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Air cargo and airport competitiveness
Article in Journal of Air Transport Studies · July 2019

DOI: 10.38008/jats.v10i2.142
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AIR CARGO AND AIRPORT COMPETITIVENESS
Thomas Van Asch*

Department of Transport and Regional Economics, University of Antwerp, Belgium
Wouter Dewulf
Franziska Kupfer
Hilde Meersman Department of Transport and Regional Economics, University of Antwerp, Belgium
Evy Onghena
Eddy Van de Voorde

ABSTRACT:
Historically, airlines and airports considered air cargo as a by-product. However, by looking for
additional sources of revenue, airlines and airports became aware of the potential of air cargo.
In this study, the competitiveness of European airports with respect to air cargo will be discussed.
The relevant characteristics determining the competitiveness of an airport with respect to air
cargo are identified by an extensive literature review and by interviews with industry-specialists.
These characteristics can be divided into four different components: territory, air cargo market
place, airport operations and product differentiation. Each component consists of several factors
affecting airport competitiveness for cargo. This study can be used by airports to help assessing
and enhancing their air cargo strategy, whereas (potential) shareholders are given an additional
instrument to check whether an investment in an airport makes would be viable or not.
KEY WORDS: air cargo; airport strategy; airport competitiveness
-------------------------------------------------- -------------------------------------------------- ------------
* corresponding author: [email protected]
Journal of air Transport Studies, Volume10, Issue 2, 2019 Page 1

1. INTRODUCTION
For a long time, air cargo was considered a by-product of passenger services in air transport;
airlines and airports paid little attention to the air cargo segment. However, things changed
considerably during the last decade and most airlines and airports have created their own
cargo strategy as both were looking for additional sources of revenue. Declining yields in the
passenger segment, as well as improved cargo payload capacity of new aircraft types have
led air cargo to become a logical way for traditional airlines to expand their portfolios. For
many airlines, cargo nowadays makes an important contribution to the profitability of the long-term
distance passenger routes offered (Amaruchkul and Lorchirachoonkul, 2011; Zhang, 2003;
Zhang and Zhang, 2002). While air cargo accounts for only 1% to 2% of total freight by
weight transported globally, it represents 35% of trade expressed in value (ATAG, 2018).
Because of its speed and reliability, typical air cargo goods include pharmaceutical products,
electronics, perishable goods (eg flowers and fruit), urgent shipments, valuable goods and
e-commerce (Alkaabi and Debbage, 2011). Air cargo transport is predicted to grow 3.51%
until 2022 (Kupfer et al., 2017), whereas Boeing (2018 and 2016) forecasted a yearly growth
rate of between 2.3% to 4.9% until 2035. These growth numbers are primarily driven by the
growing Asian market and the flourishing e-commerce segment.
“
Macário (2008) defined the role of airports as: (…) providers of a high technological
demanding infrastructure, of national strategic interest, for very sophisticated operations
where safety played both to very distinguished and distinct role ”. Historically, airports were
state-owned entities, especially because of the large investment costs. Adler and Liebert
(2014) confirmed the widely adopted idea of airports facing significant economies of scale.
Airport competition has been considered as non-existing for a long time and airports were
viewed as natural monopolies. However, since two decades, the situation has changed and
the idea of airports being monopolies lost its support. Adler and Berechman (2001) mentioned
that “ airports can be regarded ace organizations that make decisions about how to use their to
inputs (eg number of runways) produce specific outputs (eg service satisfaction)to ”. Este
does not mean that all airports take the same strategic decisions. On the contrary, depending
on the airport characteristics, different strategies can be observed. Therefore, an analysis of
the cargo characteristics of an airport and its impact on airport strategy can give importance
insights for future development and growth of the airport, especially because of the increasing
focus on carrying goods by air in today's globalized economy.

Although interest in air cargo has increased, limited academic literature is available on the
competitiveness of airports with respect to cargo. Studies about the role of the freight
forwarder in the business (eg Adenigbo, 2016) were found in the literature as was research
on the role of integrators at an airport (eg Malighetti et al., 2016). The impact of full
freighters at an airport (eg Budd and Ison, 2017) and the issue of night curfews (eg
Oosterlynck and Swyngedouw, 2010) have also already been discussed in the literature.
However, no single study is known which focuses on airport competitiveness with respect to
charge from the strategic perspective of the airport. This study aims to fill this research gap.
More specifically, this study will focus on the different factors that contribute to the
competitiveness of an airport with respect to air cargo. To capture the myriad of factors that
play a role, an extensive literature review was performed and was supported by additional
semi-structured interviews with industry representatives1 . With this, we attempt to identify
which factors determine the competitiveness of an airport with respect to air cargo. The
remainder of this study is structured as follows: the next section will give a general
introduction into airport competition. Section three will present the relevant factors for airport
competitiveness in the cargo segment and the last section will discuss the results and
conclude.
2. AIRPORT COMPETITION
In the mid-eighties, the European aviation market was described as “a world of non-competing
airlines [that] have been mirrored by a world of non-competing airports” (Barrett, 2000). Since
then, things have changed dramatically. Airline deregulation initiated competition between
airlines and airline alliances, and subsequently led to (some) competition between (hub)
airports (Starkie, 2002). Furthermore, the privatization and commercialization of airports made
airport competition an increasingly important issue. Forsyth (2006) indicated that airports
under public ownership were perceived as natural monopolies that were not competing with
each other. The commercialization and privatization trend that took place in the aviation
industry could not completely neutralize this monopoly power and the author sees this as a
good reason to justify price regulation on airports. Graham (2014) confirmed this view on
1 Semi-structured interviews were conducted with several different airports within Europe. Furthermore,
representatives from integrators, freight forwarders, NPO's, last-mile delivery companies, airlines and customs
were also interviewed about their opinion on the output of the literature review. Basically, most industry-
specialists agreed with the output and only minor changes were made on the airport competition components.
The identity of the interviewees is confidential and known by the supervisors.
airport competition but added that both the formation of global alliances and the emergence
of the low-cost market segment further opened up competition between airports. Copenhagen
Economics (2012) found some additional reasons for the changed business environment in
which airports are competing nowadays. Next to the development of low-cost airlines,
commercial and technological changes, for example, growing incomes in combination with
lower airfares meant that passengers could more easily spend money at airports and make
more trips by air. Also, the fact that more people have internet access means that better and
more accurate information is available to passengers concerning different airline and airport
options (Copenhagen Economics, 2012; Forsyth, 2006; Graham, 2014).
Airports can compete with each other in different ways, and therefore airport, competition
can have several forms (Forsyth, 2006). First, airports are in competition with each other for
a particular type of traffic, eg low-cost traffic or cargo. Next, airports are in competition with
each other to attract hub carriers and – closely related to this – also to attract home carriers.
The location of the airport is highly influential in the competition between airports, although not
necessarily only in the catchment area. Also, competition for concession revenue is seen as
important by Forsyth (2006). Graham (2014) revealed that if airports are located in the same
catchment area, there is often one dominant player and one secondary airport. Whereas the
dominant player can be seen as a major airport, the latter could be an overspill airport,
focusing on a particular traffic segment (eg short-haul business flights, low-cost flights or
post). In assessing the competitiveness of an airport, the substitution possibilities also have
to be considered. The threat of a new airport is often perceived to be quite low; however, the
competition from other transport modes is apparent. High-speed railways are not only a viable
alternative for short-haul, but possibly also for medium-haul passenger flights. better road
and railway infrastructure, in general, makes it more convenient to reach major airports. Este
lowers, for example, the need for feeder services from regional airports. Substitution is clearly
highly dependent on the type of traffic one takes into account. However, airfreight, using air
transport for its speedy and reliable service, often has a very limited number of alternatives
available (Graham, 2014).
Competition between airports is further intensified due to three typical characteristics of the
airport industry. Airports are largely fixed costs businesses which are active in a two-sided
market and are geographically fixed, a fact confirmed by Starkie (2002). Another important
competitive pressure for airports is the threat of airlines switching airports between each other, as was

