Wouter Dewulf (UAntwerp) analysed strategies in the air freight industry

“The emphasis on air freight impacts an airline’s profitability

In recent years, the air freight industry has evolved from a by-product to a mature industry. Wouter Dewulf (UAntwerp) analysed the possible strategies of airlines that carry air freight and concluded that the chosen strategy significantly influences the company’s profitability.

Traditionally airlines have always considered air freight to be a by-product of passenger transport. In the air freight market, pricing tended to be based on a marginal costs plus structure and profit contribution was a nice bonus. In recent years, however, airlines’ mindset has fundamentally changed. Increasingly, air freight is considered a product that allows airlines to significantly influence their income and profitability.

“The air freight industry has now evolved into a mature industry, in which strategies play an increasingly important role”, says Wouter Dewulf, of the Faculty of Applied Economics. “In 2012 direct turnover in the air freight industry amounted to almost 60 billion USD. If you take the logistics services associated with this into account the turnover is even higher.”

Dewulf analysed the strategic approach of airlines that transport air freight, on regular passenger flights or in cargo planes, or using a combination of both. His research revealed that there are seven possible strategy models for air freight. Based on its characteristics each airline can be linked to an appropriate strategy model. He used a dataset of 47 airlines, which generate three quarters of the air freight volume transported worldwide.

Carpet Sellers and Cargo Stars
Dewulf identified the following strategy clusters: the ‘Carpet Sellers’, the ‘Basic Cargo Operators’, the ‘Strong Regionals’, the ‘Large Wide-body Passenger Operators’, the ‘Huge Americans’, the ‘Premium Cargo Operators’ and the ‘Cargo Stars’. They each have their own specific characteristics, similarities and differences.

Brussels Airlines was classified as belonging to the ‘Carpet Sellers’ cluster. “These are mainly smaller companies that focus on a niche product or market. The cargo product they offer is more capacity-driven rather than margin-driven. It’s fast, rather than well-thought out, aimed at selling the available space, hence the name ‘Carpet Sellers’.”

KLM, by contrast, was classified in the ‘Premium Cargo Operators’ category. “KLM and its subsidiary Martinair have traditionally focused more on air freight. Consequently, KLM achieves better results for air freight, among others because of its greater product differentiation and better capacity management. Lufthansa and Emirates, however, are ‘Cargo Stars’. The cargo division markets a separate and differentiated cargo product independently of the passenger airline whose freight capacity it sells.”

The results of this research reveal the existence of several air freight strategy models. The most important success factors that contribute to ‘winning strategies’ were studied in more detail. The following factors were shown to be crucial: a wide product differentiation of the cargo product, professional capacity management, the airline’s size, the cargo hub’s size, the cost leadership for cargo transport and a balanced fleet composition with a mix of wide-body passenger planes and cargo planes.

Be the first to comment on "Wouter Dewulf (UAntwerp) analysed strategies in the air freight industry"

Geef een reactie

Het e-mailadres wordt niet gepubliceerd. Vereiste velden zijn gemarkeerd met *

*