Cost analysis of air cargo transport and effects of fluctuations in fuel price

Abstract

This study developed a model with cost functions formulated for different stages of cargo transport operation. A case analysis was performed with actual data from four air cargo traffic routes and eight aircraft types to validate the applicability of the model. The results show that the optimal payloads for various aircraft types vary with fuel price fluctuations. Furthermore, this study determined optimal types of freighter aircraft for different routes. Freight rates increase with rises in fuel price due to the corresponding increase in the fuel surcharge, thus bringing in higher total revenue. When the increase in total revenue exceeds the rise in fuel cost, the optimal payload will drop. Not only can the cost functions reveal the impact of fuel price fluctuations on different aspects of air cargo transport, they can also assist airlines in selecting the aircraft type with the best fuel economy for different route distances and cargo volumes.