US international mail business up for grabs?

Foreign air carriers may soon get a slice of the lucrative US international mail markets if a current bill to liberalise US postal services gets approved.
Hearings were taking place last week in the House of Representatives on the postal reform act, which includes a complete liberalisation of the air transport of mail, allowing the postal service (USPS) to go to an open bid process.

Although air cargo revenue from mail has been decreasing, down 10% compared with last year due to the effects of e-mail, security requirements and other issues, it still makes up around 5% of US carriers’ revenues.
Currently, international US mail has to be carried by US carriers, with foreign cam-era only allowed to carry mail via codeshares or to destinations not served by US airlines.

Jack Boisen, cargo VP of Continental Airlines, told IFW: “The postal service thinks it is being overcharged. It had a study done, but we believe it was incomplete and came up with some conclusions that were laughable.
“We are in ongoing discussions with them about rate-making, but this reform would supersede those discussions.”

With legislators appearing keen on reform, and FedEx on record as not opposing the changes, Boisen believed there was “a good chance” the reforms would go through.

“So it is a concern. We carry a certain amount and the rates are up in the same area as express products,” he said.
Capacity freed up from lost mail traffic could be filled with express traffic, he said, although there were some destinations where that would not be possible.
Continental increased its express volumes by 27% in the first quarter of 2004. This was partly due to its focus on performance, but also a sign that the economy was “kicking back in”, Boisen said.

He was also concerned about several other legislative proposals. These include an attempt to amend a bill from the Homeland Security Appropriations Subcommittee, which sets the Transportation Security Administration’s budget.
The original bill would require the TSA to double the number of inspections of air cargo, with the proposed amendment pushing for 60percent of cargo to be physically screened. “That would be an onerous task,” he said.