75th Anniversary Snapshot: What’s more valuable? Passengers or cargo?

At the start of the new year, one can be forgiven for being overly optimistic about the future. But there are limits.

One case in point comes from an article written in 1953 by Milton A. Caine, the former managing editor of Air Transportation magazine – the precursor to Air Cargo World. Titled “Cargo Will Top Passengers!” and published exactly 65 years ago this month, Caine’s piece all but guaranteed that the explosive growth of air cargo would be the bread and butter of the aviation business.

“We predict that within 10 years – by 1963 – air cargo revenues will climb higher than passenger revenues,” Caine wrote boldly in the February 1953 issue. As evidence, he cited the enormous growth rates that carriers were reporting at the time, such as a 325 percent annual increase in cargo volume at Pacific Northern Airlines. He also noted how Seaboard & Western airlines had predicted a 340 percent increase in commercial trans-Atlantic airfreight volume between 1951 and 1955.

To further bolster his case for unbridled optimism, Caine cited how another transportation system, the New York subway, which carried no cargo but moved more people at the time than any other railroad in the United States, was “continually in debt,” as was the Long Island Railroad. “Obviously, passenger travel is not too profitable,” he wrote.

In 20-20 hindsight, it’s easy to dismiss such confident predictions as folly. But how could Caine have known how the speed of jet travel and the advent of the widebody jumbo jet would set off an explosion in affordable passenger travel over the next decade? Today, the average carrier earns between 15 and 20 percent of its revenue through cargo – even less once low-cost carriers are factored in.

But in some ways, Caine had a point about the hidden value of cargo. For many passenger carriers, high-value shipments of pharmaceuticals or electronics carried as belly cargo are far more profitable that a typical economy-class passenger. For some long-haul international routes, the value of its premium passengers plus the belly cargo are usually enough to make the trip profitable – even if most of the economy seats remain empty.

It’s unlikely that Milton Caine’s prediction will ever come true. But to those carriers that understand the value of hauling cargo in the bellies of passenger planes, such as Emirates, Caine’s analysis looks more salubrious than silly.