In 2018 AA achieved $1 billion in cargo revenue

    https://www.aircargoweek.com/1billion-o ... nes-cargo/
     
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    Re: How Little Cargo Revenue Really Matters For DL And UA

    Sat Jul 20, 2019 5:41 pm

    I'm not sure it is 'cargo', but does Delta still have "Delta Dash"? That has to be profitable!
     
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    Re: How Little Cargo Revenue Really Matters.

    Sat Jul 20, 2019 6:04 pm

    CALMSP wrote:
    advertising in the inflight magazine really doesn't do much as someone flying cannot simply go and drop something off at cargo. Its simply the current customers that DL has are the same customers day in and day out. its a matter of DL being able to price something higher to the forwarder if they use DL vs. AA, or any other airline.


    That's precisely why I specifically began with "Small item for sure..." One very minor item, intended to be taken in context as part of a bigger picture.

    To me, it seemed obvious that inflight advertising for DELTA CARGO wasn't aimed at me "the passenger." But what if "the passenger" was also a decision maker at any large or small company who was faced with a logistics need?
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    Re: How Little Cargo Revenue Really Matters For DL And UA

    Sat Jul 20, 2019 7:18 pm

    NYCAAer wrote:
    RDUDDJI wrote:
    But but but, A.netters said AA only flies RDU-LHR because of the cargo... :D

    ElroyJetson wrote:
    I was looking at both DL and UA's second quarter earnings statements and it was a bit surprising how little cargo contributes to the bottom line. For example, DL had revenues of 12.5 billion dollars and cargo only added 186 million dollars to that total. Put another way, cargo represented approximately 1.5% to DL's total revenue.


    I've been saying this for years (for US carriers). US airlines realized a long time ago that pax revenue is far more valuable than operating a cargo fleet. There's simply too much competition for intra-US cargo. Heck in a given week we prob have 5 different delivery companies delivering to our house.


    AA’s RDU-LHR also exists due to corporate contracts with Glaxo Smith Kline.

    I’d be interested to see how AA stacks up against DL and UA for cargo revenue. I know some routes do very well at AA for cargo- LHR-JFK, LHR-LAX broke a company record for the amount of cargo carried on a single flight, on a 77W. Most South American long hauls like GRU and EZE do well with cargo, as does CDG-JFK. When I fly as purser on those flights, the cargo envelope is bursting at the seams and you can tell we’re heavy because the 777s have a really long takeoff roll when the payload is greater. There are also international flights with a lot less cargo- BCN, FCO come to mind.

    I don’t know which routes are big cargo routes for DL and UA, but I would expect similar routes do well for them.

    EZE, LIM, MUC, and AMS those are some of the big DL cargo routes.
     
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    Re: How Little Cargo Revenue Really Matters For DL And UA

    Mon Jul 22, 2019 5:57 am

    I'd be curious to know what the US3's cargo revenue is as a percentage of their Atlantic and Pacific operations operations. I was going to calculate the numbers myself, but I haven't had the time. (Specifically: Cargo Revenue / (Atlantic + Pacific Operations Revenue)

    It wouldn't be a perfect comparison, but it would try to compare the widebody heavy operations versus freight...
     
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    Re: How Little Cargo Revenue Really Matters For DL And UA

    Mon Jul 22, 2019 1:55 pm

    res ads - it is always interesting to guess at who the target is. It can be the general public, employees, certain decision makers, etc.

    When doing fleet planning every route is probably specifically balanced between passengers and cargo. Alaska famously flies fish (but only for certain seasons) AA pharmaceuticals as noted previously. For most flights freight can be in the low single digits. Planners and sales people are likely always looking for opportunities, but the US is slim pickens for a lot of flights.
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    Re: How Little Cargo Revenue Really Matters For DL And UA

    Mon Jul 22, 2019 2:03 pm

    So how many fish does it take for Icelandair to be profitable on a route?
     
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    Re: How Little Cargo Revenue Really Matters.

    Mon Jul 22, 2019 3:05 pm

    ltbewr wrote:
    I suspect for some areas of the USA and elsewhere, postal mail and private express package services make up a significant amount of the 'belly freight' and helps airlines make money on some flights. The transport of postal mail is why some routes are subsidized under 'essential service' programs like here in the USA. However, the overall decline in the volume of postal mail due to the use of the internet to communicate or pay bills, shifts to the use of the private freight air carriers like FedEx, UPS, DHL, etc. has likely in turn affected the volume of belly freight. Over the years too, for safety, there has been a shift of freight to dedicated freight flights from belly freight on pax flights.


