Cargo/Package payment ideas

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Cargo/Package payment ideas

Post by joefremont » Mon Jan 13, 2020 6:26 pm

Hi Flyers,

I had a brain wave last night about our cargo system and they way some pilots have had problems with it. Two issues I see with the current system are:

if a pilot gets a package closer to its destination, why should they not get paid something for that?

And:

If a pilot arrives at an airport carrying a package from very far away, and another from not so far away selects the option for local delivery to the same destination, why should the local delivery company get different amounts for each package (currently they get 1% per nm)?

The idea I had to solve both issues is basically this. A pilot picks up a package in one location then wants to drop it off at a different location that is not the packages final destination, the amount of v$ collected would be the difference between the original location to the final destination and the current location and the final destination. Lets show a few examples of how that would work:

First lets say a pilot picks up a package in San Francisco going to New York and then flies to Chicago. The cost of shipping a 200kg package from KSFO to KJFK is 1,518v$, the cost of shipping that same package from KORD to KJFK is 720v$, so if the pilot drops that package off at KORD they would earn 798v$.

Likewise a pilot picks up a package in New York going to Chicago and then flies to San Francisco. The cost of shipping a 200kg package from KJFK to KORD is 720$, the cost of shipping that same package from KSFO to KORD is 1,194v% so for that the flight would cost the airline 474v$.

For local delivery we would just use the same formula for figuring out how much it would cost. Lets say a pilot picks up a 200kg package in New York for Oakland California, flies to Los Angeles picks another 200kg package for Oakland then flies to San Francisco. The cost to ship from KJFK to KOAK is 1512v$, the cost to ship from KLAX to KORD is 552v$ and the cost to ship from KSFO to KORD is 348 v$. So for the package from KJFK the flight would earn 1164 v$ (1512 - 348) and for the package from KLAX the flight would earn 204v$ (552 - 348).

If when a package is dropped off its within 100nm of its destination it would disappear from the system as ground transport has now taken over, but if the distance is greater than 100nm it would be reset so another airline could pick it up and carry it the rest of the way.

Penalties for holding packages too long would still apply and be applied to whatever you would earn before the cost to ship it to its final destination.

What does everyone think of this idea?
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Re: Cargo/Package payment ideas

Post by Cat » Mon Jan 13, 2020 6:49 pm

Does this mean the billings will be posted instantly for connecting flights instead of waiting for the package(s) to be delivered to final destination? Or is it just a change of billing protocol?

What happens if I take a package from JFK to ORD that is going to SFO and the next guy decides to fly it to Hawaii first before landing SFO?

Will that affect the pay my flight earned?

so say our cargo hub is in Dallas We fly JFK to Dallas then split a load and fly part of that same load to Chicago and the other part to Seattle
how would that pay out?

[EDIT] ahhhhh I get it now ..... you are removing the extra mileage loophole currently being exploited. While the flight from JFK to SFO actually looses $474, the flight back to ORD picks up the $1194 income so the NET income for the package to the airline is still as if it had been delivered direct $720. So this proposed new plan will penalize pilots flying TO their hubs if the package is off a direct line and reward pilots delivering FROM hubs to final destination. It will make the system evolve eventually into a more direct only type freight system vs. a true hub based freight forwarding system.

I think pilot pay should not be connected to flight revenue either ..... if the pilot is paid by the mile/km based on the direct distance point to point instead of a percent of flight income, then they won't care if they are flying packages making negative revenue on their leg but overall revenue for the company once the packages have been delivered. It will then be up to the company freight managers to determine if packages should be hub routed or direct routed, based on the overall costs involved. Pilot pay per mile will also be a deterrent to the "3 mile club" that flies a ton of short flights to make more money. Long hauls in smaller planes will also cost the airline more as the pilot is still getting paid per rank. Set a range of pay per mile/km airline operators can work with so lower rank pilots can be paid less than higher ranking ones if the airline owner/operator so chooses.
[EDIT AGAIN sorry]
OK here's some comparison's showing the huge differences in pilot pay with the current system. All of our pilots are paid 10% regardless of rank.
737 pilot made $7,729 flying 924 nm = $7.94 per nm. 747 pilot made $26,365 flying 1251 nm = $21.08 per nm. 747 cargo pilot made $117,693 flying 2148 nm = $54.79 per nm. Single Engine Pilot made $212 flying 43nm = $4.93 per nm DC3 pilot making final package delivery made $559 flying 60nm = $9.32 per nm. Same DC3 pilot flying a twin turboprop 18 pax plane with pkg cargo made $911 flying 311nm = 2.92 per nm, made $521 flying pax/generic cargo 285nm = 1.82 per nm