found by Copenhagen Economics (2012). However, a study by IATA refuted that airlines can
easily switch between airports (IATA, 2013).
The previous paragraphs show that the argument of airports being monopolies has lost most
of its support; However, airports still have some locational monopolistic power. Airports are
located in a specific area and it is often difficult to add new capacity in that area. Forsyth
(2006) verified a (limited) locational natural monopoly for two or more airports in the same
city. Even in an oligopolistic market with limited capacity, competition is imperfect.
Furthermore, airports realize scale economies and new airports face entry barriers such as the
unavailability of land and opposition from politicians and people for environmental reasons.
Another barrier for competition is the excess demand and subsequent congestion of some
major airports. On the one hand, major airports are often negatively impacted by congestion.
However, it is unlikely that a new airport can take advantage of this situation because
passengers and airlines do not see the new airport as a viable substitute but rather as an
inferior product (for example, the lack of connections). However, those airports are often
preferred by freight carriers because some of these carriers traditionally prefer to fly into
secondary airports as do low-cost carriers. The impact of the government (be it by regulation
or subsidies) is also hampering smooth competition between airports.
Airport competitiveness with respect to cargo is a very specific research area and limited
academic research has been undertaken in this domain. The next section will introduce the
relevant factors that determine the competitiveness of an airport within the cargo segment.
Section three will start with a global overview of the factors taken into account in this study,
with a further elaboration of each.
3. FACTORS DETERMINING THE AIRPORT COMPETITIVENESS FOR AIR FREIGHT
An extensive literature review was performed to identify the various factors determining the
competitiveness of an airport with respect to air cargo. The identified factors will be explained
in detail in the following paragraphs. It is important to keep in mind that links between
the defined components exist and that all components have to be considered holistically if the
overall competitiveness of an airport is to be assessed. Furthermore, shareholders' objectives are
essential. Depending on the shareholders' objectives, airport management will take different

strategic actions and make different decisions. Figure 1 summarizes the identified factors
within the four major components noted previously.
Figure 1: Components of competition airport
Source: own composition
Figure 1 is based upon the overview of the academic research summarized in Table 1. It has
to be kept in mind, however, that not all of the factors in Figure 1 can be influenced by airport
management (eg territory block) and are thus rather exogenous. However, others are in
direct or indirect control of airport managers (eg costs, reputation, presence of freight
forwarders) and could be used to shape and or adjust the airport strategy for air cargo.

