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An inherent danger in this type of pricing is uneconomic rate cutting. If carriers begin to vie for existing traffic on the basis of price, the entire structure could collapse and profits disappear. This virtually dictates that one of two alternatives be chosen. Either the Civil Aeronautics Board, the government agency which controls air freight rates, or the air industry itself must establish a rational procedure for judging the economic validity of rate changes. The surface carriers and their regulatory agencies, after enabling legislation for exemption from certain anti-trust regulation, chose the latter course and decided to utilize industry rate bureaus for hearings and recommendations on proposed rates. Which would work best in air transportation is debatable.  

A further possibility is that all rates would be drastically cut, regardless of the effect of movement of traffic. Emergency shipments are not oriented to price and the maintenance of rates relatively higher than average will enable the carriers to set some rates lower than average in order to avoid backhaul problems, fill empty flight legs, and increase load factors.

Only though such flexible but controlled system will the air freight industry develop a substantial volume at a profitable return.

EQUIPMENT 

In the past, air freight carriers have had only two types of aircraft to choose between. One has been the vehicles designed for military use while the other is the airplanes designed for carrying passengers. Very little effort has been expended by the aircraft manufacturers in the development of cargo airplanes. However, it is difficult to condemn these designers. The total market for commercial cargo aircraft has been extremely small and could not justify large expenditures on developmental programs.

Thus the airlines have had to utilize airplanes which resulted from modifications or compromises of the designs of military or passenger aircraft. As a result, the cost structure of air freight has been such that rate reductions have been impractical if not impossible. 

Another limiting factor of these vehicles that have been used for carrying freight is their inefficiency in loading and unloading shipments. These operations almost always have had to be conducted through side doors and the fuselage portion holding the freight has not been of a constant size. These factors have regarded the mechanization of ground-handling, which in turn has led to high ground costs and reduced aircraft utilization. 

At the present time Flying Tiger Line is in the process of installing a mechanized cargo-handling system. Whereas in the past it has taken 11 men one hour to load 25,000 pounds, with the new operation over 60,000 pounds can be unloaded and a similar amount loaded in a total of less than one hour. From less than 2,300 pounds per man-hour, productivity will be increased to over 40,000 pounds per man-hour. The decrease in unit costs is readily apparent. 

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