IDEAS home Printed from https://ideas.repec.org/a/eee/jaitra/v35y2014icp51-56.html
   My bibliography  Save this article

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

Author

Listed:
  • Chao, Ching-Cheng
  • Hsu, Ching-Wen

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.

Suggested Citation

  • Chao, Ching-Cheng & Hsu, Ching-Wen, 2014. "Cost analysis of air cargo transport and effects of fluctuations in fuel price," Journal of Air Transport Management, Elsevier, vol. 35(C), pages 51-56.
    • Handle: RePEc:eee:jaitra:v:35:y:2014:i:c:p:51-56
    DOI: 10.1016/j.jairtraman.2013.11.010
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969699713001403
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jairtraman.2013.11.010?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Takebayashi, Mikio, 2011. "The runway capacity constraint and airlines' behavior: Choice of aircraft size and network design," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 47(3), pages 390-400, May.
    2. Givoni, Moshe & Rietveld, Piet, 2010. "The environmental implications of airlines' choice of aircraft size," Journal of Air Transport Management, Elsevier, vol. 16(3), pages 159-167.
    3. Tsoukalas, Gerassimos & Belobaba, Peter & Swelbar, William, 2008. "Cost convergence in the US airline industry: An analysis of unit costs 1995–2006," Journal of Air Transport Management, Elsevier, vol. 14(4), pages 179-187.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kateryna Molchanova, 2021. "Organization of Aviation Enterprises’ Interaction Based on the Digital Platform," Virtual Economics, The London Academy of Science and Business, vol. 4(1), pages 77-97, January.
    2. Tanrıverdi, Gökhan & Ecer, Fatih & Durak, Mehmet Şahin, 2022. "Exploring factors affecting airport selection during the COVID-19 pandemic from air cargo carriers’ perspective through the triangular fuzzy Dombi-Bonferroni BWM methodology," Journal of Air Transport Management, Elsevier, vol. 105(C).
    3. Kupfer, Franziska & Meersman, Hilde & Onghena, Evy & Van de Voorde, Eddy, 2017. "The underlying drivers and future development of air cargo," Journal of Air Transport Management, Elsevier, vol. 61(C), pages 6-14.
    4. Akinyemi, Yingigba Chioma, 2023. "Air cargo demand in Africa: Application of cointegration and error correction modelling techniques," Journal of Air Transport Management, Elsevier, vol. 109(C).
    5. Shaban, I.A. & Wang, Z.X. & Chan, F.T.S. & Chung, S.H. & Eltoukhy, A.E.E. & Qu, T., 2019. "Price setting for extra-baggage service for a combination carrier using the newsvendor setup," Journal of Air Transport Management, Elsevier, vol. 78(C), pages 1-14.
    6. Campa, Juan Luis & Arce, Rosa & López-Lambas, María Eugenia & Guirao, Begoña, 2018. "Can HSR improve the mobility of international tourists visiting Spain? Territorial evidence derived from the Spanish experience," Journal of Transport Geography, Elsevier, vol. 73(C), pages 94-107.
    7. Hong, Seock-Jin & Kim, Woongyi & Niranjan, Suman, 2023. "Challenges to the air cargo business of combination carriers: Analysis of two major Korean Airlines," Journal of Air Transport Management, Elsevier, vol. 108(C).
    8. Chao, Ching-Cheng & Li, Ru-Guo, 2017. "Effects of cargo types and load efficiency on airline cargo revenues," Journal of Air Transport Management, Elsevier, vol. 61(C), pages 26-33.
    9. Sibdari, Soheil & Mohammadian, Iman & Pyke, David F., 2018. "On the impact of jet fuel cost on airlines’ capacity choice: Evidence from the U.S. domestic markets," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 111(C), pages 1-17.
    10. Park, Yongha & O'Kelly, Morton E., 2018. "Examination of cost-efficient aircraft fleets using empirical operation data in US aviation markets," Journal of Air Transport Management, Elsevier, vol. 69(C), pages 224-234.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Park, Yongha & O'Kelly, Morton E., 2018. "Examination of cost-efficient aircraft fleets using empirical operation data in US aviation markets," Journal of Air Transport Management, Elsevier, vol. 69(C), pages 224-234.
    2. Lay Eng Teoh & Hooi Ling Khoo, 2016. "Fleet Planning Decision-Making: Two-Stage Optimization with Slot Purchase," Journal of Optimization, Hindawi, vol. 2016, pages 1-12, June.
