Applicability of Dynamic Pricing Concept for Air Cargo
Zivcic, Rudolf (2022)
2022
All rights reserved. This publication is copyrighted. You may download, display and print it for Your own personal use. Commercial use is prohibited.
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2022120827330
https://urn.fi/URN:NBN:fi:amk-2022120827330
Tiivistelmä
The airline industry and commercial airlines play a significant role in the world economy and transportation chain. For this to continue, airlines must operate profitably.
Various strategies and approaches improving profitability are being implemented. One such strategy is an application of the revenue management, with an aim to maximize flight revenue by means of differential pricing, market segmentation and inventory management of available capacity. As many passenger airlines also provide air cargo services, they are exploring possibilities for application of revenue management principles and techniques into cargo business area.
One characteristic of implemented revenue management is a price behaviour where the price for a potential passenger increases as the flight departure nears and the capacity is getting more booked. This pricing concept is in the text named as LoTRI (Load- or Time-based Rate Increase). The purpose of this thesis is to investigate whether such pricing strategy could be successfully used in air cargo area.
Thesis consists of theoretical framework and practical research realised through expert interviews. Theoretical framework provides context and background for revenue management; description of air cargo sales process, its participants, their roles and motivations; and detailed view on aforementioned LoTRI pricing strategy with discussion on applicability for air cargo. Practical research analyses data collected through twelve expert interviews and ultimately answers defined research questions.
Conclusion offers recommendations for the future research, lists other pricing strategies potentially suitable for cargo and suggests impact evaluation before any pricing method is implemented into use.
Various strategies and approaches improving profitability are being implemented. One such strategy is an application of the revenue management, with an aim to maximize flight revenue by means of differential pricing, market segmentation and inventory management of available capacity. As many passenger airlines also provide air cargo services, they are exploring possibilities for application of revenue management principles and techniques into cargo business area.
One characteristic of implemented revenue management is a price behaviour where the price for a potential passenger increases as the flight departure nears and the capacity is getting more booked. This pricing concept is in the text named as LoTRI (Load- or Time-based Rate Increase). The purpose of this thesis is to investigate whether such pricing strategy could be successfully used in air cargo area.
Thesis consists of theoretical framework and practical research realised through expert interviews. Theoretical framework provides context and background for revenue management; description of air cargo sales process, its participants, their roles and motivations; and detailed view on aforementioned LoTRI pricing strategy with discussion on applicability for air cargo. Practical research analyses data collected through twelve expert interviews and ultimately answers defined research questions.
Conclusion offers recommendations for the future research, lists other pricing strategies potentially suitable for cargo and suggests impact evaluation before any pricing method is implemented into use.