Table 1: Literature overview

TERRITORY
Location Fuerst and Gross, 2018; Mayer, 2016; Wong et al., 2016; Bowen, 2012; Boquet, 2009; Gardiner and Ison, 2008; Gardiner et
al., 2005a; Gardiner et al., 2005b; Zhang, 2003; Air Transport World, 2002; Noviello et al., 1996; Dennis, 1994; Schwieterman,
1994; O'Kelly, 1986; Harris, 1954
Local OD demand Boonekamp and Burghouwt, 2017; Kupfer et al., 2016; Bowen, 2012; Alkaabi and Debbage, 2011; Gardiner and Ison, 2008;
Cosmas and Martini, 2007; Zhang, 2003; Hall, 2002; Zhang and Zhang, 2002 Adenigbo,
Capacity 2016; Magalhães et al., 2015; Basso and Zhang, 2010; Madas ans Zografos, 2008; Neiberger, 2008
CARGO MARKET PLACE
Presence of freight Boonekamp and Burghouwt, 2017; Kupfer et al., 2016; Burghouwt et al., 2014; Chu, 2014; Li et al., 2012; Rodrigue, 2012;
forwarders Tretheway and Andriulaitis, 2010; Yuan et al., 2010; Air Cargo World, 2001
Presence of Malighetti et al., 2016; Struyf, 2016; Onghena, 2013; Bowen, 2012; Alkaabi and Debbage, 2011; Lafaye, 2007; Gardiner,
integrators 2006; Bowen, 2004; Zhang and Zhang, 2002
Presence of wide- Lange, 2019; Boeing, 2018; Boonekamp and Burghouwt, 2017; Budd and Ison, 2017; de Wit et al., 2017; Kupfer et al., 2017;
body capacity Kupfer et al., 2016; Mayer, 2016; Merkert and Ploix, 2014; Hsu et al., 2009; Bowen, 2004 Boonekamp
Presence of full and Burghouwt, 2017; Budd and Ison, 2017; Kupfer et al., 2017; Airbus, 2015; Gardiner et al., 2005a; Bowen, 2004; Zhang
freighter capacity and Zhang, 2002
AIRPORT OPERATIONS
Operational time Kupfer et al., 2016; Chao and Yu, 2013; Oosterlynck and Swyngedouw, 2010; Tretheway and Andriulaitis, 2010; Gardiner et
al., 2005b; Delve, 2001; Shaw, 1993
Costs Yuen et al., 2017; Adenigbo, 2016; Fichert and Klophaus, 2011; Kupfer et al., 2011a; Tretheway and Andriulaitis, 2010;
Gardiner et al., 2005b; Zhang, 2003; Adler and Berechman, 2001; Barrett, 2000
Connectivity – Boonekamp and Burghouwt, 2017; Ben-Akiva et al., 2013; Chao and Yu, 2013; Chung and Han, 2013; Kim and Park, 2012;
network Kupfer et al., 2011b; Heinitz and Meincke, 2009; Malighetti et al., 2009; OSC et al., 2009; Ohashi et al., 2005
Accessibility Boonekamp and Burghouwt, 2017; Struyf et al., 2016; Heinitz et al., 2013; Bowen, 2012; Schramm, 2012; Kupfer et al.,
2011a; Tretheway and Andriulaitis, 2010; Gardiner et al., 2005b; Hall, 2001
PRODUCT DIFFERENTIATION
Reputation Kupfer et al., 2016; Hwang and Shiao, 2011; Gardiner and Ison, 2008; Gardiner et al., 2005b; Ohashi et al., 2005;
Zhang, 2003; Adler and Berechman, 2001; Murphy et al., 1989
Marketing & business Fichert and Klophaus, 2011; Yuan et al., 2010; Gardiner and Ison, 2008; Macário, 2008; Gardiner et al., 2005a; Lee and
development Yang, 2003
Specialized supra- Elliott and Bonsignori, 2019; Graham, 2014; Tretheway and Andriulaitis, 2010; Gardiner et al., 2005b; Kasarda and Green,
structure 2005; Page, 2003; Zhang, 2003; Zhang and Zhang, 2002; Kingsley-Jones, 2000
Source: own composition
Journal of air Transportation Studies, Volume10, Issue 2, 2019 Page 7

3.1 Component 1: Territory
The Territory component contains factors related to the geographical location of the airport.
Different studies have mentioned the importance of location and see it as a crucial factor in
the assessment of the competitiveness of an airport. However, other factors that are closely
linked to location are also relevant; origin-destination (OD) demand in the catchment area of
the airport is a good example. The third major factor taken into consideration is airport
capacity. Especially in Europe, capacity seems to be a very relevant issue, as is evidenced by
the number of airports operating at almost full capacity such as London Heathrow (LHR) and
Amsterdam Airport Schiphol (AMS).
Location
The two main advantages of air cargo transport compared to other transport modes are speed
and reliability. Therefore, air cargo is usually used for time-sensitive goods (eg e-commerce
and pharmaceuticals), valuable items and perishables. Zhang (2003) indicated that if “all other
factors equal, the ideal hub location is one that minimizes the total flight kilometers within a
network and allows services with larger aircraft.” This illustrates the relevance of a central
location of an airport for hub activities: minimizing flying time and costs (Air Transport World,
2002; Dennis, 1994; Schwieterman, 1994). By doing a k-means cluster analysis, Wong et al.
(2016) confirmed a study by Zhang (2003) that Hong Kong is the most competitive airport for
cargo in the Asia-Pacific region because of its central location. However, as Dennis (1994)
clearly mentioned in his study of passenger airline hub operations in Europe, the ideal location
of a hub depends on the markets one wants to serve. The same is valid for cargo operations.
Studies by – among others – Harris (1954), Noviello et al. (1996), and O'Kelly (1986) looked
for the most appropriate national cargo hub in the US: All studies revealed that the area
around Southern Ohio was the best choice due to its central location. Bowen (2012) mentioned
the superior location of Louisville compared to Chicago for the US activities of UPS. boquet
(2009) found that airports with a strategic location – like Anchorage, Doha, Abu Dhabi and
Dubai – can focus more easily on transshipment cargo activities. A study by Schwieterman
(1994) looked for the most attractive air cargo hub in the Pacific Rim by considering 15 major
Asian cargo centers. The preferred hub location was South China, and more specifically, the
airports in Hong Kong, Taiwan, Manila, Guangzhou and Shenzhen.
A study about non-aeronautical passenger revenues by Fuerst and Gross (2018) used airport
location as a proxy for economic development in the surrounding area of the airport. For the
cargo segment, Gardiner et al. (2005a, 2005b) and Gardiner and Ison (2008) conducted
several with interviews non-integrated cargo operators to shed light on their airport decision
process. An important conclusion of these studies is that in the first stage of the airport choice

process, carriers look for an appropriate location or region. Once the location has been chosen,
the airport with the highest financial return potential will be chosen. That return depends not
only on the costs of operating at the airport but also on the local air cargo demand. Gardiner
and Ison (2008) and Mayer (2016) also noted a correlation between the focus of an airport
on cargo and – among others – its geographical location, manufacturing base and the
airlines operating at the airport.
It may be clear that airports with a favorable location have an absolute competitive
advantage over other airports. However, defining 'a favorable location' is a case-by-case
issue that depends heavily on the type of activities one wants to develop at the airport.
Origin – Destination Demand

