Air cargo pricing and reservation under option contract

• Main Authors: Szu-HsienLee, 李思嫻
• Other Authors: Shiow-Yun Chang
• Format: Others
• Language: zh-TW
• Published: 2018
• Online Access: http://ndltd.ncl.edu.tw/handle/77za2e

碩士 === 國立成功大學 === 工業與資訊管理學系 === 106 === Option contracts are increasingly applied in the air cargo industry because it effectively reduces the capacity utilization risk of cargo airlines. The air freight forwarder reserves a certain amount of capacity based on the reserve price and execute price offered by the air cargo carrier, and determines the quantity to be executed after the market demand is realized. When the amount of capacity reserved by the forwarder does not meet the contract market demand, the required quantity can be purchased from the spot market at the spot price. In addition to price, the study considered four behavioral factors, goods security, transport efficiency, customer service, and equipment convenience, as assessment criteria of the amount of capacity reserved by forwarders. We discuss multiple air freight forwarders and air cargo carriers competing with each other and determine the optimal pricing and reservation policy for each of them. Through the results of numerical analysis, we noticed that when the number of forwarders increases, the profits will decline due to the price wars. Therefore, forwarders can consider cooperation or even mergers to increase market power. On the other hand, the carrier's focus should not be limited to capacity utilization because higher utilization does not always lead to better profits, and should consider cooperation with forwarders which can increase profits by reducing operating costs, providing better service quality and cultivating loyal customers.