Economies of Traffic Density and Scale in the Integrated Air Cargo Industry: The Cost Structures of FedEx Express and UPS Airlines

This paper examines the cost structures of the leading integrated air cargo carriers, FedEx Express and UPS Airlines. A total cost model is estimated for the two carriers using quarterly data on domestic operations and costs over a nine-year period (2003-2011). The estimated model indicates that the integrated industry exhibits increasing returns to trac density and constant returns to…

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