Yield Trends
Over the past two decades, freight yields have declined at an average rate of 2.8 percent per year.
On-going profit challenges at passenger airlines have focused airline attention on lower-hold revenue cargo market opportunities. On average, cargo revenue represents 15 percent of total traffic revenue, with some airlines planning to earn well over half their revenue from this source. Continuing industrywide declines in yield for cargo and passenger services reflect productivity gains, technical improvements, and intense competition. They also create pricing pressure on all industry segments (e.g., lower aircraft acquisition and operating costs).
Since 1985, the decline in scheduled freight yield has averaged 2.8 percent per year, after adjusting for inflation. Scheduled freight yield increased from 1989 through 1991 but then resumed its decline through 2005, with a noted exception in 2000. The increase in freight yield in 2000 of approximately 1.8 percent can be attributed to increased technology goods shipments during the Y2K scare and overall strong traffic growth throughout much of that year.
From 2004 through 2005, scheduled freight yield declined approximately 1.9 percent per year. Fuel and security surcharges that were imposed during that period were offset to a large extent by pricing transparency through the proliferation of automated booking systems and aggressive competitor pricing. Moreover, from 2004 to 2005, total air cargo capacity increased twice as fast as traffic, further contributing to the ongoing yield decline.