6. Conclusions and further research
This paper aimed at evaluating some of the issues regarding the domestic air freight markets in Australia by examining the time and cost of service provided by air and road transport modes by utilising gravity modelling methods. The models employed have identified regional economic factors (unemployment, employment within logistics and transport sectors, retail service levels) that may indicate the strength (or weakness) of attraction for any domestic air freight route. As expected distance factors were significant to the analysis (although cost was not as significant), and these factors influence the substitution effect between road and air services. We have shown that some corridors, such as all routes to Perth (as a result of its distance to any other Australian major urban centre), should pose competitive advantages for air freight over any other mode of transport. Transnational passenger routes from Perth utilise wide-bodied aircraft and provide coopetition to the dedicated freighter network, whilst the long distances for intercity freight movements (to Sydney, Melbourne and Brisbane) provide significant time savings. On short-haul routes, such as Sydney to Canberra, air freight is simply not competitive to road at all. The fact that routes which would benefit from air freight are not growing (by tonnage, despite subsequent growth in capacity) may be related to a combination of demand factors such as the type of commodity that is transported between those cities, as well as anti-competitive pricing strategies, thus creating market inefficiencies.