Cargo/Package payment ideas

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MMattyK
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Re: Cargo/Package payment ideas

Post by MMattyK » Tue Jan 28, 2020 8:39 pm

So where are all those available packages stored if not at warehouses?
Airlines purchase them, so why not give those airlines who purchase these warehouses a bonus when it comes to cargo as they not only have to purchase a warehouse, but also pay regular rent on their warehouse.
In fact, unless an airline has a warehouse at the departure airport, should it be allowed to carry anything but generic cargo?
It might also be an idea the categories warehouses not only by size, with the size of packages that can be held. but also by what is held for transport as in national destinations, continental destinations and intercontinental destinations.
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Cat
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Re: Cargo/Package payment ideas

Post by Cat » Fri Feb 21, 2020 5:08 pm

Another example today: Flew the Boeing B736 with 94 pax on board and nearly full load of packages from KBOI-KIDA and made $820,400 (multiplier at standard - 25). The flight back had the same passengers but no packages available and the flight only paid $285,425. So the difference between generic cargo and package cargo is HUGE. For those who have to "deadhead" a freighter (with no passengers and only generic cargo), you are going to see an even larger discrepancy between generic and package cargo.

One more question: do economy seats pay more than generic cargo now? Would it be in our best interest to max out the pax when package cargo is unavailable? We tend to fly more first and biz class in order to free up cargo space but if generic cargo is paying so low now, that plan is no longer effective, yet the math says a plane with say "5 first" or "10 biz" and cargo will make more than 20 "economy" and cargo as the ticket income remains the same but there is more room in the first/biz plans to haul additional cargo...... low numbers are just an example, not indicative of how smaller planes would do as many times they don't fly to destinations that will support the first class pax numbers and/or their cargo capacity is too low to reap any benefit of changing out seats to higher paying pax. The only benefit would be fuel savings as the gross weight would be less.
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Re: Cargo/Package payment ideas

Post by joefremont » Sat Feb 22, 2020 6:11 pm

Well currently the payment of packages is about the same as a first class passenger, Generic cargo is around an economy passenger. The formula for generic cargo is linked to the standard ticket price and at 2000kg its equal, at 0kg its 1.5x and as the amount of cargo increases it will limit down to 0.75x .

When I was initially working on the package system I envisioned teams of pilots picking up packages at remote airport, flying them to a hub and the flying back to the remote airport and wanted the package revenue to be worth the effort. So if you manage to pick up cargo and can fly it directly, its very profitable. I do admit that after spending the time I did on the package system, I wanted it to be used and worth the pilots time. But have we gone to far, is anyone using airport hubs for packages in the way I though they would? It would be easy for me to just reduce the multipliers I use when calculating the value of new packages so they are not quite so rich.
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Re: Cargo/Package payment ideas

Post by joefremont » Thu Apr 30, 2020 3:28 pm

I'm still thinking about this, part of me its just trying to fix some inconsistencies in the process.

Granted in the real world, someone goes down to there UPS/FedEx/DHL/Post office and wants to ship something, they hand it over to the workers there and those workers know exactly how that package its going to get to its destination, maybe not each personally but they will send it on the truck to a distribution center and the flights that carry it to its destination are already scheduled and will fly on time.

But in our FSA world its not as simple. In our world, someone goes down to the airport and hands there package over to the local shipping agent, they accept it and wait for a flight heading in that direction, or at least willing to take it. That agent would certainly take a percentage above the normal price for arranging things, say 20-25% so lets go back to my initial example. Someone in San Francisco wants to send to New York and the normal charge is 1518v$, they then drop it off in Chicago, the shipping agent there would charge 900v$ (25% markup) and the profit would be 618v$.

Now an argument against that is if that agent in San Francisco can't find a shipper they can call the sender and say 'We could not find someone to take your package, come back to the airport and collect it'. But in the above scenario, it would be 'We could not find someone to take it and by the way your package is in Chicago'
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Cat
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Re: Cargo/Package payment ideas

Post by Cat » Thu Apr 30, 2020 6:50 pm

I personally think the payoff on package cargo is too high and airlines flying passengers will be wanting to get into the cargo biz ASAP after seeing this.

Yesterday a pilot (our airline owner) flew a Boeing 777-200LR with 296 passengers from Las Vegas NV to Frankfurt Germany and made $16,292,150 after paying flight expenses. He had on board 71,871 lbs of package cargo. The flight took 10.7 hours. He made $1,511,630 per flight hour.

Using the cargo rate in the flight report and taking an average per pound of package cargo I came up with these figures for an all cargo (777F) flight:

777F with all generic cargo: $14,345,325 after expenses (including the catering which would not have billed) = $1,240,684 per flight hour.

777F with all package cargo at the average rate based on the flight above: $37,252,223. = $3,481,516 per flight hour.

Perhaps the package cargo needs to be scaled back to business class level instead of first class level?

On another note, the delivery time window just does not allow most VA's to even consider hub ops as by the time pilots fly regionals to a hub to fill a jumbo, those packages may already be expiring before the jumbo ever pushes back for the "main flight". If one wanted to really promote a hub type system, then standard packages need a longer shelf life than 4 days, say 7. Priority I'd keep at 2 days.

[EDIT] - all final income figures using the standard 25x multiplier
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Re: Cargo/Package payment ideas

Post by BVU-951 » Mon Jan 18, 2021 6:10 pm

joefremont wrote:
Sat Feb 22, 2020 6:11 pm

When I was initially working on the package system I envisioned teams of pilots picking up packages at remote airport, flying them to a hub and the flying back to the remote airport and wanted the package revenue to be worth the effort. So if you manage to pick up cargo and can fly it directly, its very profitable. I do admit that after spending the time I did on the package system, I wanted it to be used and worth the pilots time. But have we gone to far, is anyone using airport hubs for packages in the way I though they would? It would be easy for me to just reduce the multipliers I use when calculating the value of new packages so they are not quite so rich.
At BVG we do exactly this, fly the A225 to one of our hubs, full of packages to be delivered within 1000 nm of the Hub then smaller aircraft make the deliveries. Was great fun, please do not change anything.
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Re: Cargo/Package payment ideas

Post by Zehvra » Sat Jan 23, 2021 2:23 pm

I have a similar setup and I agree the current system is good.

The cargo jobs gives variation between the types of planes used and you do not always fly to the same destinations.

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