[one more edit] Before everyone goes ballastic about taking away pilot "profit sharing", I am only pointing this out to show how much more cargo pilots make than passenger line pilots, regional pilots or small GA based pilots. The package cargo system is overly balanced to favor cargo haulers in my meek opinion. I think pkg cargo should be 2 times generic cargo and generic cargo should be the same as economy seats taking up the same weight in the airplane. So a cargo only airplane loaded to max zero fuel weight with package cargo would be making slightly more than a full load of all biz class passengers, unless the passenger plane's cargo hold was also full of pkg cargo in which case they would both make approximately the same income for the same route.
Last edited by Cat on Mon Jan 13, 2020 9:26 pm, edited 2 times in total.
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Re: Cargo/Package payment ideas

Post by joefremont » Mon Jan 13, 2020 7:45 pm

Hi Sam,

Not exactly, if the VA retains the package all the way to its final destination, things stay as they are now. This idea only takes makes a difference where the pilot 'delivers' or 'releases' the package short of its destination.

Edit: Lets say in my first example the package from KSFO to KJFK first goes to Dallas and then Chicago, where is is released. The 798v$ earned would be divided between the two flights based on distance.

Edit: The idea of disconnecting pilot pay from flight revenue is not a bad one, does in the real world two pilots with the exact same experience and rank, but one flying a 737 and the other flying a 767 make different money for the same length flight or make different money if the plane is empty or not? Since in this case the pilot is also the scheduler it makes more sense to tie pilot pay to profit but giving the option to pay the pilot based on hours or nm's is not a bad idea

Edit: Back in the day, did two British Airways pilots, one flying a 747 and the other flying the Concorde, with the same experience make different pay on the EGLL to KJFK route?
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Re: Cargo/Package payment ideas

Post by Cat » Mon Jan 13, 2020 9:29 pm

Equipment flown would/could certainly change the pay scale, it would all be based on the union negotiations. So perhaps leave well enough alone before the FSA Pilots Association wants a new CBA. :shock: :lol:
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Re: Cargo/Package payment ideas

Post by Cat » Mon Jan 13, 2020 9:31 pm

It would be nice as an "Advanced Financials" option tho. income % or "flat rate" per nm/km. Tying pay into equipment flown would be an administrative nightmare for our purposes as we fly for enjoyment and may go from a Cessna to a jumbo jet in the same day. So for our purposes it may be beneficial if some want "equal pay for equal experience" to set flat rates per nm/km based on hours flown. Hit 100 hrs you get a pay raise, hit 250 you get another and so on and so forth. This way the high time pilots (airlines that use 16X you are on your own figuring that out) are being paid the most, as they should for their loyalty to the airline.
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Re: Cargo/Package payment ideas

Post by Cat » Mon Jan 13, 2020 9:45 pm

Back to the topic at hand, I was confused about the purpose of the new proposal. We have always operated under the theory that once you take a package you either release it immediately, deliver it on time or release it/hold it past the cutoff and face the negative financial consequences.

So you are proposing a new release system where we can fly something halfway, release it with no consequences and still get paid for the leg we flew it? If I were the customer I would not be happy to know my package is stalled at some halfway point waiting for someone else to pick it up.
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Re: Cargo/Package payment ideas

Post by Cat » Tue Jan 14, 2020 4:11 am

After discussing in our pilot chat room tonight, the % pay is still the most fair. Cessna pilots should not make the same as 747 pilots. So Disregard all my previous jibber jabber...... sorry :shock:
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Re: Cargo/Package payment ideas

Post by joefremont » Thu Jan 16, 2020 10:55 pm

I came up with this cargo idea because there are some pilots who for reasons of language or other limitations seem incapable of understanding how it works, and I was trying to think of a way to make it simpler to use. You may have seen the post from our german friend, he seems to just loads package at random into the aircraft and then gets angry when he can't load any more, cause the hold is full of packages going everywhere but where he wants to fly.

But another VA was interested in collecting the packages from the hinterlands into a major airport but not interested in taking it across the Ocean so if they could take them to a major airport and then have another VA take it the rest of the way, it may be of some interest to some pilots.

If we were to do this, and I am not saying we will, some additional penalty for releasing the package short of its destination would probably be in order, maybe 10-20% that would be held back for the VA that takes it the last mile or just some reduction to the money the pilot releasing the package would get.