    3. Zakharenko, Roman & Luttmann, Alexander, 2023. "Downsizing the jet: A forecast of economic effects of increased automation in aviation," Transportation Research Part B: Methodological, Elsevier, vol. 170(C), pages 25-47.
    4. Sibdari, Soheil & Mohammadian, Iman & Pyke, David F., 2018. "On the impact of jet fuel cost on airlines’ capacity choice: Evidence from the U.S. domestic markets," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 111(C), pages 1-17.
    5. D’Alfonso, Tiziana & Jiang, Changmin & Bracaglia, Valentina, 2015. "Would competition between air transport and high-speed rail benefit environment and social welfare?," Transportation Research Part B: Methodological, Elsevier, vol. 74(C), pages 118-137.
    6. Zou, Li & Yu, Chunyan, 2020. "The evolving market entry strategy: A comparative study of Southwest and JetBlue," Transportation Research Part A: Policy and Practice, Elsevier, vol. 132(C), pages 682-695.
    7. Mohammadian, Iman & Abareshi, Ahmad & Abbasi, Babak & Goh, Mark, 2019. "Airline capacity decisions under supply-demand equilibrium of Australia’s domestic aviation market," Transportation Research Part A: Policy and Practice, Elsevier, vol. 119(C), pages 108-121.
    8. Gudmundsson, Sveinn & Paleari, Stefano & Redondi, Renato, 2014. "Spillover effects of the development constraints in London Heathrow Airport," Journal of Transport Geography, Elsevier, vol. 35(C), pages 64-74.
    9. Zuidberg, Joost, 2014. "Identifying airline cost economies: An econometric analysis of the factors affecting aircraft operating costs," Journal of Air Transport Management, Elsevier, vol. 40(C), pages 86-95.
    10. Olja Čokorilo & Ivan Ivković & Snežana Kaplanović, 2019. "Prediction of Exhaust Emission Costs in Air and Road Transportation," Sustainability, MDPI, vol. 11(17), pages 1-18, August.
    11. Ekici, Selcuk & Ayar, Murat & Kilic, Ugur & Karakoc, T. Hikmet, 2023. "Performance based analysis for the Ankara-London route in terms of emissions and fuel consumption of different combinations of aircraft/engine: An IMPACT application," Journal of Air Transport Management, Elsevier, vol. 108(C).
    12. Mantin, Benny & Gillen, David & Delibasi, Tuba Toru, 2024. "Measuring the impact of scheduling overlap and market structure on prices: Evidence from the airline industry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 183(C).
    13. Low, Joyce M.W. & Lee, Byung Kwon, 2014. "Effects of internal resources on airline competitiveness," Journal of Air Transport Management, Elsevier, vol. 36(C), pages 23-32.
    14. Martini, Gianmaria & Manello, Alessandro & Scotti, Davide, 2013. "The influence of fleet mix, ownership and LCCs on airports’ technical/environmental efficiency," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 50(C), pages 37-52.
    15. Morrison, William G. & de Wit, Jaap, 2019. "US open skies agreements and unlevel playing fields," Journal of Air Transport Management, Elsevier, vol. 74(C), pages 30-38.
    16. Chiambaretto, Paul & Combe, Emmanuel, 2023. "Business model hybridization but heterogeneous economic performance: Insights from low-cost and legacy carriers in Europe," Transport Policy, Elsevier, vol. 136(C), pages 83-97.
    17. Alonso, G. & Benito, A. & Lonza, L. & Kousoulidou, M., 2014. "Investigations on the distribution of air transport traffic and CO2 emissions within the European Union," Journal of Air Transport Management, Elsevier, vol. 36(C), pages 85-93.
    18. William Morrison, Jaap de Wit, 2017. "US Open Skies Agreements and Unlevel Playing Fields," LCERPA Working Papers 0104, Laurier Centre for Economic Research and Policy Analysis, revised 01 Aug 2017.
    19. Klophaus, Richard & Yu, Chunyan, 2023. "Short-haul airline services in Europe and North America - A cross-business model and cross-continental analysis," Journal of Air Transport Management, Elsevier, vol. 109(C).
    20. Zuidberg, Joost & de Wit, Jaap G., 2020. "The development of long-haul low-cost networks in the North Atlantic airline market: An exploratory data approach," Transport Policy, Elsevier, vol. 95(C), pages 103-113.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jaitra:v:35:y:2014:i:c:p:51-56. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/journal-of-air-transport-management/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.