Especially for origin-destination (OD) airports (eg Milan Malpensa Airport), local OD
demand is a top-level factor to consider. These airports do not act as hubs and are, therefore,
almost fully dependent on the local market. Gardiner and Ison (2008) found that it is important
for these airports to be located close to an economic cluster because it is an indication of
higher demand. A study by Zhang and Zhang (2002) stated that freighter operations will be
located where sufficient local demand is generated. Zhang (2003) divided the relevant markets
to Hong Kong Airport into three different parts: local traffic, gateway traffic, and hub traffic.
Generally, an airport faces very little competition for local traffic, whereas the competition for
gateway cargo is rather fierce airport betweens in the same catchment area (Boonekamp and
Burghouwt, 2017; Kupfer et al., 2016; Zhang, 2003). Regarding hub traffic, airports face
competition from other hub airports which are not necessarily in close proximity of the airport.
LHR and Dubai International Airport are for instance close competitors of each other on most
Europe-Asia routes.
Besides the different types of airports, there are also different types of carriers serving the
cargo market. Whereas combination carriers prefer to co-locate cargo and passenger services
at their hub airports (Hall, 2002), all-cargo carriers are more likely to choose OD airports
(comparable to low-cost carriers in the passenger segment). The latter are 100% focused on
transporting cargo, whereas for most combination carriers, cargo is not the main focus of their
business and their airport choice is mainly dependent on their passenger routes. The airport
choice for passenger activities will not be elaborated further upon in this paper. For readers
that are interested in the airport choice of passenger airlines, a wide range of papers can be
found in the literature, eg Shaw (1993), Rodríguez-Déniz et al. (2013), etc.
The combination of a good location and local OD demand is probably of greatest importance
for the integrators (DHL, FedEx and UPS), as studies by Alkaabi and Debbage (2011), Bowen
(2012), Cosmas and Martini (2007) and Hall (2002) show. These companies guarantee fast
delivery times for which a close location to the market is key; in addition, sufficient local
demand gives security to their business.
Airport Capacity
Assessing airport capacity is not just limited to slot allocations and or/restrictions. However,
almost all academic research dealing with capacity issues at airports concerns 'slots' (eg
Adenigbo, 2016; Madas and Zografos, 2008). Slot allocation is a major issue at the vast
majority of major airports. Most of these airports try to allocate slots as much as possible to
passenger flights because they generate higher income (Basso and Zhang, 2010). Such an
allocation policy, together with the unpredictability of air cargo, and therefore, their need for
flexible slots, makes it difficult for cargo carriers and/or cargo flights to set up activities at
these airports as have been seen at AMS. In 2019, the Dutch government decided against an
increase in the number of flight movements at AMS (currently set at 500,000). Because
intercontinental passenger flights are financially more beneficial for the airport, as many slots
as possible are allocated to such flights. As a result, full freighter airlines experience particular
operating difficulties at AMS, and the first signs of negative growth in the cargo segment at
the airport can already be observed2 .
However, more factors regarding capacity need to be considered, especially if air cargo is
taken into account. A study by Magalhães et al. (2015) touched very briefly upon expansion
on the landside for future developments. The potential for expansion at airport an can be high
relevant for the air cargo segment, especially because the industry is consistently growing
every year. In particular, cross-border e-commerce logistics generates high growth figures
and companies active in the e-commerce segment are continuously evaluating possibilities for
further expansion to optimize their business. DHL, for example, recently opened a new sorting
hub at BRU as a response to the booming cross-border e-commerce market (Air Cargo World,
2018). Such investments are beneficial for the whole airport community because of – amongst
others – the additional added value and employment that is created (Neiberger, 2008).
3.2 Component 2: Market Place
The second component – the cargo market place – includes factors related to the different
actors in the air cargo transport/delivery chain. As freight forwarders still control a large share
of the air cargo customer front end, the presence of these companies at an airport is highly
appreciated by other actors in the transport chain. Furthermore, the enormous growth of
2 Kalitta Air, for example, has lost slots at AMS in 2019, forcing it to redirect its flights to other airports, including
OST and BRU in Belgium (Nieuwsblad Transport, 2019).
Asian and Middle Eastern carriers in the last two decades occurred in tandem with a strong
increase in the number of wide-body aircraft. These aircraft are exceptionally well designed
to carry cargo in the belly space. A good mix of wide-bodies and full freighter aircraft at an
airport is, therefore, a precondition to establish a competitive position in the market.
Freight Forwarders' Presence

Contrary to the maritime industry, freight forwarders (logistics service companies arranging
the transport of goods from origin to final destination) and integrators such as DHL and FedEx
still control the majority of the air cargo transport chain (Air Cargo World, 2001; Tretheway
and Andriulaitis, 2010). Kupfer et al. (2016) stressed the important role of freight forwarders
in the air cargo market. Having a wide range of freight forwarding companies present at the
airport is said to be beneficial for the airport to attract cargo business (Kupfer et al., 2016;
Tretheway and Andriulaitis, 2010). Airlines that fly to long-haul destinations (and thus have a
significant amount of belly space available) from a particular airport, benefit from the presence
of a wide range of freight forwarders at that airport because these carriers try to optimize
their bellyhold capacity via the spot market. The freight forwarding business mainly revolves
around the consolidation of smaller shipments from different shippers into larger
consignments. (Boonekamp and Burghouwt, 2017; Burghouwt et al., 2014; Chu, 2014; Li et
al., 2012) The non-integrated airlines also rely heavily on the freight forwarding business.
These airlines see the presence of a wide range of freight forwarders at an airport as an
indication of enough local volume (ie demand) for the development of a sustainable cargo
service. Freight forwarders on their part cluster together in the proximity of an airport in order
to optimize their operations because of the time-sensitivity of air cargo (Rodrigue, 2012) and
do not want to fragment their flows from different airports within the same catchment area
(Yuan et al., 2010). Furthermore, these companies prefer airports which can offer a broad range
of long-haul destinations to ensure that their cargo can reach a wide range of destinations in
a fast and efficient way.
Integrators' Presence
At times, the presence of an integrator can also be beneficial in attracting airlines (Gardiner,
2006) and, therefore, enhance the competitiveness of an airport. Onghena (2013) looked into
the business of integrators at the largest airports for cargo in Europe. The same is done in
Table 2, although updated with more recent numbers.

