Blue Yonder > Case Studies > Achieving Sky-High Success

Achieving Sky-High Success

Customer Company Size

Large Corporate

Region

America

Country

United States

Product

JDA® Cargo Revenue Optimizer

Tech Stack

Capacity Forecasting Technology
Overbooking Algorithms

Implementation Scale

Enterprise-wide Deployment

Impact Metrics

Revenue Growth
Productivity Improvements

Technology Category

Analytics & Modeling - Predictive Analytics
Functional Applications - Inventory Management Systems

Applicable Industries

Aerospace

Applicable Functions

Logistics & Transportation

Use Cases

Predictive Replenishment
Inventory Management

Services

Software Design & Engineering Services
System Integration

About The Customer

American Airlines Cargo is a division of American Airlines that manages more than 36 million ton miles of freight and mail weekly on approximately 180 wide-body and more than 3,200 narrow-body flights each day. The company provides cargo lift capacity to more than 240 cities in the United States, Europe, Canada, Mexico, the Caribbean, Latin America and Asia. It utilizes the cargo capacity of American Airlines’ passenger fleet to facilitate the shipping of many product types, including fresh flowers, fruit, vegetables, seafood and life-saving pharmaceuticals. Its freight customers include some of the largest shippers in the world.

The Challenge

American Airlines Cargo, a division of American Airlines, manages more than 36 million ton miles of freight and mail weekly on approximately 180 wide-body and more than 3,200 narrow-body flights each day. The company provides cargo lift capacity to more than 240 cities in the United States, Europe, Canada, Mexico, the Caribbean, Latin America and Asia. However, calculating available cargo capacity on a passenger flight is not as straightforward as it may seem. Not only are there obvious factors such as passenger and baggage forecasts, the amount of fuel on board and equipment weight to consider, but there are also external factors such as airport limits on takeoff and/or landing weights or ground-handling capabilities for tight airport connections that have to be taken into account. The most important factor that affects capacity forecasting accuracy is customer behavior. Bookings on passenger flights are often cancelled, amended or under/over tendered at the last minute. Therefore, forecasting customer tendering behavior is a critical factor that needs to be modeled, using overbooking algorithms to predict the optimal adjustments to capacity in order to minimize spoilage or offloads.

The Solution

American Airlines Cargo embarked upon a multi-year effort to streamline and simplify the way it does business. A significant part of this initiative was to revamp its revenue management business process and solution. The company selected JDA Cargo Revenue Optimizer (CRO) to replace its existing technology. The first phase of this initiative was to implement advanced capacity forecasting and overbooking capabilities. The JDA solution delivers a powerful capacity forecasting and overbooking capability, allowing cargo carriers to predict sellable capacity quickly and accurately in response to changing events throughout the booking window. Forecasts from the JDA solution were compared with those produced by the incumbent system. The model showed that JDA’s solution provided more significant improvement in revenue per year. Based on these results, American Airlines Cargo moved the system into production.

Operational Impact

Increased capacity forecast, resulting in significant added revenue each year
Improved forecast accuracy of available cargo capacity
Reduced capacity spoilage and offloads

Quantitative Benefit

Improved forecast accuracy over the existing system by up to 40 percent in the test runs
Volume- and position-level forecast accuracy was approximately 93 percent
Weight forecast accuracy was approximately 82 percent