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Passenger planes won't carry cargo

©Los Angeles Times

© St. Petersburg Times,
published September 14, 2001

The Federal Aviation Administration has temporarily banned mail and air cargo from all passenger planes, further delaying delivery of parcels, paychecks, documents and other U.S. mail that has been grounded since Tuesday's terrorist attacks.

About a quarter of the 650-million pieces of mail that the U.S. Postal Service handles each day has been redirected from passenger planes to trucks, pushing back deliveries anywhere from 24 to 48 hours, said U.S. Postal Service spokesman Mark Saunders.

Most of the nation's express mail and cargo -- everything from medicine to fresh fish to apparel -- that has been grounded for the past two days should be back up in the air today as the country's largest cargo carriers resume service.

But analysts and company executives fear that the FAA cargo ban and additional security measures at airports and ports of entry could send shock waves throughout the business community here and abroad.

"If we can't get this resolved, it will fundamentally change the way we do business, it will put a tax on global commerce because of the precautions that will be necessary," said Peter Morici, senior fellow at Washington-based Economic Strategy Institute.

FAA officials say that the cargo restriction is probably temporary but that some restrictions will likely remain. "I think you will see there will be some specific requirements in the short term, medium term and some long term,' says spokesman Allen Kinetzer.

Companies such as Driscoll Strawberry Associates in Watsonville, Calif., have already felt a sting, losing tens of thousands of dollars of revenue from fresh berries stranded in grounded planes that were bound for supermarkets around the country.

Seafood restaurants have for the moment lost their ability to fly in fresh fish and lobster from the East Coast.

And department stores relying on a just-in-time inventory system may soon find their distribution centers empty and shelves getting stripped, said W. Guy Fox, president of the Los Angeles Air Cargo Association and president of Global Transportation Services, a customs broker and international freight forwarder.

However, the freight ban on passenger airlines will have the largest impact on the airlines themselves, who need cargo revenue to boost their sagging bottom lines.

"The cargo profit contribution is enormous" and needed in many cases for an airline to post a profit, said Brian Clancy, a principal in MergeGlobal, a cargo consulting firm in Arlington, Va.

Trying to offset this loss of revenue by raising passenger fares probably wouldn't work, especially with consumers already skittish about traveling, said Ron Kuhlmann, an airline consultant with Roberts Roach & Associates in Hayward, Calif.

The airlines could try to pass off those costs in the form of additional fees or charges, he said, perhaps a "security surcharge" like the energy surcharges of the past. But he said they will probably be forced to simply absorb these losses.

The airline's loss, however, will translate into gains for air freighters such as FedEx and United Parcel Service, as well as smaller operators with fleets of 747s.

Passenger aircraft carry as much as 75 percent of the cargo to Europe, 35 percent of the cargo to the Pacific Rim and 45 percent to Latin America, Clancy said, and that business will have to be relocated to freight carriers.

Most are hoping the bans are only temporary, but acknowledge this tragic turn of events will forever alter the sense of security for businesses as well as passengers.

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