On November 3, Lufthansa Group reported its third quarter, and on November 4 STAT Times and The Loadstar reported the cargo detail: Lufthansa Cargo's adjusted EBIT rose to 162 million euros from 49 million a year earlier, on capacity up 5 percent, chargeable weight up 7 percent, load factor up 3 points to 63.5 percent, and yields up 22 percent, of which the carrier said 14 percent was base yield and the rest fuel pass through. Revenue rose 26 percent to 1.04 billion euros. The group's CFO added that visibility in air freight is usually limited to about 2 weeks of bookings in advance.
Read those numbers as a planner. Volume moved a little. Price moved a lot. The profit tripled on the price.
The arithmetic of a yield point
Take an illustrative carrier with fixed capacity, 1 billion in revenue and a 10 percent margin, so 900 million of cost. Most of that cost is attached to the capacity: aircraft, crew, fuel, handling slots. It is paid whether the hold is 60 percent full or 66.
Raise yield by 1 percent with volume unchanged. Revenue rises 10 million. Almost nothing on the cost side moves, so EBIT rises about 10 million, from 100 to 110: 10 percent more profit from 1 percent more price.
Now raise volume by 1 percent at unchanged yield, filling space that was flying empty. Revenue also rises 10 million, but the extra tons carry handling, fuel burn, and claims cost. Call it 40 percent of revenue in variable cost. EBIT rises 6 million. Less than the price move, and bounded by a load factor that cannot pass 100.
The ratio is the point. On a fixed network, a point of yield is worth roughly 1.5 to 2 points of load factor, and the yield lever has no ceiling. That is why a quarter in which weight rose 7 percent and price rose 22 percent produced a profit multiple, not a profit increment.
Where the lever actually sits
A yield figure in a quarterly report is an average over hundreds of thousands of bookings. Nobody sets it. It emerges from decisions taken at the booking desk and the quote screen, shipment by shipment, in a market the CFO says is visible about 2 weeks ahead.
That constraint shapes the tooling. A rate card revised monthly is 2 revisions behind the market it is pricing into. The decision that moves the number is the one made when a 3 ton shipment asks for space on Thursday's flight: accept at the requested rate, counter, or hold the space for the booking that has not arrived yet. Each of those is a small pricing decision, and in a capacity constrained quarter the sum of them is the whole margin.
What a planner does with this
3 consequences follow.
First, spend decision effort where the leverage is. If price moves profit nearly twice as hard as volume, the quote process deserves at least as much attention as the load planning process. In most operations we have seen, it gets less.
Second, measure the yield of the freight you declined. A booking turned away at 4 dollars a kilogram that would have displaced a booking at 6 is not lost revenue. It is the yield lever working. If the desk cannot see the displaced booking, it cannot know whether the decline was right.
Third, match the pricing cadence to the visibility horizon. With 2 weeks of forward view, prices should be revised in days, not months, and the revision should come from the booking data of the last few days, not from the budget set in January.
Tight capacity does not last. The lesson of a quarter like this one does: when the hold is full, the number that pays is the price, and the price is decided 1 booking at a time.