MANAGING AIR CARRIERS

      How do the changes in the industry affect shippers who want to use air cargo services? This has be a rapidly growing industry for a few reasons:

• Increased demand for premium service. There is an increasing number of people in the world who can afford the benefits of premium service and want the luxury goods that can afford the benefits of premium service and want the luxury goods that can best be provided by air cargo.

•  Increased service. There has been an overall increase. There has been an overall increase in the flight industry, including many new routes and increased services on routes.

• More competitive service. The business environment is less regulated and more competitive, which translates into reducing costs.

•     Carrier integration. Air cargo carriers, rather than operating independently as airlines used to do, are now part of integrated carriers that increase the value of air cargo services.

Carriers are becoming much more advanced and the range of services has been increasing. The variety of services range from next flight out to next day delivery to the cheapest and slowest service available.  In Hong Kong, one air express company is now using convenience markets to drop off urgent packages where they pickup three times daily.

Shippers make a choice on how to transport cargo, so it is helpful to see how air cargo compares to other modes of transport. Competition among the different modes of transport has caused them to change their operating methods. One reason ships are more schedule conscious is because of competition from air cargo service. This competition between air and sea is not very strong for the simple reason that there is a very large difference in the cost and service provided by the two. Small differences in air cargo rates are not going to have much of an impact on ocean cargo that is only a fraction of the cost. The service provided by ocean carriers could not come close to the speed of air cargo.

There is more competition between air service and trucking service over short distances. As already mentioned, air cargo is sometimes trucked if the distance is not too great, and there are no natural barriers. This is common in the US and Europe. Trains are rarely a viable alternative because their service is too slow and inflexible. Air cargo is seeing some competition from non transportation industries, particularly the fax and internet. These new technologies are the main threat to air express, mail and courier services.

Air cargo carriers can save money in the planes used, and the fleet selected. Older planes can be acquired more cheaply, but use up to 40% more fuel than new models. Having a standardized fleet makes maintenance and personal cheaper. Cargo planes may either be retired passenger planes, or custom designed cargo planes.