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Jason

Maybe it is my overally simplistic view of the world, but I am confused by the fact that the passenger airline industry continues to lose money year after year while freight airlines (Fedex, UPS, DHL, etc) seems to produce profits.

How is hauling human cargo that much more of a challenge than hauling any other cargo?

Joe

An interesting question. One think I can think of immediately: a freight airline doesn't have a chance if it doesn't have national scale. There's little value in a company like that if they can only deliver to five cities. So right off the bat, it makes barriers to entry much higher.

Vincent

Yes Joe, I think you're right. With air freight, you drop a package off at the airport and let it walk itself to its final destination. You thus need a pretty complex logistics management system. No only do you fly the package from pt A to pt B, but you also need to get all the packages to the airport, consolidate them, and then later de-consolidate and get them to each destination's door. Thats really where the barrier is. I think it helps a lot to both own the planes and have the pt to pt logistics down pat. If you just owned the planes and tried to do a few high volume routes, maybe it would work, but I would imagine you would end up giving up a lot of margin to logistics players. So a start up needs not just the planes and a few routes, but also a system for consolidating and deconsolidating packages to and from the airport.

Vincent

My comment above was meant to say "you CAN'T drop a package off and let it walk itself..."

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