Table 2: Top-10 European airports for cargo throughput (in tonnes)

European Worldwide Airport Tonnage % change Main cargo carriers at the airport
rank rank 2017 2016 / 2017
1 10 CDG 2,195,229 2.8 FedEx (main European hub)
Air France – KLM (main hub)

2 eleven FRA 2,194,058 3.8 DHL
Lufthansa (main hub)

3 17 LHR 1,794,276 9.4 IAG Cargo (main hub)
4 18 AMS 1,778,382 4.9 Air France – KLM (main hub)
AirBridgeCargo, Cathay Pacific

5 25 LEJ 1,131,382 8.0 DHL (main hub)
Aerologic
6 26 IST 1,095,518 16.2 Turkish Airlines (main hub)
MNG Airlines
7 32 CGN 897,132 12.0 UPS (main European hub)
FedEx (hub)
DHL, Lufthansa
8 3. 4 LUX 822,330 6.7 Cargolux (main hub)
Panalpina
9 39 LGG 716,894 8.5 FedEx/TNT (main hub)
Ethiopian Cargo, El Al Cargo,
Kalitta Air, Icelandair
10 46 MXP 589,719 7.5 Cargolux Italy (main hub)
DHL, FedEx, AirBridgeCargo
Source: own composition based on WATS (2017) and Onghena (2013)
Table 2 reveals some interesting facts. Almost all of the top cargo airports in Europe have an
integrator as one of their major cargo carriers. Integrators – DHL, FedEx and UPS – are fully
integrated logistics service providers that operate their own or wet-leased aircraft. estos
companies – originally focusing on the fast delivery of small shipments – are an important
driver of the growing e-commerce market (Bowen, 2004; Malighetti et al., 2016; Zhang and
Zhang, 2002).
The idea that cargo attracts cargo is also supported by Struyf (2016). She found that larger
airports in terms of cargo have developed economies of scale in the cargo segment, whereas
small airports with limited cargo activities face diseconomies of scale. This means that airports
with well-established cargo activities are more competitive in attracting new cargo services.
Furthermore, cargo is concentrated in a number of areas around the world, as was shown by
Alkaabi and Debbage (2011) for the US market and by Bowen (2012) regarding the cargo
hubs for FedEx and UPS. The presence of an integrator is positive for the cargo development
at an airport as the integrator already provides a certain cargo volume (because these
companies require large operations for both: market presence on the demand size and
economic reasons on the cost side) (Lafaye, 2007).
presence of Wide-body Capacity
In today's air cargo market, belly space capacity plays a major role. Approximately 50% of
airfreight is carried via the bellyhold of wide-body aircraft, and this share will probably increase
further in the future (Boeing, 2018; Boonekamp and Burghouwt, 2017; Kupfer et al., 2016).
Narrow-body aircraft, on the other hand, play a negligible role in the air cargo business due
to their limited availability of space for air cargo (Boonekamp and Burghouwt, 2017; Lange,
2019).
Wide-body aircraft are exceptionally well designed to carry cargo in the bellyhold. Since the
economic and financial crisis of 2008-2009, a number of legacy carriers – foremost the
European carriers – are struggling with their cargo divisions (Budd and Ison, 2017). Many of
these airlines shifted their focus from carrying cargo in full freighters to the belly space of
their passenger aircraft (Boonekamp and Burghouwt, 2017). Wide-body aircraft have also
become increasingly important for the air cargo market in the last couple of years as the new
wide-body aircraft built by Boeing and Airbus, eg B777 or A350, are better designed to carry
a larger amount of charge in their bellies (Boonekamp and Burghouwt, 2017; Budd and Ison,
2017; de Wit et al., 2017; Mayer, 2016). Contrary to full freighter capacity, bellyhold capacity
can be used at marginal cost. The direct operating costs of a wide-body flight can mainly be
allocated to the passengers on that particular flight, meaning that the incremental costs of
transporting cargo in the belly are limited to cargo-handling, additional fuel consumption and
some costs (Budd and Ison, 2017 administrative; de Wit et al., 2017; Kupfer et al., 2017;
Lange, 2019).
Furthermore, an airport with a fair amount of wide-body services can give flexibility on the timing
and the network. Passenger aircraft can fly into destinations which would not have been viable
for full freighters and can serve some destinations more frequently (Boeing, 2018; Bowen,
2004; Hsu et al., 2009). Furthermore, these wide-body aircraft can feed the full freighter
operations at a particular airport (Boeing, 2018; Hsu et al., 2009; Merkert and Ploix, 2014).
However, some limitations have to be taken into account when transporting cargo in a
passenger aircraft such as security regulations, cargo dimensions, etc. (Budd and Ison, 2017;
Kupfer et al., 2017).

Presence of full Freighter Capacity
Even though a broad range of wide-body capacity is important, it should also be supported
by full freighter activities as freight forwarders and shippers tend to move away to others
airports in the event that full freighter activities are absent at an airport (Boonekamp and
Burghouwt, 2017). However, all-cargo airlines have difficulties in obtaining slots at major
gateways such as LHR (Gardiner et al., 2005a) and more recently also at AMS. A study by
Airbus (2015) mentioned the strategic advantages for freight forwarders and shippers of full
freighter capacity at an airport: greater control over schedules, volumes and routes; broader
network (eg airports that are not served by passenger flights); ability to transport hazardous
and outsized loads which cannot be flown in the belly of passenger aircraft.
On some air routes, the belly capacity of wide-body aircraft does not match the demand and
full freighters could cater for this additional demand (Kupfer et al., 2017). Furthermore, some
cargo can or may only be shipped by freighters due to its size or hazardous characteristics
(Kupfer et al., 2017). These aircraft are also able to carry larger volumes in one single flight
and are, therefore, useful to create a larger throughput at the airport (Bowen, 2004). But
Contrary to passenger flights, full freighters have to deal with unbalanced cargo flows and,
Therefore, often operate triangular routes (Budd and Ison, 2017; Kupfer et al., 2017; Zhang
and Zhang, 2002). Such routings can be a disadvantage for time-sensitive commodities like
perishables, pharmaceuticals or e-commerce; In addition, the price of belly capacity is often
much cheaper than full freighter capacity.
Next to the integrators, some other carriers are exclusively flying freighters. Kalitta Air,
AirBridgeCargo, Nippon Cargo Airlines and Cargolux are some well-known examples (Bowen,
2004). Contrary to most American and European carriers, the Asia-Pacific and Middle Eastern
carriers have often well-developed cargo divisions with their own full freighter subdivisions
(Budd and Ison, 2017). Budd and Ison (2017) saw two important reasons for this: the strategic
geographical location of these countries and the increasing demand for cargo capacity in the
emerging economies.
3.3 Component 3: Airport Operations
The third component presented in Figure 1 is called airport operations. As indicated, one of
the unique selling positions of air transport is speed and reliability (Dewulf et al., 2014; Lange,
2019). In other words, time-efficient handling of air cargo is essential. Furthermore, the
network and connectivity of an airport are vital for shippers and freight forwarders to be able
to ship their goods around the world. And since air cargo is by nature multimodal, smooth
Intermodal operations are fundamental for the cargo market.

