1978-02-01

Overview of the Small Package Air Carrier Industry - A Study of the Operations in Federal Express 780540

The growth in air freight traffic can be attributed to the increasive number of service and light industries of the United States' economy. Fast and reliable deliveries of small and time sensitive documents are much in demand. The inflation spiral and the thin density of operations, however, have resulted in the discontinuation of air passenger services into small communities. Air freight forwarding, which is an adjunct to passenger service, has been sharply curtailed as a result. A solution to the problem appears to be an all air cargo airline that can operate its own vehicles in a streamlined fashion and can achieve the economy of scale by consolidating traffic. While there are attempts to do this, Federal Express Corporation is an example of innovation. Door-to-door service is provided through its fleet of Falcon jets and pickup/delivery trucks. Traffic is bundled up from thin density markets via a concentrated operation in Memphis. These two features in conjunction allow services to be rendered economically to small and medium size cities. In addition, the consolidated sorting facility and communication center at Memphis allow for a fast and reliable service. The youthful spirit of the airline means that ideas are often configured from afresh. The airline, long qualified as a third level carrier, has operated with a large degree of freedom - outside the confines of regulatory controls. As the company expands and as a set of national air cargo regulations are being formulated, some of the advantages enjoyed by the company may be negated. The future success of the “Federal Express Model” is an interesting case study for both practitioners and researchers in the air freight industry.

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