Domestic Air Cargo Industry in Australia - Bureau of Infrastructure ...

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Chapter 7carried at the published rates and that discounts of up to 80 per centare provided by the two major airlines where substantial accounts areinvolved (Gawan-Taylor 1984a, 19; Shires 1985; Transport andDistribution Letter 1986b, 2). Similar discounts are provided toshippers by forwarders.The extent of discounting is illustrated by rates for movement fromSydney to Melbourne provided by one forwarder contacted during thestudy. In late 1986 the average basic charge paid by shippers was 51per cent below the company' scheduled charge and the average rate perkilogram was 60 per cent less than the rate in the forwarder'spublished schedule.Shippers with large amounts of cargo are able to negotiate discountswhere they require regular runs as a steady volume of base cargo has afavourable effect on carriers' cost structures. This is in contrastto irregular shipments where variability in traffic imposes some extracosts on carriers. Similarly, discounts are available where a shipperis prepared to accept longer delivery periods as this facilitates theuse of otherwise under-utilised capacity.Where there are significant imbalances in cargo flows, there may alsobe substantial variations in rates. Industry sources indicate that inlate 1986 the rate into Tasmania was around $1.20 per kilogram whereason the return leg where cargo was 1 imited the rate was only 30 centsper kilogram. Backhaul rates are generally 1 irniteci to lower ratedcomodities as carriers do not want to dilute their revenueunnecessarily by providing low rates for high value comnodities whichwould continue to travel at the higher rates. Where ground costs area high proportion of total costs, lower linehaul costs associated withexcess capacity may not be reflected fully in freight rates.There are still some links between rates and comnodity type. Forexample, perishables receive high priority and a low rate inrecognition of the fact that the trafficis economical for theairlines to carry but very price-sensitive. Officials from onecarrier contacted during the study indicated that they were trying tolink urgency and service requirements (for example, cold storagefacilities at.terminals) to price and eliminate the links to comnoditytype. However, it was recognised that the extent to which this couldbe achieved was limited by the constraints imposed by demandelasticities.Rates on particular routes may be reduced be1 ow attributable costswhere a large national shipper is involved. The most comnon case isservice to a centre such as Darwin which incurs high operating costs.57
Occasional Paper 87If a shipper has large quantities of traffic moving to other locationswith a carrier, the operator may heavily discount rates on theexpensive leg in order to retain the national account. Industrysources indicate that shippers often assess accounts primarily on thebasis of a carrier's performance on difficult routes, and hence thereis a strong incentive for a carrier to be more accomodating in thesecases.The level of discounts available to large shippers under favourableconditions was illustrated in late 1985 when details of an AAF accountwere pub1 ished (Transport and Distribution Letter 1985, 1). It wasreported that a company was paying very low rates such as 20 cents tosend a 1 kilogram parcel from Sydney to Melbourne by air. Thiscompared with the going rate of about $5 on this route. The low rateswere achieved by a member of a business group which was a majorshipper. They were based on several conditions including 72-hourservic'e, a minimum charge and movement on services where AAF had sparecapacity.Mai 1Rates for the carriage of mail are currently based on several paymentscales. Different rates are applied to air mail, courier traffic,priority paid mail and surface mail by air.lPayments to trunk a,nd regional carriers are administered by theAustralian Postal Comission's central office. Rates are mainlydetermined by a cost-based formula with annual adjustments, althoughthere is also an element of negotiation in the setting of rates. Therate is not affected by the route or direction of travel. Paymentsfor the carriage of mail by 'comnuter air1 ines are handled by theAustralian Postal Comnission's State offices.The Commission has recently completed a review of the arrangements forthe transport of mail by air. The findings of the review and anyeffect's on the determination of rates were not available at the timethis Paper was completed.TRENDS IN RATESAn index of published domestic freight rates basedon an industrysample is prepared by the Department of Transport and Comunications1. In this case air mail refers to the sub-group of articles whichrequire a high quality of service and rapid delivery.58
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BTE Publication SummaryDomestic Air
Page 6 and 7:
CHAPTER 7CHAPTER 8CHAPTER 9APPENDIX
Page 8 and 9:
7.2Annual change in average yield i
Page 10 and 11:
CHAPTER 1INTRODUCTIONThe discussion
Page 12 and 13:
CHAPTER 2 THE AIR CARGO MARKETThe d
Page 14 and 15: Chapter 2involved in the movement o
Page 16 and 17: Chapter 2176 -150 -150 -140 -130 --
Page 18 and 19: Chapter 21984-85. The importance of
Page 20 and 21: Chapter 2sources indicate that the
Page 22 and 23: Chapter 2TABLE 2.4 AUSTRALIAN DOMES
Page 24 and 25: Occasional Paper 87commenced with t
Page 26 and 27: Occasional Paper 87required the two
Page 28 and 29: Occas ioml Paper 87market, Ansett a
Page 30 and 31: Occasional Paper 87specialist freig
Page 32 and 33: Occasional Paper 87characterised by
Page 34 and 35: Occasional Paper 87TABLE 4.1MAJOR E
Page 36 and 37: Occasiona 7 Paper 87general manager
Page 38 and 39: Occasional Paper 87also specificall
Page 40 and 41: Occasional Paper 871984, 2-3). A sp
Page 42 and 43: Occasional Paper 87the major operat
Page 44 and 45: Occasional Paper 87also substantial
Page 46 and 47: ~~CHAPTER 5 CURRENT INDUSTRY PARTIC
Page 48 and 49: Chapter 5TABLE 5.2 AUSTRALIAN DOMES
Page 50 and 51: Chapter 5newspapers accounted for m
Page 52 and 53: Chapter 5If cargo is not under bond
Page 54 and 55: CHAPTER 6 CURRENT OPERATIONAL PRACT
Page 56 and 57: Chapter 6not obtain as much of the
Page 58 and 59: Chapter 6divisions of AT1 at rates
Page 60 and 61: Chapter 6combined banks contract fo
Page 62 and 63: CHAPTER 7 RATING PRACTICESThe struc
Page 66 and 67: Chapter 7(Department of Aviation 19
Page 68 and 69: Chapter 7TABLE 7.2ANNUAL CHANGE IN
Page 70 and 71: Chapter 7contacted during the study
Page 72 and 73: Occasional Paper 87TABLE 8.1 FORECA
Page 74 and 75: Occasional Paper 87domestic routes
Page 76 and 77: Occasional Paper 87adequate capacit
Page 78 and 79: Occasional Paper 87large amount of
Page 80 and 81: CHAPTER 9 CONCLUDING REMARKSThe dom
Page 82 and 83: Chapter 9but it appears that in at
Page 84 and 85: a30TABLE 1.1 AUSTRALIAN AIRLINES' F
Page 86 and 87: W TABLE 1.2 AAF'S FREIGHTER NETWORK
Page 88 and 89: TABLE 1.3-TNT AIR'S OVERNIGHT FREIG
Page 90 and 91: % TABLE 1.4 TNT AIR'S DAYTIME FREIG
Page 92 and 93: CO03 2r,TABLE 1.5 (Cont.) WARDS EXP
Page 94 and 95: Occasional Paper 87(1984), Transpor
Page 96 and 97: Occasional Paper 87- (1979e), Anset
Page 98: ABBREVIATIONSAA F Ansett Air Freigh
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