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Feature: profiting from cargo
12 October 2010
Peter Morrell of Cranfield University looks at the financial performance of air cargo carriers.
The airline industry is not noted for its profitability or
return on capital and the cargo side of the business is no
exception. Making a profit from carrying air cargo whether on
dedicated freighters or in cargo holds of passenger aircraft is
challenging, but there are some successful business models.
Those airlines that carry only freight have often struggled
to stay afloat financially, not least because of the frequency
of major industry downturns. Many new entrants have failed in
spite of the strict financial fitness tests that are often
applied by licencing authorities.
This does not seem to deter potential further start-ups and
capital has been surprisingly forthcoming, given the patchy
financial performances. The availability of suitable aircraft
on operating leases has encouraged new entrants because of the
reduced capital requirements.
The recent overall financial performance of cargo airlines
compares favourably to the industry as a whole. Based on
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