Hbr - Lan Airlines 2008

883 Words4 Pages
Lan Airlines in 2008: Connecting the world to Latin America . Describe difficulties passenger airlines face with shipping cargo and how LAN dealt with them. In order to increase profitability, passenger airline carrier may consider entering or increasing their cargo business. In doing so, they may find several difficulties that may hinder their success, including: 1. Types of Planes in Airline’s current fleet While passenger airline companies may have the knowledge and desire to enter the cargo shipping industry, they may be restricted by the types of planes they have in their fleet. For example, the size of the cargo may not align with passenger planes. In passenger planes, for example, only the bottom half of the plane is available for storage while the top half is seating area for passengers, meaning that a passenger plane carrying cargo may only be half full with goods (also fuel costs would be higher because of the seating infrastructure weight). Other examples of issues with planes include planes that don’t fit large cargo (volume issues instead of weight) and planes that aren’t outfitted with special requirement issues (for example refrigeration). Each of these issues may impede the company’s success in the cargo industry. 2. Differences in Destination Requirements Passenger airline companies have specific routes and timetables they operate on a regular basis. In order to enter the cargo industry, it may be difficult for them to align their routes to the needs of the cargo they are carrying. If these needs don’t match, they will need to consider offering new routes that do not fit with their current business strategy. 3. Knowledge and Ability to Enter Local Markets Laws and regulations in certain countries are such that it is difficult for airline companies to enter the market (a barrier to entry). While the barrier to enter may easier for
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