Operational Time
The operational time (operating hours) of an airport have always been controversial,
demonstrated, for example, by the move of DHL from Brussels to Leipzig in 2003 (Oosterlynck
and Swyngedouw, 2010; Tretheway and Andriulaitis, 2010). Gardiner et al. (2005b) explained
the importance of night-time operations, especially for integrators. However, the authors also
found that night-time operations are less essential for non-integrated carriers as these airlines
have to make a trade-off between conducting 24/7 operations on the one hand, and operating
from a main gateway airport on the other hand, which traditionally has night-time restrictions.
However, 82% of the questioned non-integrated carriers operating full freighters valued
the possibility to operate at night at an airport as either 'important or extremely important'.
Kupfer et al. (2016) confirmed this view and added that especially in the Asian market, night-
time operations are a necessity. According to these authors, the main reason for this is that
cargo has to leave the Asian continent by night to arrive in Europe in the morning. However,
the study by Kupfer et al. (2016) made a clear distinction between major and regional airports.
Night-time operations are very important for airlines serving regional airports, whereas airlines
active at major European airports are able to schedule their operations around the night-time
restrictions.
Delve (2001) considered airports with 24-hour operations as more suitable to attract dedicated
cargo traffic and suggested that airports with 24/7 operations have a competitive advantage
over others for this type of services. Shaw (1993) clearly indicated that airports should have
unrestricted night-time access to attract cargo as well. After reviewing and summarizing the
existing literature, Chao and Yu (2013) used the Delphi method to check the relevance of this
factor. Airport operational time continues to be seen as an important factor in the assessment
of the competitiveness of an airport with respect to cargo. This research approaches the
operational time of an airport by examining the night-time restrictions at airports. It is
generally accepted that airports that are fully closed at night are less favored than airports
which allow a limited number of night flights or airports without any restrictions.
Airport Costs
Another factor that airlines take into account when choosing a particular airport are the airport
costs or airport charges. Fichert and Klophaus (2011) introduced the following definition:
“Airport charges are levied on the use of airport facilities and services.” Airport charges can
further be divided into aeronautical charges (charges directly related to the operations of an
aircraft and the respective passenger services) and non-aeronautical charges based on
commercial activities.

Adenigbo (2016) found that airport charges – together with airport capacity and customs
efficiency – were one of the most significant factors in the choice of cargo agents operating
in Abuja Airport; this was supported by Tretheway and Andriulaitis (2010). Barrett (2000)
demonstrated that airport charges as such were not seen as determining the airport choice of
airlines. A more crucial factor was the total cost of operations, which contains airport charges,
but also terminal and ground-handling costs, other operating costs, etc. This view was –
among others – confirmed by Kupfer et al. (2011a). While minimizing the total cost of
operations is very important for cargo operators (Gardiner et al., 2005b), Gardiner et al.
(2005b) found that lower airport charges are a common reason for the relocation of full
freighter flights. Yuen et al. (2017) confirmed this view stating that an increase in the charges
at a particular airport will decrease the cargo output at that airport and increase the cargo
output at another airport. In his study about the cargo airlines' choice of an airport, Zhang
(2003) revealed that airport charges for Hong Kong's cargo carriers represent only 7% of the
airline's total cost, thus illustrating that airport charges are of less importance: However,
comparing airport costs is a challenge. This is not only because airports define their 'airport
fees' differently, but the costs are also dependent upon other factors such as the type of
aircraft, time of the day, the number of passengers and tons of cargo carried, etc.
Besides airport charges, other costs are important as well. Adler and Berechman (2001), for
example, found that labor costs could also be a factor that has to be taken into account.
Kupfer et al. (2011a) mentioned labor costs as well, but also referred to other costs: handling
cost, fuel cost, line-haul cost, etc. It must be made clear that the airport costs consist of more
than just airport charges. Labor costs – still a major input variable in the aviation industry –
could be a relevant factor that many actors in the industry consider when choosing their
airport.
Airport Connectivity – Network

Connectivity by air is crucial for regional and economic development, which was confirmed by
Boonekamp and Burghouwt (2017). Studies by Kupfer et al. (2011b) and Ben-Akiva et al.
(2013) found a positive relationship between freight transport and the economic activity within
to region.
Malighetti et al. (2009) examined the connectivity of 467 airports within the European aviation
network and classified airports based on connectivity. Eight different clusters were defined,
ranging from worldwide major hubs to small airports with only a restricted number of routes.
However, no particular attention was paid to the cargo segment. Boonekamp and Burghouwt
(2017) concluded that (intercontinental) connectivity is a key element in the airport choice for
cargo operations. A study by Chung and Han (2013) indicated that flight frequency and flight
connectivity were almost always mentioned in research about the airport choice for cargo
activities, which once again stressed the relevance of both factors. A study by Chao and Yu
(2013) mentioned that a wide network of flights goes hand-in-hand with a high availability of
cargo transport. To attract transshipment cargo to an airport, Ohashi et al. (2005) also
confirmed the importance of an airport's network. Finally, Wong et al. (2016) saw flight
frequency and network development as factors in assessing airport competitiveness in the
Asian-Pacific air cargo market. The study put Hong Kong and Shanghai Airport as the most
suitable to become air cargo hubs in the Asian market, mainly due to their high flight frequency
and good network.
As was stated by Boonekamp and Burghouwt (2017), very little literature is available yet on
air freight connectivity models. Boonekamp and Burghouwt (2017) described a NetCargo
model to benchmark the connectivity of European airports. Kim and Park (2012) used a
network quality model for the analysis of cargo transshipments whilst Heinitz and Meincke
(2009) on their part built a multi-level air cargo supply-demand interaction model to forecast
air freight commodity flows on a global scale. Finally, it is also worth mentioning WorldNet, a
freight model developed for the European Commission (OSC et al., 2009).
Airport Accessibility
Air transport has inevitably a multimodal character, most often combined with road transport
to and from the airport (Hall, 2001; Kupfer et al., 2011a). Good accessibility by road helps
guarantee fast delivery, which is vital for air cargo (Gardiner et al., 2005b; Hall, 2001). Smaller
airports specializing in freight should pay particular attention to good road accessibility (Kupfer
et al., 2011a). Road haulage is even more crucial for integrators, especially for their next-day
deliveries (Bowen, 2012).
Furthermore, it is worth mentioning that especially within Europe and the US, a large amount
of freight is trucked (Boonekamp and Burghouwt, 2017; Heinitz et al., 2013; Schramm, 2012;
Struyf et al., 2016; Tretheway and Andriulaitis, 2010), often under an airway bill number. The
reasons are manifold, but the excellent road network within Europe and the low cost of
trucking are important drivers of this trend.
Since very few European airports use railways for their cargo activities, no further attention
will be given to railway connections and their impact on the air cargo market.

