Nordic Air Freight Market Visions for Cargo Business Development from Airport Management view-point -Based on a case study of Swedish LFV Landvetter Airport and their industry network

Abstract

Severe financial crisis sweeping the world causes international trade to fall down sharper than expected in 2009. As taking care of goods physical movement, the transportation industry has been severely impacted and the air freight business with it. Adding into this equation changes by declining yield, violent oil price fluctuations and decreasing demand, followed by routing cutoffs and over-capacity of airlines, airports are directly influenced. Airline business changes cause fewer cargo volumes, resulting to less airport revenue. At the same time airport management faces airport development requirements, operational challenges, pressure on airport costs and higher uncertainty with regard to future cargo volumes. All this pushes for a mental switch which is happening in the airline industry right now and the airport management recognizes that the competition toughens but that the turbulence also always creates strategic business development opportunities. The research purpose is to recognize how the relevant airport stakeholders picture the future of air freight development, and to analyze whether their visions for the future are aligned. With step-by-step approach, the industry level analysis seeks to describe how the Nordic air freight industry looks like; and what are the characteristics of the market place in the light of global trade changes. The paper structures and analyzes these influences with focus on Airport Management. The second step was to acquire deeper understanding of the airport as a specific micro-environment, and LFV as a state-owned airport manager. A Case study was conducted on Gothenburg-Landvetter Airport (GOT) and within their industry network (stakeholders). For interviews were there is empirical bias for Nordic, especially to Swedish data. To the certain extend, the results can be considered strongly indicative to all Nordic Airport Management business development units, and much of the discussion can be of interest to other similar European non-central hub airport This watermark does not appear in the registered version - http://www.clicktoconvert.com v managers, and to those trading in the Nordic market place. LFV aims to use the outcome of the research as a supporting input for their future business development strategy. Theoretical framework builds on the known industry influencers’ reports, expert views, and on existing academic research. To continue to build up the research and to assess the strategic industry environment, theoretical tools such as the Porter 5-forces analysis and the Stakeholder model are applied. The identified stakeholders are the airlines, export/import industry, shippers, forwarders, integrators, other logistics providers and partners such as airport handling companies. Literature and experts reviews indicate that airport operations management is a very specific micro-environment, directly connected and dependant on airline business performance, and airports worldwide are seeking ways to diversify the business opportunities. Forecasts in the beginning of 2009 show that the airline industry losses will still mount during 2009, but if the current oil price and 2009 expected lower oil prices will compensate the costs in 2009, capacity-related savings may just match the collapse in revenues. Empirical findings of the Case Study also indicate that looking into the future, the depression economics may have not hit the air cargo business so hard after all - the first signs of careful positivity and trust for the future for the airline industry and for the total growth for air transport in the future can be recognized. Further research results give deeper view to the future development of stakeholders’ global market visions, the type of future Nordic air cargo, and other important structural changes of air cargo business actors possibly impacting cargo airport management and their future strategy. At the company level the research results address LFV Cargo and stakeholder future relationships, provided LFV and airport services, competition, visions for multimodality, visions in changes in airline networks and in airport structures, in pricing and in future demand turbulences.