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may prefer to pickup and deliver their shipments in order to save time and to avoid the extra charges incurred when this service is performed by the air carrier or its own agent. The surface operators perform door-to-door service at a single rate, on the other hand, and this complete passage is often more acceptable to shippers and consignees. 

Mechanical failures and weather are further obstacles to air freight service. They may never be surmounted. While shippers readily understand how these delays can occur, this does not help them to solve sales, production, or inventory problems which are caused. Again they may prefer the dependability of trucks or trains. 

Because of all these factors, shippers may have to plan on second-day service by air to allow for delays. With transcontinental delivery by surface carriers in four to five days in the offing, air freight service may have little to offer for the additional cost. 

PRICING

As long as air freight rates remain at the level they have held for the past years, growth will be restricted. Most of the traffic moving consists of emergency or perishable merchandise and products which possess characteristics or problems which make them especially adaptable for ait transportation. 

In order to attract new tonnage, rates more closely related to those of competitive modes of transportation are necessary. Most shippers concede that air delivery is worth more than surface movement but the amount of differential they will pay is difficult to measure. This almost dictates that rate reductions be made very carefully so the results can be studied. Rates that are too low will not only lead to unnecessarily reduced profit but also to reductions in service standards if more traffic is tendered than can be expeditiously handled.

Because the demand for air freight services varies from product to product and even among firms marketing a similar product, pricing flexibility is a necessity. Under the legal minimum rate floor that has existed since 1948 little managerial discretion has been permitted in setting rates for air freight service. The Civil Aeronautics Board recently revoked this order but the outcome is unknown at this time. 

Flying Tiger Line, after more than two years of research, believes that the answer lies in pricing structure more oriented to cost than tariffs of the past. Under such a system, products would pay a rate based on the cubic space occupied within the airplane, with high density articles paying the lowest rates and items which have a low weight in relation to space would pay the higher rates. 

Volume movements of products which could not pay the rate required by a density-cost tariff would have to be attracted through lower rates. These would be filed on a point-to-point basis where capacity permits, as long as the charge is compensatory to the carrier.

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