As 2016 begins we welcome to our editorial staff Bill Boesch, who will bring regular contributions of thought and insight.
     As top executive at Pan Am, American Airlines, and DHL for the past half century, Bill has been an outspoken proponent of air cargo and also a dreamer and doer in our industry—a leader of the form.
     Here he shares his unique insight and outlook for 2016 and beyond.
     We welcome your comments and ideas. You can write to Bill at bill@aircargonews.com.

     I am a firm believer that air transportation is needed, but I also think that the level or type of aircraft utilized to carry freight and potential return in terms of market share and additional factors—including in price and time requirements—needs to be analyzed to gain proper perspective when forming a correct overview of air cargo in 2016.
      First up as we begin 2016 and this series of articles, let’s consider air cargo transported on passenger airlines.
      Later we will examine the integrators, then scheduled all cargo service, followed by non-scheduled freighter service, and finally by other lower-priced options to fixed wing air cargo service.
      But first things first, we must look at the massive fleets fielded worldwide by the carriers, all or most of which carry air cargo.
      In the airline business, you can add a lot of enhancements to the passenger product.
      But in the end that is what the classes of service should differentiate and each class of service has to compete on price and quality.
      This is true for most industries selling products to consumers, including air cargo.
      On the passenger side the industry continually enhanced its products’ quality and appeal based on passenger feedback and that process appears to be needed today with the customer feedback statistics we are seeing.
      Even with all the improvements over the years, there are times in this airline industry where profits are meager at best.
      Bob Crandall, a great airline leader I had the honor to work with, had a sign on his desk I often quote. It read, “If God had meant people to fly he would have made it profitable.”
      You might say the same thing at times about air cargo.
      Some passenger airlines do not fly freighters because they didn’t make a profit on their own.
      You can say the same for some passenger routes, but they are operated because those routes supported the profit of the whole and were not looked at as standalone, and I believe that in some cases, depending on the size and routes of the airline, freighters within a passenger airline need to be viewed the same way.
      They should be carefully controlled as a support to maximize the profitability of cargo in the bellies of the passenger aircraft and not as a standalone operation.
      Now, I’m not saying that I believe in a large freighter fleet within a passenger airline, because I don’t.
      Over 90 percent of air cargo can easily fit in large, wide-body passenger aircraft bellies and therefore have costs much lower than the cargo that moves on freighters. And, moving cargo to maximize your passenger aircraft’s unused belly capacity is extremely profitable for the airline. In addition, cargo moving in large aircraft bellies have more flights and times to destination and if handled correctly can give the customer a better service quality than an all-cargo operation and can therefore have the potential to charge a higher price.
      So why is it in a passenger airline’s interest to operate a few freighters?
      Because some cargo, due to its size, cannot fit into a wide-body belly compartment and needs to move on a freighter. You might say, “so what!” But because passenger airlines—unlike FedEx, UPS, etc.—primarily get their cargo through airfreight forwarders rather than directly from the shipper, the airfreight forwarders use this lack of freighters as a negotiating tool to lower the price of the passenger carriers who do not operate them. Therefore the industry needs a paradigm shift, which I'm the first to say can be dangerous and costly.
      However, the timing is right.
      To do this, airlines need to develop top cargo expert leaders to run their cargo departments just like they have on their passenger side, and they need to let them run and fund their cargo business under a P&L that holds the cargo department accountable to maximize the use of the belly capacity.
      Carriers need quality measurement IT systems that measure quality from their customers’ view point, state of the art scheduling and booking systems, revenue management systems, and top management control systems.
      Airlines need systems with artificial intelligence tied to their passenger systems that learn as they operate, and these systems require large investments
      With fuel prices predicted to continue dropping to (perhaps) $20 a barrel, I believe the large passenger airline that invests in an operation similar to the above will significantly increase its overall profits and return to its shareholders.
Bill Boesch