    I could be wrong, but I don't think any US Postal Service mail is transported on passenger flights in the United States.
     
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    Re: How Little Cargo Revenue Really Matters.

    Mon Jul 22, 2019 3:19 pm

    mcg wrote:
    ltbewr wrote:
    I suspect for some areas of the USA and elsewhere, postal mail and private express package services make up a significant amount of the 'belly freight' and helps airlines make money on some flights. The transport of postal mail is why some routes are subsidized under 'essential service' programs like here in the USA. However, the overall decline in the volume of postal mail due to the use of the internet to communicate or pay bills, shifts to the use of the private freight air carriers like FedEx, UPS, DHL, etc. has likely in turn affected the volume of belly freight. Over the years too, for safety, there has been a shift of freight to dedicated freight flights from belly freight on pax flights.


    I could be wrong, but I don't think any US Postal Service mail is transported on passenger flights in the United States.


    massive amounts of USPS is moved on pax flights in the US.
     
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    Re: How Little Cargo Revenue Really Matters For DL And UA

    Mon Jul 22, 2019 4:08 pm

    c933103 wrote:
    exFWAOONW wrote:
    Don’t forget, UA had dedicated cargo 720s and DC8s flying around until the mid 70s or so. One even made a daily appearance in FWA on its way to somewhere else. Whether you think it was short-sighted or not, they got out of the cargo-only operation. I would speculate there was a convergence of several factors in that decision, like fuel costs, replacement aircraft cost, economic downturns, etc.

    United States have dedicated freight transportation airlines and I suspect they have better cost structure to handle dedicated cargo operations than others that are not
    Are trying to argue that freight-only carriers have a better cost structure when they have only one revenue stream to amortize costs? How does that work when cargo operations are one flight per day at so many of their locations? Integrated carriers, on the other hand, have at least two revenue streams, more than one flight per day, more opportunities to move cargo, and staff that are there to cover both sides of the operation and not idle 20hours a day.
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    Re: How Little Cargo Revenue Really Matters For DL And UA

    Tue Jul 23, 2019 1:35 pm

    CALMSP wrote:
    royroy wrote:
    Also don't forget, corporate pax contract can also come with downstairs contracts aswell. Look at Astra Seneca and MAN-PHL


    not necessarily, unless Astra is a freight forwarder. Cargo needs to be shipped by a freight forwarder, not an actual company that produces the goods.


    There is nothing stopping a company from transacting with the airline directly. They are simply known as direct shippers. The company in question would only need to become a TSA Known Shipper and set up an account with the desired airline/s.

    That said, most companies use forwarders because managing logistics is a daunting task. Using forwarders takes the work and worry of logistics away from whatever company, allowing them to focus on their core business.

    77H
     
    CALMSP
    Posts: 2984
    Joined: Wed Aug 13, 2003 3:18 am

    Re: How Little Cargo Revenue Really Matters For DL And UA

    Tue Jul 23, 2019 1:39 pm

    77H wrote:
    CALMSP wrote:
    royroy wrote:
    Also don't forget, corporate pax contract can also come with downstairs contracts aswell. Look at Astra Seneca and MAN-PHL


    not necessarily, unless Astra is a freight forwarder. Cargo needs to be shipped by a freight forwarder, not an actual company that produces the goods.


    There is nothing stopping a company from transacting with the airline directly. They are simply known as direct shippers. The company in question would only need to become a TSA Known Shipper and set up an account with the desired airline/s.

    That said, most companies use forwarders because managing logistics is a daunting task. Using forwarders takes the work and worry of logistics away from whatever company, allowing them to focus on their core business.

    77H


    correct, but companies do not do that, and airlines would risk upsetting forwarders who give them business, but its really not worth it for a company to do so and manage the logistics of moving cargo, thus, 99.9% of cargo will always remain through a freight forwarder.
     
    zuckie13
    Posts: 164
    Joined: Fri Mar 02, 2018 8:23 pm

    Re: How Little Cargo Revenue Really Matters For DL And UA

    Tue Jul 23, 2019 1:52 pm

    Honestly, this is a silly argument. If you are an airline making 5-6% profit net (overall). then 1.5 to 2% of your revenue not being there would be a significant hit.
    Take 2018. Without United's measly 2.5% revenue of cargo, their NET profit would have been nearly cut in half.

