Originally Posted by
ATC Watcher
you mentioned 2 $ / Kg on some LH routes, but at this rate what kind of profit margin the airline gets considering the fuel cost penalties...
The ~$2/kg is specificly Singapore (or Bangkok) to Europe for generic cargo (or rather it was some years ago, I'm not privy to current rates, but as passenger fares stayed relatively stable on that route for the past 10 years or so, I assume so did freight). The fuel penalty would be minuscule, in the few cents range per kg, not material. This translates into a revenue of $200 for 100kg of freight, which is roughly the weight of a passenger with baggage. Passenger yields on that route would be in excess of $400 for economy passengers. It is a pretty good rule of thumb that on high density longhaul routes with over 20 daily frequencies generic cargo yields are roughly half of passenger yields per unit weight. Once passengers have paid for the flight, any cargo to fill available underload goes directly to the bottom line, which of course drives the yield down, especially at times when there is less cargo than available belly space. There is of course better yielding cargo, though seldom paying more than passengers. However that comes with the caveat of guaranteed space, which is very difficult to manage on primarily passenger services with the unpredictable passenger and baggage loads that change up to the very last minute. KLM solved this problem by operating combi aircraft with a dedicated cargo capacity, supported by long-term contracts primarily with the dutch flower industry and a number of large manufacturers. However they too found that having dedicated freighters for the cargo business works far better than mixing passengers and cargo.