Components larger the airport, the greater demand for a

Components of Aggregate
Demand

 

•           Fuel Costs – Fuel
is number one concern with regard to all cost components and it has significantly
risen over the last 15 years. An upsurge in jet fuel costs makes air movement a
pretty expensive option for cargo transportation.

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•           Road Transport
Competition – Although air transportation is more expensive relative to other
modes of transport, it provides a good level of security and speedy shipping
times. Nonetheless, on some short
distances (up to 300…400 km), trucking companies can compete with the cargo
planes.

•           Global Trade and
Economy – Economic activity and consumer spending directly influences demand
for air cargo transportation. When warehouse costs are high, air delivery is
preferred (InterVISTAS Consulting Inc., 2011).

•           Industrial Factor – Companies with
sudden changes in their manufacturing base either within a region or between
countries can shift their distribution networks, and as a result, can increase
or decrease their demand for air cargo at a particular airport. Recent on-shoring
of manufacturing activities has been seen as a threat to global air cargo
activity as companies move manufacturing operations to North America (including
Mexico) from overseas to save on travel costs. 3D manufacturing (the process of
using special printers to create mechanical parts and other goods) could also
disrupt global supply chains by reducing the production and shipping needs of
valuable, time sensitive products (Copeland, 2012).

•           Logistics Scenario
– Air transportation has been used for “last-minute” delivery of products,
especially for personal effects or retail goods. A company’s supply chain
strategy can affect demand for air cargo, depending on how they structure their
inventory between their local distribution bases and cargo suppliers.

 

Airport Supply Components

•           Airport Size – The
volume of passengers and cargo at an airport is an important determinant for
the scale of activity around airports. The larger the airport, the greater
demand for a range of freight operators involved in air cargo such as
integrators and freight forwarders. Airports which have a limited flight
network or small passenger volumes require less diversity in terms of air cargo
providers.

•           Connectivity and
Multi-modal Infrastructure – The availability and access to different
transportation modes can also increase demand for air cargo. Sea-to-air and
rail-to-air connections for example are methods whereby goods come off an ocean
vessel or intermodal rail yard and go onto a pallet at an airport. This
provides more expedient delivery than transporting strictly by sea or rail;
however, it is less expensive than transporting by air only and airports can
greatly benefit from these connections.

•           Capacity – The size
of airport facilities, the size of the airplanes and the infrastructure
surrounding an airport are key components for airport demand. Freight often is
included in passenger trips in the “belly” of planes and the increase or
reduction in plane size and/or passenger capacity can affect total cargo
volume.

•           Regulation
and Security – taxes, fees and security regulations for air cargo are
increasingly complex, and can affect air transportation. Security regulations
in Canada for example have increased in line with higher security standards set
by the US.

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