Page 10 - LUA May - June 2023 for Magzter

COVER STORY

Exhibit 3
Customer booking patterns are evolving post-pandemic.
Customer booking patterns are evolving post-pandemic
Customer booking patterns are evolving post-pandemic.

A cargo airline case study: cumulative booked weight by days until departure, % of total weight

2019 2021 2022
100
Higher visibility 1 week out
(+13 percentage points vs 2019)
80
Booking levels accelerated early on
60

40

20

0
21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0
Days until departure Credit: McKinsey

Source: FLYR Labs

McKinsey & Company
on a new approach to digital, and on 2030s, that of India," says a report by Trade 5.7 percent, respectively, air cargo traffic
ensuring that the customer remains and Transport Group. with its biggest trading partner, Europe,
centre stage when making revenue- "A combination of things need to will grow more slowly at 3-3.2 percent
management decisions." change for the African market to go per year, the report said. "Turkiye and the
provided cargo on the same lane 12 days before that are booked to fill a flight have the highest
beyond the two percent market share,"
UAE also offer strong growth potential for
AFRICAN CARGO MARKET: says Sanjeev Gadhia, CEO, Astral Africa air trade, given the commanding
yield. This means that pricing and revenue-
departure, but the revenue-management team
UNTAPPED, HUGE Aviation. "African airlines need to invest Africa market presence of the airlines from
management decisions made in this timeframe
notices on day 10 that the customer has not
POTENTIAL in freighters to increase the capacity for those two countries."
provided the cargo—it is time to act. Sales teams
have the most potential to either be very
With over 1.4 billion people, expected to air-cargo to, from and within Africa.
profitable or leave value on the table.
could contact the customer and ask what they
increase by 170 million by 2026, Africa African airlines need to expand their OUTLOOK
need, if their needs have changed, or how the
still accounts for only two percent of air networks to Asia, Middle East and USA African flower exports have
cargo trade. besides the existing focus on Europe. underperformed compared to Latin
McKinsey analysis suggests that if airlines can
airline could tailor its products. Processes need
"Yet that share belies its enormous-yet- Liberalisation and open skies in addition American flower exporters, says the report
focus on the yields that are below average in the
to be in place to alert the sales team if a flight is
seemingly-elusive promise. By the early to reducing taxes will result in growth." by Trade and Transport Group. If national
last week before departure, and improve this by
not filling up as expected or to signal that they
2030s, Africa’s working age population Africa's air cargo traffic with China and and regional export promotional efforts
India is expected to grow annually by 5.4- en overall revenue can increase by
need to review pricing guidelin
will exceed that of China, and by the late es if a flight is 30 percent, th could be bolstered, it is conceivable that
filling up too quickly. between 7 and 8 percent.
8 LUA MAY - JUNE 2023
There is significant value at stake from acting In today’s market, airlines need to be extremely
at the right time. In an industry where critical fast to respond to shifts in supply and demand,
decisions are made in the last week before a and make the most of sudden opportunities, but
flight, airlines need to be agile and well-informed. decisions need to be carefully calculated. Airlines
Typically, yield volatility is at its highest in the last would benefit from having the data and analytics
week—the spread is relatively stable until five in place to enhance decision making, and also
days before departure when it starts to widen by having internal processes and a decision
(Exhibit 4). Often, the final cargo shipments framework in place to coordinate among sales,

6 Ahead of the curve: Getting cargo revenue management right as the cycle turns