No mail, air cargo in passenger planes for now, FAA says

Los Angeles Times

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 shockwaves 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 the cargo restriction is probably temporary, but 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," spokesman Allen Kinetzer said.

"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, an Arlington, Va.-based cargo consulting firm.

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 and pass of 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.