AVSC 2180 Lesson 10 - Lesson 10 Cargo Management...

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Lesson 10 Cargo Management Applications Commercial airlines originally considered cargo operations as a sideline. Today, the airlines recognize the profit potential in them and include them as a vital aspect of their business strategy. The focus of early computer applications revolved around passenger business. Success with automated programs prompted managers to expand the use of computer technology into other areas of the business. Cargo operations were a natural fit. Computer programs provided a resolution for these factors that directly affected the profitability of cargo divisions: · Time consuming scheduling processes · Delayed updates of flight schedules · Inaccurate data collection and dissemination · Management decisions based on inaccurate, untimely information Cargo divisions need automated decision-support tools to survive in a complex, constantly changing environment. Key factors for profitability include: · The ability to accurately forecast revenue based on available cargo space, market capacity, market segment, type of equipment, day of the week and time of day · Optimize booking based on historical activity · Identify alternative revenue sources and potential service problems Automated computer programs facilitate financial control, enhance decision-making, and increase efficiency by automating price rating and prorating processes. Programs calculate and report accurate and detailed revenue and costs for evaluating the profitability of each shipment. According to Sabre Airline Solutions, the airlines benefit from automated cargo programs by selling space at a price that maximizes the revenue from various customers based on willingness to pay, which varies from customer to customer. Effective cargo management programs determine available cargo capacity for individual flights, identify expected products and associated cargo space needs, and allocate products for shipment based on the most efficient methods for transporting, handling and storage of tendered freight. Cargo Programs Cargo programs use price segmentation to maximize revenue for cargo shipments. This concept is similar to revenue management programs used for passengers, but is more complex due to multiple factors: Uncertain capacities: The number of passenger seats available on a given flight is constant, cargo capacity changes with each flight. Three-dimensional capacity: All dimensions of cargo (weight, volume, space allocation) will probably be different for each booking. Passenger data is constant, one passenger per seat. Cargo Customers: Divergent customer types and varied shipment types generate multiple demand types for cargo services. While there are many passengers, variance in the nature of the individual passenger does not affect the individual flight statistics. Rate/Density mix: Alternative pricing is possible, based on supply and demand for cargo space and
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AVSC 2180 Lesson 10 - Lesson 10 Cargo Management...

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