    Comparing to the likes of an Emirates is also silly. Your comparing an all widebody fleet that flies almost exclusively to major international destinations, to a mixed fleet with tons of small domestic destinations.
    Last edited by zuckie13 on Tue Jul 23, 2019 1:54 pm, edited 1 time in total.
     
    smartplane
    Posts: 1024
    Joined: Fri Aug 03, 2018 9:23 pm

    Re: How Little Cargo Revenue Really Matters.

    Tue Jul 23, 2019 5:59 pm

    mcg wrote:
    ltbewr wrote:
    I suspect for some areas of the USA and elsewhere, postal mail and private express package services make up a significant amount of the 'belly freight' and helps airlines make money on some flights. The transport of postal mail is why some routes are subsidized under 'essential service' programs like here in the USA. However, the overall decline in the volume of postal mail due to the use of the internet to communicate or pay bills, shifts to the use of the private freight air carriers like FedEx, UPS, DHL, etc. has likely in turn affected the volume of belly freight. Over the years too, for safety, there has been a shift of freight to dedicated freight flights from belly freight on pax flights.


    I could be wrong, but I don't think any US Postal Service mail is transported on passenger flights in the United States.

    Mail volumes, if referring to envelopes, letters and cards, is flat-lining globally. The more developed the country, the faster the fall. In contrast, package volumes have increased (though not presently), but volumes are spread among many players, on super slim margins.
     
    smartplane
    Posts: 1024
    Joined: Fri Aug 03, 2018 9:23 pm

    Re: How Little Cargo Revenue Really Matters.

    Tue Jul 23, 2019 6:07 pm

    flyPIT wrote:
    [Qatar Airlines - primarily a passenger airline - just overtook UPS in the global cargo rankings.
    https://www.aircargonews.net/airlines/top-25-cargo-airlines-fedex-at-the-top-as-qatar-closes-in-on-emirates/

    Surely the ranking and volume changes reflect the country's blockade.
     
    77H
    Posts: 1443
    Joined: Mon Sep 19, 2016 11:27 pm

    Re: How Little Cargo Revenue Really Matters For DL And UA

    Wed Jul 24, 2019 3:07 am

    CALMSP wrote:
    77H wrote:
    CALMSP wrote:

    not necessarily, unless Astra is a freight forwarder. Cargo needs to be shipped by a freight forwarder, not an actual company that produces the goods.


    There is nothing stopping a company from transacting with the airline directly. They are simply known as direct shippers. The company in question would only need to become a TSA Known Shipper and set up an account with the desired airline/s.

    That said, most companies use forwarders because managing logistics is a daunting task. Using forwarders takes the work and worry of logistics away from whatever company, allowing them to focus on their core business.

    77H


    correct, but companies do not do that, and airlines would risk upsetting forwarders who give them business, but its really not worth it for a company to do so and manage the logistics of moving cargo, thus, 99.9% of cargo will always remain through a freight forwarder.


    Agreed. I was just pointing out that it is possible for any company to ship direct with the airline. While you are correct in that the majority of large corporations align with forwarders to handle their logistical needs there are quite a few smaller companies who prefer to do things in house. Some of my largest cargo shippers in the sub region I’m based in are direct shippers, some of which push close to $2M in annual spend. All depends on preference. And while you do risk upsetting forwarders, some direct shippers simply will not use them. In those cases it’s no harm, no foul.

    77H
     
    b747400erf
    Posts: 3136
    Joined: Wed Jun 19, 2013 4:33 am

    Re: How Little Cargo Revenue Really Matters.

    Wed Jul 24, 2019 6:04 pm

    mcg wrote:
    ltbewr wrote:
    I suspect for some areas of the USA and elsewhere, postal mail and private express package services make up a significant amount of the 'belly freight' and helps airlines make money on some flights. The transport of postal mail is why some routes are subsidized under 'essential service' programs like here in the USA. However, the overall decline in the volume of postal mail due to the use of the internet to communicate or pay bills, shifts to the use of the private freight air carriers like FedEx, UPS, DHL, etc. has likely in turn affected the volume of belly freight. Over the years too, for safety, there has been a shift of freight to dedicated freight flights from belly freight on pax flights.


    I could be wrong, but I don't think any US Postal Service mail is transported on passenger flights in the United States.

    It would be so easy to find out this fact before posting

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