Revenue management for Air Cargo freight

//Revenue management for Air Cargo freight

Revenue Management for Air Cargo is much more challenging than for passengers.

While a typical commercial flight event has a hundred and more passengers who need more or less equal space, freight flights mostly depend on very few major shipments.  And these shipments come in various density, a combination of weight and size. Also some shipments are not stackable, some need special care such as valuables, life animals, fresh food, etc.

Value sales in Air Cargo? There is no lounge need for freight!

In addition passenger business offers many options for value added sales approaches. Safety might be most important but also punctuality, convenience, comfort, etc. For most freight shipments value sales is tougher. Safety might still be an issue for animals, punctuality for fresh food or express shipments. But for the bulk of all freight price is even more important than in the pax industry. But reliability offers great arguments for value selling.

Demand forecast? Nearly impossible with freight!

Demand changes significantly between O&D, day of week and even single flight events. Historical data provides very limited guidance for future demand forecasts. Each single flight event has its very individual demand pattern. A low price will fill up capacity too early and a high price might keep utilization low. Targeting for the optimal density mix makes it even more complex and stowage loss calculation is a source for major misconception.

Dynamic pricing over the booking period? No-show fee is not part of the industry rules!

Early booking discounts might be famous in the passenger world but not common in the cargo industry. Instead of price increases towards the departure day prices typically decrease from booking day to booking day. Fencing by complex terms and conditions does also not work as most shipments can be cancelled on short notice or even just not delivered before departure. A no-show fee is nearly unknown in the industry and everyone who has tried has been punished by the market. But a penalty on no show is a need for the air cargo industry.

2018-01-05T14:13:00+00:00 By |Miscellaneous|