Again, just an idea I was thinking about I wanted to get some feedback on.
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Re: Cargo/Package payment ideas

Post by joefremont » Sat Jan 18, 2020 5:39 pm

Couple more things to add to the idea.

I figure the cost of ground delivery will probably be same as air freight at about 100 nm distance, so the cost of delivering a 200kg package would be about 4v$ per nm, different size packages would have different formulas but would maintain the same basic formula that 100nm would be the same for ground and air..

When a package is taken to that other airport and 'delivered', it is given into the hands of a local shipping agent, who will of course want something for there efforts, say an extra 10% so in that case the package going from KJFK to KSFO via KORD. It starts at 1518v$ for sending it from KJFK to KSFO, then at KORD the normal charge would be 1182v$ but the shipping agent would want 119 additional to take it off your hands so the airline for that leg would get only 217v$ compared to approximately 240v$ for generic cargo (depending on load).

Going the other way (SFO to JFK) same base cost of 1518 but to ship from ORD to JFK is 720 so the agent would want an 72 to take it off your hands so your profit would be 726 compared to about 396 for generic cargo.

Edit: At 20% charge the airline would get 99v$ to take theNYC to SFO bound package to Chicago or 654v$ to take the SFO to NYC package Chicago.

Edit again: Again assuming 20% fees, lets say a package in London/EGLL needs to go to Oakland/KOAK but is going to make a lot of stops, normal direct EGLL to KOAK would be 2880v$ but the profit on each of its legs:
New York/KFJK 1065v$ (2413 nm closer)
Miami/KMIA -303v$ (3 nm further)
Chicago/KORD 86v$ (645 nm closer)
Los Angeles/KLAX 525v$ (1300 nm closer)
San Francisco/KSFO 494v$ (284 nm closer)
(the last leg was ground delivery to Oakland, 58v$ for 9nm),
Combined all the airlines earned 1867v$, 1013v$ less than if someone had just taken it directly

So far Sam is the only one who has commented on this, and it did not sound like she was in favor of it, so unless there is some interest I am not sure if I will do it.
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Re: Cargo/Package payment ideas

Post by Cat » Mon Jan 20, 2020 4:00 am

I'm thinking "non delivery" of packages should be more than just a fine, maybe a 1 pt airline reputation hit? I can hear the big airlines screaming alreay so maybe not :lol: And the system would have to decipher the difference between non delivery and early release.
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Re: Cargo/Package payment ideas

Post by AdySmith » Mon Jan 20, 2020 8:54 am

Another thought on packages.

I am at Glasgow EGPF, flying to JFK.

If there are packages at Edinburgh (EGPH about 30 NM from Glasgow) needing to go to JFK how about I get the option of them being ground transported to Glasgow so I can fly them to JFK?
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Re: Cargo/Package payment ideas

Post by MMattyK » Tue Jan 21, 2020 7:18 pm

A further idea regarding packages/cargo,

If an airport increases its cargo capacity by an airline building a warehouse, does the package availability increase at the airport, or indeed does the airline get requests to deliver cargo, rather than collect it from the generic cargo availability or by having a warehouse; at other destinations does the incoming cargo potential increase because of the warehouse capacity?
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Re: Cargo/Package payment ideas

Post by joefremont » Tue Jan 21, 2020 7:41 pm

Right now warehouses do not affect the number of packages, number of flights do and flights between airports will add packages on that route. I suppose having a warehouse at an airport would tell those nearby that they can ship there package from that airport, so it would not hurt to have that as part of the formula, will look into that.
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Re: Cargo/Package payment ideas

Post by MMattyK » Tue Jan 21, 2020 8:01 pm

Thanks Joe :)
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Re: Cargo/Package payment ideas

Post by Cat » Mon Jan 27, 2020 3:22 am

I've been crunching numbers again and the package system is tilted way in favor of all cargo operations now. For example, our 737-600 which can convert to all pax or all cargo or anything in between makes $2100-$2300 per flight mile flying standard pax config with generic cargo. All cargo operation it makes $3500-$3800 per flight mile. This equates on a typical 400 nm trip to a $560,000 difference between pax and cargo flying the same plane on the same route.

calcs made using standard 25x multiplier

In a further breakdown, those pax flights with little or no package cargo are making about $530,00-$570,000 per flight hour whereas the all cargo flights are making $919,500 - $957,964 per flight hour. data based on flights of 347-397 nm

Just an FYI for all those pax haulers out there who think they are now getting the short end of the stick...... you are. :lol:
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