Page 7 - LUA May - June 2023 for Magzter

Digital, customer focus
CAN BOOST

CARGO REVENUE

MANAGEMENT

As belly capacity returns, the market will likely become increasingly
competitive, and airlines that don’t have robust commercial and
revenue management strategy might lose out, Jyothi Shankaran reports.

he air cargo market is at a turning point the case for airlines that have their own
as yields begin to fall from the peaks of sales portals. Through digitalisation, the air
the past three years — now is the time cargo industry has an opportunity to build a
Tfor cargo airlines to re-think revenue 360-degree view of demand across the entire
management, says a report from McKinsey. customer journey which includes data that is
Over the past three years, the cargo market above the sales funnel such as which flights
has been capacity driven and airlines with customers search for, lead times, how the cargo
significant capacity pulled ahead of competitors, request was made, how long it took to fulfil,
says Soufiane Daher, Ludwig Hausmann and and if there was a cancellation or modification.
Mark Williams in the report. "Recently, there "Airlines can also look at step-based
seems to be a transition back to a demand- conversion rates showing how the airline
driven market: yields have declined, demand has performs at each stage of the sales funnel
slowed, and belly capacity continues to recover. (discovery, flight selection, product selection,
Moving forward, rates are expected to decline price offer, etcetera). Having all of this data
further, although they will likely remain above in one place means that cargo airlines can
2019 levels." improve their customer experience: better
What this means is that new ways of understand what customers want, and when
working may be required for individual they are likely to want it."
cargo airlines to remain competitive "and as Cargo airlines are well positioned to
belly capacity returns, the market will likely increase forecasting accuracy through AI.
become increasingly competitive, and airlines "For example, AI could make sense of the
that don’t have a robust commercial and thousand or more commodities, as well as
revenue management strategy in place might their inter-dependencies, within the supply
lose out and see their yields diminish faster chain. For instance, AI could determine
than the average." how trends in raw materials and semi
manufactured products in one country could
DIGITAL PAYING OFF lead to a growth or decline in specific finished
Many cargo airlines have invested considerably products in another — and how this would
in their digital strategies since the pandemic influence cargo demand."
began, the report said. "In particular, online
sales have boomed, and consequently, cargo MANAGING SUPPLY AND
airlines have access to much more data than DEMAND
was possible three years ago. A recent Freightos Booking curves have changed post-pandemic
WebCargo report found that digitised air and the changes are likely to accelerate, given
capacity across the industry reached 57 percent that the market is at a turning point. "This
in Q1 2023 compared to 38 percent in Q1 2022 is why it is now more important than ever
and only three percent in Q1 2019." for airlines to continuously monitor capacity
Due to the increase in online sales, cargo booking, and be even more proactive when
airlines have more data available about their it comes to simulating demand—and do it
customers’ behaviour. "This is particularly more frequently."

MAY - JUNE 2023 LUA 5