Lufthansa Cargo AG Case Study (DIFFERENT QUESTIONS FROM OTHER CASE STUDIES) 1. H
ID: 452452 • Letter: L
Question
Lufthansa Cargo AG Case Study (DIFFERENT QUESTIONS FROM OTHER CASE STUDIES)
1. How does air cargo differ from the passenger business in terms of revenue management? Which areas are more complex, and which can be managed more easily?
2. What is the purpose of selling long-tem capacity contracts? Does Lufthansa Cargo effectively reach its business and risk-sharing objectives?
3. How could current reservation and pricing practices be improved? How does the introduction of dynamic pricing effect capacity buyers?
Explanation / Answer
1. How does air cargo differ from the passenger business in terms of revenue management? Which areas are more complex, and which can be managed more easily?
Answer- 1: The amount of space available for cargo is impacted by a number of factors. For example, if cargo is to be flown on an aircraft that is also carrying passengers, then the anticipated passenger load must be taken into account, since passengers have priority over cargo in most cases. In addition, any anticipated increase in cargo for a flight will require an increase in fuel weight, resulting in less available space for cargo due to weight restrictions of the aircraft. Other factors that affect cargo capacity include: • Aircraft type, • Passenger baggage weight, • Extra fuel weight, • Reserved space (allotments), • Mail weight, • Environmental (weather, time of year and so on).
2. What is the purpose of selling long-tem capacity contracts? Does Lufthansa Cargo effectively reach its business and risk-sharing objectives?
Answer- 2: The first step in cargo revenue management is to estimate the available capacity on future flights. When determining capacity for cargo, both the weight and volume (or container positions, for a widebody aircraft) of the cargo must be considered. Since cargo revenue management centers around the space that is available for free sale, any space that is reserved for other materials must be excluded.
Lufthansa cargo developed its accounting system known as CESAR (Cargo Entire Sales Reporting) which assists it in forecasting & managing its control systems.
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