Airborne Express
By: Ganymede Team
Spring 2008
Introduction
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Background
Unique Approach and Current Operations
Major Comparisons to Rivals
Current News with Airborne
Future Questions for Airborne
Recommendations
Airborne Today; 2008
Airborne’s bAckground
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Airborne Express is a express mail and cargo delivery
company
It is the third largest after FedEx and UPS
Airborne was founded as the Airborne Flower Traffic
Association of California in 1946 to fly flowers to the
state of Hawaii.
Airborne Express developed special narrow containers
which allows the use of passenger jet aircraft without
needing a large cargo door modification.
It’s headquartered in Seattle, Washington, with its own
airport hub at Wilmington, Ohio.
Airborne’s unique ApproAch
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Airborne Express targets the business customers that
regularly ships large volume of urgent items
They purposely pass over residential and infrequent
shippers
Airborne tailors to specific business needs
Vice president, Ray Barry, said,
“The customers needs we have targeted to fill are what we are best at. If we
had large order customers requiring nothing but residential deliveries, we
might be able to serve them as as well as we know how to . Since we can’t
be all things to al people, we pick our kind of customer deliberately.”
Airborne’s current operAtions
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Airborne has 13,300 vans, fleet of 175 aircrafts
12,700 full-time and 8,000 part-time employees
Airborne owns the airport that serves as its
major hub, which is unique from other express
mail companies
It does not have to pay landing fees
 It dos not have to tailor to other facility needs
 If has to maintain the airport
 And it does not share other expenses with other airlines
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Airborne’s current operAtions
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Airborne buys used aircrafts and modifies them
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Modifies passenger doors to fit Airborne’s cargo
containers
 Airborne does not does not require large cargo doors to
transport cargo
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Shippers and recipients were heavily populated
in metropolitan areas
Airborne uses independent contractors to
handle 60-65% of Airborne’s volume
Technology and Marketing
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Major software is Freight On-Line Control and
Update System (FOCUS)
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Allows customers to trace packages and submit
shipping information
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Not as advanced as its rivals
Targets major shippers via 500-person sales
force
Does not advertise in mass media
Major Comparisons
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Airborne has its own airport
Airborne has unique planes
Airborne targets the business customers that
regularly ships in bulk
Airborne tailors to specific business needs
Used independent contractors for 60-65% of
the deliveries
Airborne’s strengths
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Airborne has its own airport hub
Airborne’s planes were usually 80% full
Airborne picked up and delivered more parcels per stop
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Saved 30% between pick-up and drop-off costs
Airborne tailors to specific business needs
Greater portion of Airborne’s deliveries were afternoon
and second-day deliveries
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Allowing them to use more trucks more often
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This saves Airborne over 50% in delivery costs
Airborne’s WeAknesses
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Airborne does not express a lot of residential
Airborne only guarantees overnight deliveries by
noon the next day (rivals guarantee by 10:30am)
Only 96% of Airborne’s arrive on time
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FedEx and UPS are 99% or higher
Software is not nearly has advanced as rivals
Marketing is not as aggressive as rivals
Airborne and RPS?
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Roadway Package System (RPS) is a strong
ground delivery company
Airborne is forming a good relationship with
Roadway Package System
RPS targets the large ground transport needs of
large-volume business customers
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Putting a dent in UPS’s traditional customer base
This could be setting up for a very good and
strategic merge to compete better with rivals
Current Events
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UPS went on strike
Airborne is forming a good relationship with
Roadway Package System (RPS)
Airborne recently had revenues up by 29% over
the last quarter
UPS and FedEx turned toward distance-based
pricing
The Future of Airborne
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Is Airborne’s position secure?
Can it compete with UPS & Federal Express in
the long-run?
Is the RPS partnership important?
Should Airborne move to distance-based
pricing?
Further recommendations…
Airborne & the “900-pound gorillAs”
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With UPS workers on strike and Airborne’s
terrific financial results, its future is looking very
bright.
However, since UPS is such a giant in the
industry, one move requires Airborne’s full
attention & immediate action.
Should Airborne be worried about an
acquisition by UPS…? The answer is NO.
Airborne & the “900-pound gorillAs”
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Federal Express has
heavy-weight power, but
is it enough?
FedEx recently raised its
prices – a plus for
Airborne.
Airborne’s potential is a
major threat to FedEx,
thus Airborne is not
worried.
Airborne And rps…pArtners?
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Is the relationship to
RPS crucial to Airborne’s
future?
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What can RPS and
Airborne do for each
other?
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YES, RPS can help
Airborne cut into UPS’s
traditional customer base
with its ground
transport.
Airborne will get use of
RPS’s info and tracking
capabilities & RPS will
get appeal & name
recognition.
Distance-bAsed pricing…A good Move?
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In 1996 UPS changed its
prices to reflect the distance
of the parcel.
In 1997, FedEx made the
same changes – charging
more for packages that travel
farther
Will it work for Airborne?
Customers are expecting this
change simply as an industry
trend, so YES.
Further Recommendations
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Competition comes from
unexpected places; keep an eye
on the Postal Service because
they have done very well
during the strike at UPS.
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Be aware of future moves by
UPS because they will
definitely try to recoup some
of that lost volume.
Further Recommendations Cont.
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In order to continue healthy growth over the
years, Airborne should consider an alliance or
merger with RPS.
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Globalization: Further expand investments into
overseas & global shipping; Do Not allow
competition to get too ahead of you.
Airborne Today; Since 1997
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1998 - Airborne entered the Fortune 500 list for the first time.
1999 - Airborne@Home, an alliance with the United States Postal Service,
was formed.
2000 - Carl Donaway became the company's new president, which lead to
many managerial changes. Also that year, Airborne started a ground service
for the first time in its history.
2001 - Airborne Express launched Ground Delivery Service and 10:30am
Delivery Service. Airborne.com launched some services of its own, including
the Small Business Center and Airborne eCourier.
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August 14, 2003 - Airborne shareholders approved
the acquisition of Airborne, Inc. by DHL of Brussels, Belgium.
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The acquisition became effective the next day. DHL retained ownership of
Airborne's ground operations and spun off its air operations as ABX Air, Inc.