مدیریت درآمد محموله هوایی تحت سیاست بازخرید  Air cargo revenue management under buy-back policy

1. Introduction According to the forecast of Boeing (2014), global air cargo traffic will grow at an annual rate of 4.7 percent over the next twenty years, with global air freight traffic expected to more than double by 2033. Kasarda et al. (2006) pointed out that air freight represents 35%e40% of advanced economies’ total import and exports by value. Significance of air cargo increases as it is related to delivering high value or time sensitive products. Moreover, the cargo space is bid six to 12 months prior to departure (Popescu, 2006), thus when to book the space and how much space to book remain a big challenge for intermediaries. Generally, three players are considered in the air cargo supply chain: asset providers (airlines), intermediaries (air forwarders) and shippers. As the space is bid in advance so far from the departure time, backlog or overbook happen. To hedge against the risk of wasting the capacity, asset provider usually oversells the capacity. Whenever unexpected demand increases, asset provider still can buy back the required capacity from intermediary. Meanwhile, intermediary can choose to book the capacity either from option contractor or from spot market. Because the cargo space bought from spot market is usually more expensive than that from option contractor, intermediaries would overbook the capacity and return the unwanted capacity to the airlines a few days before the departure time at certain cost. The overselling/overbooking from airlines and intermediaries makes the revenue management complex for the air cargo industry. Scholars have extensively analyzed the elements of cargo revenue management and the underlying philosophy in the air industry. For example, Han et al. (2010); Popescu et al. (2013), and Castelli et al. (2014) all proposed dynamic biding prices to manage the revenue according to the demand forecast. While earlier work focused on using pricing tools, recent contributions highlighted the need for novel approaches. Moreover, pricing tools is used for decision in the period before booking. Study calls for exploring the decisions in the period of booking release and booking execution. To manage the revenue effectively, both asset provider and intermediary need to decide when to book/sell the cargo space, how much space to be reserved, and at what price, so as to increase the total profit? It is observed that there is limited study in the usage of buy-back tools in air cargo revenue management. As a prevalent financial instrument in the stock market, “buy-back” means repurchasing a portion of its own outstanding shares, either to increase the share value or to prevent hostile takeover. Therefore, our study aims to fill this gap by applying financial concept into the logistic domain. The action of re-obtaining the right of cargo space is executed between asset provider and intermediary. Asset provider can buy back thoseoverselling space either to keep the supply promise in the peak season, or to resell at higher price. Intermediary may be more willing to sell back the overbooking space to the asset provider than to the spot market. Because selling back the space to the asset provider can assist building a good relationship with the asset provider. Buy-back makes a win-win situation both for asset provider and intermediary. In the practical case, the financial buy-back is usually applied between the airlines and the large-scale forwarders who have stable and regular business around the year. Exploring the potential application of buy-back policy, asset provider and intermediary can response to the unexpected demand more easily as well as provide more flexible service to the shipper. The utilization of the cargo capacity can be increased as the extra cargo capacity can be bought back and resold which reflecting the market demand. With regard to the policy maker, the buy-back item can be developed as a specific contract version which allows more agile transactions. According to the potential benefit of buyback policy, this paper intends to explore the application of buyback policy in the air cargo booking, concerning about whether to buy-back, when to buy-back, how much to buy-back, so as to maximize the total profit of asset provider and intermediary.