Page 8 - LUA May - June 2023 for Magzter

COVER STORY

Exhibit 1
Cargo yields have fallen from the highs of 2021, although they remain elevated
Cargo yields have fallen from the highs of 2021, although they remain elevated
versus pre-pandemic levels.
Cargo yields have fallen from the highs of 2021, although they remain elevated
versus pre-pandemic levels.
versus pre-pandemic levels
Demand and supply, index to Jan 2020 Demand (FTK) Supply (ATK)
150

110
120
92
90
90 91
60

30
Load factors, %
80
70 59
60 52 49
50
40
30
20
10
0
Yields, $/kg

5
4.04
4
2.95
3

2 1.71
1
0
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1
Credit: McKinsey Note: International air cargo market. 2021 2022 2023
2020

Source: IATA; WorldACD; Freightos

McKinsey & Company
In 2021 and 2022, the pace of booking Airlines could, for instance, use airline will have to act to protect its
accelerated and exceeded 2019 levels at the dashboards to monitor how flights position, writes Daher, Hausmann and
two-week before departure point, the report are being filled, and where the biggest Williams. "This requires airlines to be agile,
data that is above the sales funnel, such as which
product selection, price offer, etcetera). Having all
said. "At one week before departure, the opportunities lie, based on what make decisions quickly, and to implement
flights customers search for, lead times, how the
of this data in one place means that cargo airlines
share of weight booked was considerably capacity has been booked and what is new ways of working."
cargo request was made, how long it took to fulfill,
can improve their customer experience: better
higher compared to pre-pandemic levels, expected at any point in time, says the Cargo airlines looking to re-think
understand what customers want, and when they
and if there was a cancelation or modification.
resulting in less urgency to fill the flight at report. "Forecasts, or estimates of what revenue management could consider the
are likely to want it. This is the type of insight that
Airlines can also look at step-based conversion
the last minute. is expected, could be based on lagging following three priorities:
rates showing how the airline performs at each
companies in B2C industries, such as passenger
"Any last-minute price reductions indicators (historical data) and also on ƒ Harness the power of data
airlines or hotels, typically have access to and cargo
stage of the sales funnel (discovery, flight selection,
would probably have been less effective the leading indicators made possible by ƒ Assess the value of advanced analytics
than in previous years as most of the the trove of new data that comes with ƒ Re-design internal processes.
airline’s customers were already booking digitising capacity." "Despite the challenges that cargo
closer to the flight date. This example also airlines could be facing in the coming
illustrates the last-minute nature of the TIME TO ACT - NOW months, there are opportunities to
industry, where more than half of a flight’s In a volatile and uncertain market where improve revenue management to remain
3
Ahead of the curve: Getting cargo revenue management right as the cycle turns
capacity is often booked in the last week." yields are likely to decline, each cargo competitive and profitable. This depends
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