## 4 Case Study Results
### The Application of [PERSON]'s Five Forces Model to the AeroLogic Joint Venture
#### 4.5.1 Intensity of Rivalry among Established Firms in the Global Air Cargo Market  
In the world air cargo industry, air cargo capacity is provided by combination passenger airlines, that is, airlines that carry passengers on the main deck and air cargo in their passenger aircraft lower lobe belly-holds and by dedicated all-cargo carriers, as well as the integrators, for example, FedEx and United Parcel Service (UPS) [177]. All-cargo services are operated by dedicated freighter aircraft with all the available capacity dedicated to air cargo transportation [4; 178]. The intensity of competition between market incumbents is extremely high. This intensity in competition is due to a range of factors:  
* There are many similar competitors active in the market. These carriers operate virtually the same aircraft type and their business models are comparable at a worldwide level [175]. Both the combination passenger airlines and the dedicated all-cargo airlines principally provide airport-to-airport services, and they source their traffic from air freight forwarders. In contrast, AeroLogic only acts as a linehaul carrier for its two JV partners, so its business model is quite different to the other incumbent airlines in the global air cargo industry.
* Air cargo capacity can only be introduced in quite large increments [175]. As previously noted, the major air cargo carrying airlines typically operate dedicated freighter aircraft, with airlines such as Cargolux, Nippon Cargo Airlines, and AirBridge Cargo Airlines operating fleets of Boeing B747-400 freighter or Boeing 747-87 freighters. These aircraft have a commercial payload of around 121.9 and 132.6 tonnes, respectively [179; 180]. Other airlines, such as Etihad, Lufthansa Cargo, and Korean Air operate the Boeing B77-200 LRF, which has a commercial payload of 103.7 tons [181]. Once again, AeroLogic has a competitive advantage in that its capacity is strategically deployed to satisfy the JV partners' requirements. Additionally, it only transports cargo on their behalf, so the size of the fleet is tailored to meet the volumes of cargoes generated by the two JV partners.
* The fixed assets that are required by actors to compete in the global air cargo industry, such as aircraft, air cargo terminals, and office buildings, can usually only grow in larger and fixed steps [175]. Aerologic, once again, enjoys an advantage as its fleet size and aircraft type is tailored to satisfy the JV partner requirements. As the airline only transports the JV partners' cargo on an airport-to-airport basis, it is not directly affected by the necessity for larger air cargo terminals as the JV partners take delivery of the cargoes directly from the aircraft. In contrast, both the combination and dedicated all-cargo airlines contract their cargo handling services to dedicated cargo handling companies [4] and, thus, adequate and efficient facilities are required to accommodate future growth and sustain the airline desired cargo service quality standards. The integrated carriers, such as FedEx and United Parcel Service (UPS) operate cargo terminals at their major and min-hubs, and contract cargo handling services at other airports.  
* The barriers to market exit in the air cargo industry are high [175; 182] due to the specialized means of production (aircraft), high fixed costs associated with the retirement of aircraft, and other government barriers [175]. Additionally, it can be quite difficult to sell large freighter aircraft [182].