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Abstract

To develop efficient pricing and service strategies for air cargo carriers, we formulated air cargo demand as a Multinomial Logit model to reveal forwarders’ preferences toward freightage, flight frequency and service reliability. By applying non-cooperative game approach, we solve the market equilibrium to produce optimal freightage of priority and ordinary cargo for forwarders with various shipping volumes as well as the optimal flight schedules of air cargo carriers. In the case study, we found that the leader of air carriers would have not only the largest share, but also the highest freightage for both ordinary and priority cargo. And, with the provision of transfer flights, carriers could further reduce their operating cost by 1% to 3%.

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