Wrap and Extend?June 15, 2021
Wrap and Extend to Capture Critical E-Commerce Revenue
Airlines have faced some of their most challenging quarters in decades due to the global pandemic. According to ICAO, 2020 gross airline revenue fell close to $400 billion. Yet, one industry has proven to be relatively insulated from deep losses during the pandemic: e-commerce. As more and more people looked to online solutions during the pandemic, revenue shifted from retail to e-commerce worldwide. Before the pandemic, e-commerce accounted for 14% of all retail sales; however, in 2020, that number jumped to 17%. Experts anticipate that this trend will continue. Global e-commerce is projected to grow 28% over the next three years from $5 trillion to $6.4 trillion by 2024.
This surge in e-commerce will allow airlines to expand their cargo transport capabilities and grow revenue, even if passenger levels remain below the peak. E-commerce packages, usually averaging 1-10 kilos in weight, are a perfect fit for an airline’s domestic fleet. Plus, with passengers carrying less baggage due to baggage fees, more belly space is generally available today for additional cargo. These two realities, coupled with the fact that typical passenger planes only fly with about 50% of their cargo capacity utilized on any given flight, means that revenue opportunities exist and are optimized through SmartKargo’s seamless solution.
SmartKargo’s flexible and cost-effective cloud-based platform allows airlines to “wrap and extend” their current cargo solution in a turnkey fashion and start building additional revenue streams in as little as a few months—not years. Airlines in Brazil, Canada, Mexico, and Norway are early adopters of SmartKargo’s wrap and extend methodology.
This flexible approach allows airlines to “wrap” the e-commerce solution around legacy air cargo systems without starting from scratch. This innovative approach will enable airlines to add this rapidly growing e-commerce business within months, not years, as it has taken with others in the industry. In addition, SmartKargo facilitates revenue capture quickly and easily.
One of the key benefits of their solution is that implementation is seamless with existing legacy systems. SmartKargo deploys a team of the seasoned airline, technology, and e-commerce experts to integrate the method and establish business processes alongside the airline cargo team. This low-cost investment has proven to yield significant results for their customer base, mainly because airlines do not have to “rip and replace” existing legacy systems. Because SmartKargo can essentially take what airlines have in place and extend their cargo e-commerce capabilities, airlines have increased revenue from the first day of implementation.
SmartKargo supports air-to-air and door-to-door businesses with easy integration into e-commerce sites. One of SmartKargo’s key differentiators is its deep knowledge of e-commerce vendors and e-commerce logistics. Their solution, using existing APIs and EDI-enabled e-commerce technology, is disrupting the traditional air cargo business.