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Comment by nelaboras | Hacker News Reader

I'd love to see some numbers on this. As far as I understand they are used for freight because it's better than to let them sit empty (and pilots and ground staff have to be paid too), but it still is not profitable.

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A _large_ proportion of worldwide freight is ordinarily carried in the belly of passenger aircraft. When most airlines stopped flying, the price of air freight _quickly_ rose (as the capacity pretty much fell overnight to just the dedicated freighter aircraft). This meant it became profitable (i.e., above the marginal costs of the flights) to fly passenger aircraft purely for the belly-hold freight.

They certainly aren't doing this and making a loss: they're hemorrhaging enough money already that they wouldn't want to add to that, but when the marginal cost is essentially the landing fees minus the parking fees they'd otherwise be paying, plus the additional cost of paying the crew above and beyond any furlough payment, plus the cost of fuel, plus any marginal maintenance cost from the extra cycles.

Not to mention that when we're talking about freighters, e.g. 747-8F-- they are not limited to belly hold freight. (And have much less cabin weight, fly slower / use less fuel, so the weight they can carry is better than repurposed passenger aircraft).

Have seen plenty of evidence of freight being shipped in passenger cabins the last few months too. Some in and on the seats and others with seats newly stripped out.

I don’t have evidence of this to show but friends in the airlines have told me stories of empty passenger planes flying just for freight, sometimes even with small items in the passenger cabin

Here's an announcement from KLM back in April (2020-04-30): https://news.klm.com/klm-introduces-cargo-in-cabin-carrying-...

Here's another piece with flexport: https://techcrunch.com/2020/04/26/ryan-petersen-flexport/ (scroll down and you have an image of packages strapped in a commercial plane)

Cathay has been doing this: https://youtu.be/PCJ5ikpIEOs

If I recall it is only profitable on shorter routes.

Certainly into and out of Australia at the moment we are seeing significant surcharges from DHL.

I just watched a video about this, that basically goes over all your points: "Air Cargo's Coronavirus Problem" by Wendover Productions https://www.youtube.com/watch?v=r2oPk20OHBE

A summary of the video:

- Passenger flight belly cargo used to be responsible for 25% of air cargo capacity, so capacity is severely reduced.

- PPE emergency logistics has caused a huge spike in demand, since PPE allocations are currently too volatile for anything except for air cargo. Air cargo prices are high.

- Government funding for airlines require pilots to remain on salary, so there's no additional marginal cost of labor.

- The biggest marginal cost of a flight, the cost of fuel, has understandably also become very cheap.

The end result is that even though it's still quite inefficient as compared to dedicated freight planes, the perfect storm of circumstances makes passenger-planes-as-cargo-planes momentarily profitable.

I like the shot of airline workers acting like old-fashioned stevedores loading packages one-by-one into the passenger cabin.

the cost of fuel, has understandably also become very cheap

Apparently, jet fuel was down around 40 cents a gallon. Kerosene, basically the same stuff, was never anywhere near that. Pretty strange.

Tangent: are there a ton of pilots struggling to remain qualified and well practiced given all the flights not flying?

From what I understand, most airlines are rotating the few remaining shifts. This way each pilot gets a couple of flights per month, which is enough to keep their ratings.

That said, since many airlines have completely stopped flying some plane types (particulary the A380 superjumbo), those pilots are going to have a problem soon.

AFAIK, some airlines were scheduling _extremely_ few flights of larger aircraft purely to keep currency.

You can check reddit.com/r/flying to see how pilots are doing.

> This meant it became profitable (i.e., above the marginal costs of the flights) to fly passenger aircraft purely for the belly-hold freight.

That's not the usual definition of "profitable". As you say, they're turning a gross profit (if we treat aircraft leasing costs etc. as fixed, which over a short timeframe they are), but it's not enough to cover their fixed costs, so grandparent is correct that they are not (net) profitable.

Is there a single word for "it's more profitable to do this thing, rather than the other thing, or nothing"? I think that's what this counts as.

I think this is in the same category of decision as retailers selling old stock at a loss, because that's better than not selling it.

A large portion of the modern economy is run by spreadsheets, and crunching the numbers on what the "most-profitable" thing to do often leads to companies doing what seems insane to the average person. P.S.: only the first 2/3rds of that was directed at your comment specifically.

I don't think there's a single word, but there's the concept of "gross profit" like I said.

“Loss-conserving?” Or you could say it contains the mounting liabilities.

In this air freight context, the relevant short concept would be the "shutdown rule" of economics: you keep operating in the short term as long as your revenue covers your variable costs. If it doesn't, it's cheaper to just not operate at all, but if you're beating the variable costs you're at least minimizing your losses even if you're not covering your fixed costs.

In the long run, you can't ignore the fixed costs forever and you eventually just leave the market altogether.

I think the best terms woud be “marginally profitable”, or “with positive gross unit margin”

They are putting cargo on the passenger area as well, either removing seats or tying them up over them.

BA have stripped the seats from a couple of 777s, so the main deck can carry cargo

Will only be lightweight cargo though

https://simpleflying.com/british-airways-boeing-777-freight/

Jet2 also have some 737 that can be converted between passenger and cargo

In normal times they'd often fly holiday makers in the morning, and freight in the afternoon - takes 45mins to change over

Here's one with the cargo door open but the seats in https://www.airliners.net/photo/Flyglobespan-Jet2/Boeing-737...

There's a video showing the change over on YT somewhere

You can just look at the freight costs which skyrocketed with COVID.

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