When Emery Worldwide agreed to ground its 37 freighter aircraft in August it was due to safety issues. But the move also brings into question the future of domestic US freighter networks.

Emery had no alternative but to ground the aircraft, which operate its US overnight services, after the US Federal Aviation Administration found over 100 problems with its maintenance procedures. Emery insisted it would work to speedily resume normal operations, but the omens are not good. Miami cargo carrier Fine Air made the same promise when it grounded itself for just two months in 1997 after an FAA probe, but never recovered its former vigour and remains under Chapter 11 protection.

Fine had the advantage that it was operating in a booming market. Emery, by contrast, has been losing money since the third quarter of last year. It has lost a key US Post Office contract to FedEx and in June announced that it was to reduce its fleet from 54 to 38 aircraft.

Its whole overnight model also looks increasingly under threat. One reason is trucking is taking over from air for domestic shipments in the USA, with the stress on 24-48 hour time-definite delivery rather than expensive overnight air services. Rivals such as FedEx and Airborne have all invested in this area.

Rival forwarder EGL has also successfully cut into Emery's business with charters on point-to-point routes to serve specific customers, cutting out hub costs and the need to fly fixed routes. Even EGL has cut back in this respect, however, suggesting that if Emery's fleet is cleared to fly again, it may have little reason to take to the air.

Source: Airline Business