3.4 Component 4: Product Differentiation
Within the product differentiation component, the focus of airport management with respect
to air cargo will be clarified. The reputation of an airport is seen as an important variable by
airlines and freight forwarders. Marketing and business development indicate to what extent
an airport is engaged in the cargo business. Airports that advertise their cargo facilities and
have a good reputation will probably welcome (new) cargo activities. Offering specialized
supra-structure, eg dedicated warehouses and equipment, to customers will contribute in a
positive way in the airport's attempt to attract cargo.
Airport Reputation
Adler and Berechman (2001) found that airport quality levels are important in the airport
choice of passenger airlines. A study by Zhang (2003) elaborated on the attention airlines pay
to customs efficiency when assessing airport quality, a view confirmed by Ohashi et al. (2005).
Ground handling services also contribute to airport quality. Different studies – for example,
Gardiner et al. (2005b); Gardiner and Ison (2008); Hwang and Shiao (2011); Kupfer et al.
(2016) and Murphy et al. (1989) – revealed the importance of a good reputation with respect
to air cargo. Although this factor is rather subjective and perceptual, airlines and freight
forwarders consider this as relevant. The study by Kupfer et al. (2016) indicated that a good
reputation reduces the uncertainty concerning the quality of collaboration between airline and
airport, and is seen as even more important in the long-term than financial incentives offered
by the airport or airport marketing. Murphy et al. (1989) clearly stated that the quality of
cargo services needs to be checked because goods shipped by air are often of high-value, and
damage and loss should be minimized. Gardiner and Ison (2008) found that for all-cargo
carriers, reputation and experience in handling freighter flights was one of the most relevant
factors in their airport choice process.
Airport Marketing and Business Development

For Gardiner and Ison (2008), an airport is demonstrating its pro-cargo attitude if it is actively
promoting its cargo capabilities. The study confirmed a previous one by Lee and Yang (2003)
which indicated that airports could attract freighter operators by “intensive competitive
“strategies and aggressive marketing strategies.” In this sense, a study by Macário (2008) is
interesting because she found that marketing plays a key role in helping to keep the
satisfaction gap as low as possible, meaning that expected and perceived value are matched
as closely as possible. Yuan et al. (2010) ascribed the good performance of Hong Kong Airport
and Singapore Airport in the cargo segment in 2006 to the fact that both governments listed
the development of the logistics industry as one of their top priorities.

In addition, the topic of financial incentives is often included in the discussion on airport
marketing and business development. These financial incentives are commonly used by
airports to attract business as was studied by among others, Fichert and Klophaus (2011).
The role of such financial incentives for the cargo segment, however, remains inconclusive as
no research has been performed on this topic. Furthermore, only a limited number of airports
have incentive schemes specifically for air cargo. Overall, the impact of airport marketing as
such remains highly questionable as it is very difficult to quantify the exact results of airport
marketing schemes (Gardiner et al., 2005a).
Specialized Cargo Supra-Structure

The last factor that is worth mentioning is the specialized cargo supra-structure, such as
specialized handling equipment, storage areas, etc. Gardiner et al. (2005b) used a report by
the UK government to highlight the need for good supra-structure for the optimal handling of
freighters. Compared to passenger activities, more apron space to load and unload the aircraft
is needed. In addition, Graham (2014) highlighted the necessity of specialized loading and
transfer equipment to support sustainable cargo activities at an airport. Zhang (2003) found
that modern transportation, communication, and logistics systems are essential to become an
air cargo hub in China. Kingsley-Jones (2000) and Page (2003) confirmed the importance of
sufficient ramps, parking spaces, runways and terminal capacity. Tretheway and Andriulaitis
(2010) mentioned the importance of the provision of air cargo facilities for freight forwarders
at an airport. The most fundamental aspect, however, is the role of customs. The more
efficient customs are, the more efficient the cargo flow will be.
The role of customs can influence airport choice (Zhang and Zhang, 2002), a role which was
thoroughly analyzed by Elliott and Bonsignori (2019). These authors confirmed that customs
Restrictions are not only disadvantageous for the air cargo business at the airport but also for
the economic development of the wider region. The relevance of customs for air cargo
development was also mentioned by Kasarda and Green (2005), although these authors state
that there is still some ambiguity in the impact customs have on air cargo operations. within
Europe, the differences between customs reliability are limited, but outside of Europe, some
major differences could occur.

