Increasing cargo

My biggest problem with flying long haul is the cargo part. I don't have problems filling up the economy and business seats in a 788 or 789. But I hardly reach 20% load factor on cargo. Resulting in a big loss on cargo and therefor in a negative profit margin for the entire flight.

I'm wondering what would the best way to increase the cargo on long haul flights?

- By interlining more

- By interlining more with cargo specific companies

- By leasing/buying more passenger planes with some cargo loads

- By leasing/buying cargo planes for small/medium hall routes

My transfer statistics (both departing and arrival) are around:

PASSENGER

Internal: 56%

External: 17%

Direct: 27%

CARGO

Internal: 25%

External: 22%

Direct: 53%

I have around 5.000 departures using 160 E-jets and 113 B737 (all versions, but mainly -700's). I also have 3 788 and 2 789 but finding problems getting enough cargo. What would be the best way to proceed and solve this problem?

What airport are you at? An option would be to find some 737 cargo planes (either old or new), to feed the passenger planes.  And basically it dosent matter wether your cargo planes will be loosing a bit, just as long as they are increasing the general cargo problems in your company.

(What server are you at? If Gatow, I can help you with my cargo company!)

With E-Jets and mostly 737-700s you hardly have any aircraft feeding cargo for your 787s.

It might take a LOT more feeding capacity to fill your long haul 787s.

My suggestion would be to focus on pax and see each unit of cargo as a bonus. If you’re not able to fly profitable with pax only you certainly should review your prices. If nithing helps, then you might consider getting rid of your 787 - replace them with 73J wherever possible.

Or search for a cargo supplier at your hub :)

There are a lot of airports that have high passenger demand and very little cargo demand. Only a few have very high for both, and those fill up very quickly. Their slots are a premium because they are attractive to everyone. It does depend greatly on what airports you are flying between, and also your interlining partners to a lesser extent.

Also, drop your prices if needed. For my 788s, I am usually running $30-$60 under the 'default' price. This, coupled with good interlining at strong cargo airports (nothing under a 7), should net you full cargo all the time. Don't think of cargo as a money-maker if you are a passenger airline. It will be good to just break even on the costs for cargo. This lowers your split costs on passengers and increases profits.

Remember: 50/100 cargo at $175 makes you less than 90/100 at $100. It's not necessarily about the price. It's about the math.

I'm playing at Pearls. With a cargo capacity of three times nothing, I'm transporting 11,960 cu of cargo per week, I am the biggest cargo operator on that airport. Number two I have an IL with. Although I good and simple idea, it doesn't work. Another problem is that I can't replace my 787s with 73J as I'm operating from Florida. The reach of the 73J is simply not good enough to fly to Europe. So only the upper part of South America is within reach. I already dropped the prices of cargo significantly, but still only max. 30% cargo load factor, although I have a cargo image of 81% (5 green bars). 

I'm testing with less comfortable seats for long haul. The more seats, the more money. Problem now is that I find it difficult to sell all seats. So I have to drop prices and I'm wondering whether that will solve the issue. The interesting part is that with another subsidiary, I'm flying with 14 MD11 and I have sort of the same problem. Passengers seats are full, cargo is empty. But with the MD11 the passenger income is more than enough to cover the cargo losses and having a descend profit margin. The difference is that I own all of the MD11, but still not a bad job for such an old plane compared with the 787.

I might try the A330 as an alternative for the B787 if my test with smaller seats and lower prices doesn't work out.

Thanks for your help all.

... Also, drop your prices if needed. For my 788s, I am usually running $30-$60 under the 'default' price...

Hi,

passenger planes get a very low ORS rating for freight. Doing what Caithes says will increase your ORS rating enough to attract cargo.

Jan

With a cargo ORS of 93 and lacking competition on a lot of routes, I don't think the ORS is the problem. I don't think increasing the ORS with 6 points will make the difference.

...

Remember: 50/100 cargo at $175 makes you less than 90/100 at $100. It's not necessarily about the price. It's about the math.

But math could be a dangerous thing if you don't take all variables into account. ;)

 I don't have problems filling up the economy and business seats in a 788 or 789. But I hardly reach 20% load factor on cargo. Resulting in a big loss on cargo and therefor in a negative profit margin for the entire flight.

