Cargo and LCCs: Cebu Pacific case study shows cargo can pay

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Air cargo is often an afterthought for low cost airlines. While cargo is important for most full service network airlines it has typically not been viewed as a core component of the LCC model.

Some LCCs refuse to carry cargo entirely, worried it would increase turnaround times and costs, outweighing any revenue gains. Several LCCs outsource their cargo capacity to third party specialists, generating revenues that typically account for less than 3% of total revenues.

However, cargo can be a much bigger revenue contributor for LCCs with little cost or risk if managed appropriately. The Philippine LCC group Cebu Pacific provides one of the best examples of an LCC cargo strategy that fully leverages the potential benefits. Cargo has consistently accounted for 6% to 7% of total revenues at Cebu Pacific – even before the airline group began operating widebody aircraft.

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