4. CONCLUSION
Based on the existing literature, this study presented a structure of factors determining the
competitiveness of an airport concerning cargo. The vast majority of research about airport
competitiveness is quite general or deals with the passenger segment. However, in the last
couple of years, more and more scholars have started to focus on the freight segment as well.
As a result, many different factors influencing airport competitiveness could be found in the
literature. However, to the best knowledge of the author, there is no study that provides an
overall overview of these determining factors. Therefore, this study has addressed this topic.
The added value of this study is twofold: first, it analyzed airport competitiveness from the
perspective of the airport itself, and starting from this perspective, an extensive literature
review was carried out. Secondly, a wide range of industry representatives was consulted
concerning the preliminary investigation findings. Based on interviews with different stakeholders,
the findings were at first validated, and then adjusted where necessary.
The factors that were identified in the literature were subdivided into four different
components: territory, cargo market place, airport operations, and product differentiation.
Within the territory component, factors related to the location of the airport were included.
Not only is the geographical location of the relevant airport, but airport capacity issues are
also commonly described as important. The second component, the air cargo market place,
assessed the air transport chain and related factors. The most important actors are the freight
forwarders, integrators and (cargo) airlines. The way in which operations affect the airport
competitiveness for cargo is the subject of the airport operations component. Night-time
restrictions are limiting for cargo operations. In addition, airport charges also have to be
considered, as these are typically closely monitored by full freighter cargo airlines. The
network and connectivity of the airport are another major issue to be assessed in determining
airport competitiveness, as smoothly organized intermodality facilitates effective and efficient
operations. Finally, the product differentiation component revealed the attitude of the airport
towards cargo. Some airports are mainly focused on the passenger segment, whereas others
focus on cargo. In between both ends of the spectrum, a wide mix of airport types could be
found. Reputation, airport marketing, and specialized supra-structure for air cargo are factors
that plays a major role within this component.
This study can assist policymakers in drafting their aviation policies. Most European airports
are – at least to some extent – publicly owned. Therefore, airports are often used as a tool
for regional development. The air cargo segment is still a labor-intensive industry and
Policymakers may want to boost the cargo market to increase employment in their region.
Furthermore, this study suggests which factors public authorities should consider when

attempting to expand air cargo activities at an airport. As it is rather difficult to significantly

impact the surrounding region in the short-term, governments can decide upon expansion
plans for airports in the longer term, for example, by allowing the construction of new
runways. Trying to attract major companies in the air cargo industry (eg major freight
forwarders, airlines, ground-handlers, e-commerce distributors) is another way to help expand
cargo activities at an airport. The role of the government cannot be underestimated in such
negotiations, as a supportive government can convince investment from abroad. However,
airport operations and product differentiation blocks are also relevant. Labor costs are
probably one of the most important cost drivers in the business, so the lower these costs are,
the more competitive an airport would be in the industry. Air connections are another key
variable, meaning that bilateral agreements with countries that are important freight
destinations (eg US postal clearance points, major Asian cities like Hong Kong, Seoul, Japan,
etc.) are a key element to consider as well. Finally, a good reputation combined with efficient
and effective marketing will help to succeed in increasing the air cargo throughput. All these
variables should be taken into account by public authorities while drafting their airport policies
to support the air cargo market at their airports.
Policymakers who want to examine the potential impact of new aviation policies, can conduct
a scenario-analysis based on this study. By developing different scenarios where a set of
factors defined in this study are applied, it can be tested whether a new policy will potentially
have the desired outcome or not. Not only the potential benefits have to be taken into account,
but the (external) costs also have to be considered. If governments want to boost the air
cargo market, there will probably be more employment, but also more externalities. Looking
to these different aspects from a social welfare economic perspective is crucial.
Regarding future research, the options are broad. This paper will serve as the basic framework
for quantitative research in the field of airport competitiveness in regard to cargo. Many
different research methodologies could be used to quantify the different factors listed. It could
be of interest to limit the number of factors to four or five major ones. In that way, assessing
airport competitiveness would be more straight forward. Next, regression models could be
developed to assess which factors are of major relevance for airport competitiveness and
which only has limited impact. One could also define different types of airports based on the
different factors defined. By giving a quite complete overview of factors determining the
competitiveness of an airport regarding cargo activities, this study will be a good starting point
for such further research.

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Air cargo and airport competitiveness

Article in Journal of Air Transport Studies · July 2019

Thomas Van Asch Wouter Dewulf

University of Antwerp University of Antwerp

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AIR CARGO AND AIRPORT COMPETITIVENESS

Thomas Van Asch*

Eddy Van de Voorde

KEY WORDS: air cargo; airport strategy; airport competitiveness

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* corresponding author: [email protected]

Journal of air Transport Studies, Volume10, Issue 2, 2019 Page 1

Journal of air Transport Studies, Volume10, Issue 2, 2019 Page 2

Journal of air Transport Studies, Volume10, Issue 2, 2019 Page 4

3. FACTORS DETERMINING THE AIRPORT COMPETITIVENESS FOR AIR FREIGHT

Journal of air Transport Studies, Volume10, Issue 2, 2019 Page 5

Figure 1: Components of competition airport

Source: own composition

Journal of air Transport Studies, Volume10, Issue 2, 2019 Page 6

Table 1: Literature overview

Source: own composition

Journal of air Transportation Studies, Volume10, Issue 2, 2019 Page 7

3.1 Component 1: Territory

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Origin – Destination Demand

3.2 Component 2: Market Place

Freight Forwarders' Presence

Journal of air Transport Studies, Volume10, Issue 2, 2019 Page 11

Table 2: Top-10 European airports for cargo throughput (in tonnes)

1 10 CDG 2,195,229 2.8 FedEx (main European hub)

Air France – KLM (main hub)

Lufthansa (main hub)

4 18 AMS 1,778,382 4.9 Air France – KLM (main hub)

AirBridgeCargo, Cathay Pacific

7 32 CGN 897,132 12.0 UPS (main European hub)

8 3. 4 LUX 822,330 6.7 Cargolux (main hub)

Ethiopian Cargo, El Al Cargo,

Kalitta Air, Icelandair

10 46 MXP 589,719 7.5 Cargolux Italy (main hub)

DHL, FedEx, AirBridgeCargo

Source: own composition based on WATS (2017) and Onghena (2013)

presence of Wide-body Capacity

Journal of air Transport Studies, Volume10, Issue 2, 2019 Page 13

Presence of full Freighter Capacity

3.3 Component 3: Airport Operations

Journal of air Transport Studies, Volume10, Issue 2, 2019 Page 14

Journal of air Transport Studies, Volume10, Issue 2, 2019 Page 15

Airport Connectivity – Network

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3.4 Component 4: Product Differentiation

Airport Marketing and Business Development

Journal of air Transport Studies, Volume10, Issue 2, 2019 Page 18

Specialized Cargo Supra-Structure

Journal of air Transport Studies, Volume10, Issue 2, 2019 Page 19

Journal of air Transport Studies, Volume10, Issue 2, 2019 Page 20