Your issue isn't the lack of cargo.

It's easy to earn money with a 787 without even one cargo unit sold.

With a cargo ORS of 93 and lacking competition on a lot of routes, I don't think the ORS is the problem. I don't think increasing the ORS with 6 points will make the difference.

Hi,

you are right. ORS is not the problem. I guess you have already lowered your cargo prices well below the default price  ;-)

Jan

Your issue isn't the lack of cargo.

It's easy to earn money with a 787 without even one cargo unit sold.

Than please explain, cause its not working for me.

Than please explain, cause its not working for me.

The 787-8 offers for almost all kind of long haul operations the lowest costing.

i will show to you an example:

airlinesim divides all fixed costs (as leasing and crew) and all flight-related costs (as fuel and ATC) between the different passenger cabins and the freight with a mysterious formula based on weight:

				Passengers		Cargo		Total
				126,654 AS$		5,970 AS$ 	132,624 AS$
Costs
Variable Costs 		        8,884 AS$	 	750 AS$	 	9,634 AS$
Flight-related Costs		41,210 AS$ 		14,574 AS$ 	55,784 AS$
Fixed Costs 			34,982 AS$ 		11,654 AS$ 	46,636 AS$
Result
Total 				+41,577 AS$ 		-21,008 AS$ 	+20,569 AS$
Margin 				+33%			-352%		+16%

f i am  calculating on my own all fixed costs and flight-related costs towards the passenger cabin, i will get the following numbers:

				Passengers		Cargo		Total
				126,654 AS$		5,970 AS$ 	132,624 AS$
Costs
Variable Costs 		        8,884 AS$	 	750 AS$	 	9,634 AS$
Flight-related Costs		55,784 AS$ 		0 AS$ 		55,784 AS$
Fixed Costs 			46,636 AS$ 		0 AS$ 		46,636 AS$
Result
Total 				+15,350 AS$ 		5,220 AS$ 	+20,569 AS$
Margin 				+12%			+87%		+16%

These numbers are showing: the passengers pay all the bills and the cargo offers some extra.

if you are doing this for your flights, you should get an idea how much loss the passengers are creating.

But also this is misleading. From my point of view, there should be some flight-related costs and fixed costs listed within the cargo column, but i don't have an idea how to divide these costs.

Thanks andreamilano. This was new to me and help explains my problem.

The 787-8 offers for almost all kind of long haul operations the lowest costing.

i will show to you an example:

airlinesim divides all fixed costs (as leasing and crew) and all flight-related costs (as fuel and ATC) between the different passenger cabins and the freight with a mysterious formula based on weight:

...

Nothing mysterious to this formula.

When I created a new formula for a more suitable "minimum price" I had to split cargo and pax in a suitable way.

Naturally, as pax and cargo run parallel, there is no real "correct" way to split costs in a correct cost accounting to fit everyone's need.

The formula in an effort to find an ok minimum price was simply:

[% of costs for cargo] = [max. cargo load] / [[max. pax capacity] + [max. cargo load]] * 100%

For the 788 cargo % on fixed costs, it goes: 12,800kg / [(381pax)*(95kg/pax) + 12,800kg] * 100% = 26%.

In your screenshot, you find this % when comparing the flight-related costs.

Sure, this formula is way from being "correct" all the way - there's no real "correct" way to spread costs throughout the entire aircraft in AS due to a lack of data as in AS cargo has no dimensions (you'd need to know stuff like volume or area of capacity, not just payload).

The known issues when using this formula are:

- belly cargo gets financially burdened to a somewhat large extend (again, this in an effort to create a useable "minimum price")

- belly cargo costs are particularly high on large aircraft with little total payload. Here the 748i comes to mind when compared to a 748F.

This all never was a real problem until the team decided to introduce a detailed flight costing.

The result can be seen in threads like this. Most players get confused by deeply red cargo-costs as they might not understand what those numbers actually tell.

But actually, everything above 25$ (logistics) for a cargo-ticket earns you dollars for cargo.

Players just need to be above "minimum price" in order not to create unfair competiton to all-cargo aircraft.