A Term Project Submitted in Partial Fulfillment of the Requirements of 1202332 Globalization and Logistic Management Course, Mae Fah Luang University Second Semester, 2014

1. SUMMARY AND APPLICATION OF
AIR CARGO MARKETING
AUTHORED BY:
MR. NATTAPOL WATTANA ID: 5531210128
MR. TANADE SIRINUMAS ID: 5531210150
SECTION 1
AVIATION BUSINESS MANAGEMENT
SCHOOL OF MANAGEMENT
A TERM PROJECT ADVISOR
DR. SUTHEP NIMSAI
A TERM PROJECT
SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS OF 1202332
GLOBALIZATION AND LOGISTICS MANAGEMENT COURSE
MAE FAH LUANG UNIVERSITY
SECOND SEMESTER, 2014

2. Summary and Application of
Air Cargo Marketing
Authored By:
Mr. Nattapol Wattana ID: 5531210128
Mr. Tanade Sirinumas ID: 5531210150
Section 1
Aviation Business Management
School of Management
A Term Project Advisor
Dr. Suthep Nimsai
A Term Project
Submitted in Partial Fulfillment of the Requirements of 1202332
Globalization and Logistic Management Course
Mae Fah Luang University
Second Semester, 2014

3. Contents
Page
Acknowledgements i
Declaration ii
Part 1: Summary of Air Cargo Marketing 1
1.1 Product 1
1.1.1 Basic Product 1
1.1.2 Added product 2
1.2 Price 2
1.2.1 Official rate 2
1.2.2 Market-driven rate 3
1.3 Place 3
1.4 Promotion 4
1.4.1 Public relations 4
1.4.2 Advertising 4
1.4.3 Direct marketing 4
1.4.4 Sale promotion 4
1.4.5 Personal selling 4
Part 2: Application of air cargo marketing 5
Reference 6

4. i
Acknowledgements
We would like to thank our lecturer, Dr. Suthep Nimsai, for his beneficial lecture
document "Journal of Business Administration: Air Cargo Marketing" and suggestion. His
document and suggestion gave the directions to plan the outline of this report. For everything
you have done for us, Dr. Nimsai, we thank you.
We would also like to acknowledge the very significant contribution to this report of
Sirirat Somapa for pleasant and hospitable giving us permission to use her information.

5. ii
Declaration
We, Mr. Nattapol Wattana, and Mr. Tanade Sirinumas, being members of this project
group, hereby declare that this project report entitled "Summary and Application of Air
Cargo Marketing" is written by us, and is our own effort, and has not been submitted before
for any degree to any other University. All data and information from these other sources
presented in this report are correct and have been duly referenced and acknowledged.
Nattapol Wattana
Tanade Sirinumas

6. 1
Part 1: Summary of Air Cargo Marketing
In the past decade the demand of air cargo has increased. Demand in Asia had also
increased although Asia had the economic crisis. Then many airlines took an interest in air
cargo because it is new source of revenue. Moreover, the airlines took an interest in express
cargo that used to be provided by the integrators (e.g. FedEx, DHL, and TNT). Then the
competition between the airlines and the integrators occurred (Somapa, 2001, pp. 71-80).
The marketing for air cargo business is selling the space of aircraft as much as
possible while gain the highest price. To operate air cargo, the airline should understand the
Marketing Mix first.
The Marketing Mix or 4 Ps includes:
 Product
 Price
 Place
 Promotion
1.1 Product
There are 2 main types of air cargo product.
1.1.1 Basic Product
Basic product is providing the shipping from “Airport to Airport” which includes:
 Warehouse processing
 Document procedure (e.g. Air Waybill and Manifest)
 Shipping
 Flight planning: direct flight or transit flight

7. 2
Normally, the strategy of basic product uses capacity of aircraft such as speed, space,
route, and safety. When airlines realized that the express cargo make more profit, they
launched new product by using time that is “Time-Definition” which customer can choose
the lead time delivery.
 Normal: 5-7 days
 Fast: 3-4 days
 Extra fast: 1-2 days
1.1.2 Added product
Added products are Door to Airport, Airport to Door, or add the Customs procedure
providing. Airlines found that these are creating Product Differentiation and lead them to
become the Market Leader, but the procedure on ground such as customs procedure is quite
difficult for airlines. Then the airlines hire outsource, which is freight forwarders, to do it,
while some airline coordinate with the integrators.
1.2 Price
There are 2 rates.
1.2.1 Official rate
It is setting by International Air Transport Association (IATA). This rate of each
airline is not difference so it does not make competition in the market. It is calculated by
weight (per kilogram or pound) and distance. There many types of official rate.
 Normal rate
 Quantity rate (when shipping high volume)
 Specific commodity rate (when government promote to transport some product)
 Class rate (for high value products such as gems, gold, life stock, magazine, human
body)

8. 3
1.2.2 Market-driven rate
This rate is setting by airlines to attract the customers. This rate can be used in the real
marketing. The rate is set according to the competitive situation, season, and flight frequency.
Law of price setting
 Pricing to stay profitable
Airlines like to transport the high yield products that are Time-Definition cargo,
express cargo, and Door to Door cargo, and use the contribution (profit) to be the
indicator of success. Normally, the airlines gain the contribution about 40 – 50% of
revenue.
 Pricing to generate business
This pricing emphasizes the maximum payload to make no empty flight.
1.3 Place
The air cargo marketing is difficult for airline because the airlines do not sell the load
to exporters directly. The exporters buy the load from large and small freight forwarders.
Some freight forwarder is the large consolidator who collects the cargo from small freight
forwarders. Then the airlines should consider that they should make the marketing for
exporters or freight forwarders.
The freight forwarders are both airlines’ customers and airlines’ competitors.
Nowadays, some airline changes the business model from compete with the freight
forwarders and integrators to become the partner with freight forwarders and integrators to
make more mutual profits.

9. 4
1.4 Promotion
The customers will not come to use the air cargo service of airline although the airline
provides high quality service because the customers do not know the quality of the airline’s
service. Then the airline should make the customers know its quality by using promotion.
There are 5 promotion tools.
1.4.1 Public relations
e.g. annual report, seminar, speech with specific target group
1.4.2 Advertising
e.g. printing advertising that use with general customers
1.4.3 Direct marketing
1.4.4 Sale promotion
e.g. discount, frequent flyer
1.4.5 Personal selling
e.g. sales calls, fax, or sales force

10. 5
Part 2: Application of air cargo marketing
An airline which wants to operate air cargo should use the air cargo marketing to
launch the proper strategy. The air cargo marketing, likes normal marketing, consist of
product, price, place, promotion.
An airline should choose the products that make high profit margin. However, it
should consider own capacity. If it has no capacity to do something, for example, the customs
procedure, it can use outsources or collaborate with its competitors to share the capacity to
each other and gain mutual profits.
In addition, an airline should choose the pricing style that most appropriate with its
business that it needs to stay profitable or generate business.
An important issue is to know its market place that where and who are its customer.
Some player looks like to be airline’s competitors can be the airline’s customer, for example
the freight forwarders.
The last, an airline should promote itself by using the proper promotion tools to make
customers know its service and attract them to come to use the airline’s air cargo service.

11. 6
Reference
Somapa, S. (2001). Air Cargo Marketing. Journal of Business Administration, 24(90), 71-80.