[Notes] Chapter 7 : Air Transportation

AIR TRANSPORTATION

Air transportation has been the single most significant development in logistics of this century. While other modes of transport are seeing growth resulting from increased international trade, the air cargo is experiencing exceptionally high growth. 

PRIMARY REASONS FOR THE GROWTH IN AIR CARGO:

• -      Deregulation and liberalization of the air cargo industry.
• -      Global interdependence helped by world trade agreements.
• -      International production and sales of goods and services.
• -      New inventory management concepts such as “JIT” and “ZERO” stocks.
• -      New air-eligible commodities.
• -      The vast development of high value and limited time-consumable commodities

 AIRPLANES AND AVIATION EQUIPMENT  

BELLYSPACE

§  This is the space in the belly of a passenger plane, normally used for luggage. About 60% of air cargo moves in luggage compartment. Cargo, unlike luggage, is not accompanied by the sender, more handlers, different and more documentation.

     FLEXBELLY

§  Some planes are basically passenger planes, but the interior can be adjusted to include more or less space for cargo or passengers.

      FREIGHTER

§  This is a plane used just for cargo. Often a passenger plane towards the end of its useful life is converted into a freighter. Freighter planes built just for this purpose normally would not include windows, since there is no need for windows along the body of the plane. 

      TRUCK

§  What many do not realize is that a lot of ‘air cargo’ actually goes by truck. Major airlines have been replacing their large planes with smaller planes for shorter flights. This reduces cargo space available, and thus means air cargo companies need to find a quick alternative. 

MARKETS IN AIR CARGO

  Mail – monopoly market of the official postal service in a given country 

  Express transportation – the speed of the delivery is crucial. The package is promised to be delivered at certain time.

Courier – advance and 10 times more expensive than express service and there is no need to develop tracking services.

 Freight – moves larger package that would be too expensive to be sent through air express.   

FACTORS OF AIR CARGO RATES

  Volume of traffic. – The higher the traffic volume, the cheaper it is to provide service, and thus the service is cheaper.

  Direction of traffic. – While passenger normally travels round trip, cargo does not. Many trade lanes have more traffic going one way than the reverse. 

  Value of the service. – This is determined not just by the airlines, but the needs of the customers.

  Competition. – Carriers cannot avoid the influence of other carriers in determining their rates.