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

Occasional Paper 87adequate capacity is expected to become a permanent feature of airmai 1 operations.Revised arrangementsThe entry of additional passenger carriers on the trunk routes wouldprobably affect the positions of AAF and Australian.In a highlycompetitive environment, new operators would be expected to competefor cargo traffic as a means of increasing their revenue andprofitability. However, the form of entry would be an importantconsideration. The introduction of additional wide-body aircraftcould,result in a substantial increase in cargo capacity on some majorroutes. On the other hand, the effect on capacity and competitionwould be smaller if the new operators used narrow-body aircraft.Inboth cases the established carriers would probably have competitiveadvantages as a result of their established operations.A substantial liberalisation of the regulatory framework for passengerservices could also affect the outlook for freighter operations sincethe removal of the present restrictions would allow greaterflexibility in pricing and aircraft use. As noted in Chapter 4, thecurrent regulatory framework for passenger operations reduces theattractiveness of using wide-body aircraft on night services which areprimarily directed at the freight market. A rapid expansion ofpassenger services would also increase the cargo capacity available onmixed-configuration aircraft. In this case, there could be someeffects on the operations of freighters.The IRERDA Comnittee recommended that Qantas should be permitted tocarry domestic freight on the domestic sectors of its internationalservices (Independent Review of Economic Regulation of DomesticAviation 1987, 29). Any relaxation of the restrictions on Qantascould affect the operations of the existing domestic carriers.However, the amount of additional cargo that Qantas could carry wouldprobably be limited by the international orientation of its operationsand the available capacity.In 1984-85 the capacity available fordomestic cargo on Qantas flights was around 20 000 tonnes which wasless than 12 per cent of the traffic carried by the domestic operatorsin that year (Qantas 1985, 53).Several other factors would also affect the penetration of thedomestic air cargo market by Qantas. Most of its capacity betweenAustralian ports is on daytime flights on the Sydney-Melbourne andSydney-Brisbane routes where there is already substantial capacity onthe domestic airlines' wide-body aircraft and strong competition fromroad 'transport operators. Service frequencies on other routes wouldbe too low for many domestic shippers. Arrival times for70