AIR COURIERS FEAR POST OFFICE'S WEIGHT IN CONTRACT TALKS

AIR COURIERS FEAR POST OFFICE'S WEIGHT IN CONTRACT TALKS

If their concerns were made into a movie, air courier industry representatives meeting at a resort here might call the picture ''Gorilla in the Midst.''

Facing a broad new contract negotiation between airlines and the new service-minded U.S. Postal Service - the proverbial 800-pound gorilla - air couriers worry they are going to get bumped down the priority list.The first draft of a new proposed service contract between airlines and USPS is expected to be released during the first week of June. Negotiations are expected to extend through at least September.

While the process is in the early phases, industry representatives gathered here Tuesday for the Air Courier Conference of the Americas voiced concern that the airlines may be forced to pay more attention to USPS than to couriers who pay among the highest per-pound freight rates as next-flight out, or expedited, customers.

Unlike previous negotiations, the pending contract will be marked by a significant change in how USPS does business. On Feb. 24, it began using Emery Worldwide for daylight flights of priority mail. For years, mail moved on night flights.

With the shift to Emery's daylight flights, there is concern that the longstanding provision in postal contracts that U.S. mail gets first loading priority will be extended to expedited mail and even USPS' planned same-day service. Put simply, next-flight out, or courier product, may get bumped by the high-volume postal product.

''It's a deal with an 800-pound gorilla. It's highly unlikely that they will want to get off that (provision) because it works well for them,'' said Jim Friedel, vice president of cargo marketing and sales for Northwest Airlines. ''The only way out of the deal is get yourself a 801-pound gorilla.'' The sheer volume represented by USPS - which generates $800 million to $1 billion in revenue for the airlines - makes it likely that the first-on provision may remain for same-day postal service, he said. However, he cautioned that USPS is increasingly turning to package-express giants like Emery and trucking companies to handle mail delivery - meaning the 800-pound gorilla is losing some of its weight with airlines.

''If they (develop) a same-day product then they are a next-flight out product just like you,'' Bob Uttmark, vice president of cargo marketing and sales for Trans World Airlines warned carriers.

The TWA executive agreed with Mr. Friedel that this year's contract must reflect the changes in how the Postal Service outsources delivery.

''There needs to be a balance in the equation, because they will be getting smaller (as a customer to airlines) in the years to come,'' said Mr. Uttmark.

Despite the risks in the new contract, Continental Airlines' vice president of cargo, Jack Boisen, said airlines may negotiate more flexibility to opt out of mail service on routes where freight is more profitable.

Carriers may be able to determine ''where there is and isn't higher value,'' Mr. Boisen said.

Generally, postal carriage on an airline yields revenue of 30 cents per pound, vs. 60 cents for air courier packages. However, postal volumes are far higher.