Case: Lufthansa Cargo Ag †Capacity Reservation

Question 1 ? How does air loading differ from the rider business in terms of revenue care? Which areas are more complex, which areas can be managed more easily? thither are noted differences between air charge and the passenger business. For example, contrasted passengers, cargo shippers did not book round trips and therefore cargo flows were unpaired. Furthermore, cargo was classified according to multiple dimensions like volume and weight resulting in disparate pallet put requirements, while passengers were each assigned a single seat.Concerning manageability it was identified that with regard to network planning and cogency allocation, cargo carriers had more degrees of freedom and hence faced additional challenges compared to passenger airlines. However, while passengers purchased tickets for specific flights and routes, cargo airlines could transport goods flexibly with regard to eon and route through their network, the only constraint being the promised time of availabl eness at the destination. Moreover, the load could be balanced and optimized by mixing shipments with different specific weights i. e. volume-to-weight relations. In this regard, space could be sold twice, e. g. to oneness guest with voluminous and another with heavy-weight high-density goods. Question 2 ? What is the purpose of selling long-term capacity contracts? The purposes of selling long-term capacity contracts was to model demand and increase the airlines yield by ensuring that a fixed amount of capacity was purchased, and then optimizing the aircrafts cargo capacity utilization while at the said(prenominal) time reducing the stake of deviation from customers because of the fixed commitment and non-refundable policy.It withal helped to determine how much capacity the airline maintained as a safeguard for demand for general cargo. Question 4 ? Does Lufthansa Cargo efficaciously reach its business and risk-sharing objectives? Lufthansa does not effectively reach its b usiness and risk sharing objectives as they were unable to strictly enforce some of their strike downlation topple policies due to the market power of some forwarding companies.Moreover, forwarders freedom to cancel contracted capacity up to 72 hours before departure was not adequately reflected by the rates the airline charged for the GCA freight. In addition, if cancellation was received three days before departure, there was no plight that LCAG will find other buyers to make up for the forgone revenue. LCAG also had problems with no shows. Question 5 ? How could current reservation and determine practices at Lufthansa congregation be improved? Compensating for cancellations and no-shows by overbooking, Limiting sales to low-revenue forwarders to preserve space for higher-revenue forwarders, Accepting low-revenue forwarders when higher revenue demand is less than aircraft cargo capacity, Redirecting low-revenue customers to flights with decline load factors, thereby minimizin g spilled cargo Question 6 ? How does the introduction of impulsive terms affect capacity byers, i. e. freight forwarders?The introduction of dynamic pricing can generally shrink the size of capacity buyers on the one hand but can also enable forwarders to have tidy influence with airlines. Since forwarders make their money on the difference between the worth they receive from the consignee and the cost of cargo space paid to airlines, they might comprise one airline against the other for the lowest price. Thus dynamic pricing can actually give forwarders the edge in extracting low price rates from airlines.