Volume 1 Issue 8 - October 12, 2007
A Survey and Optimization-based Evaluation of Development Strategies for The Air Cargo Industry
Yu-Hern Chang, Chung-Hsing Yeh, Shih-Yi Wang

Dean, College of Management, NCKU
Email: yhchang@mail.ncku.edu.tw

International Journal of Production Economics, 106(2), 550-562.
Paper summary for publicity purposes

The Taiwanese government has been establishing the national air cargo development policy to improve the competitiveness of Taiwan’s air cargo industry in the region and to further develop Taiwan as a regional and international air cargo hub. This paper develops a novel optimization-based approach for evaluating alternative development strategies for implementing Taiwan’s national air cargo development policy. The evaluation result is highly effective and acceptable, as the approach integrates experts’ opinions from three stakeholder groups (including the government, the academic, and the air cargo industry) and maximizes the interests of all stakeholder groups as a whole. The research findings suggest that the best national development policy must consider the best interests of all stakeholder groups, and not individual ones. The outcome of this paper is of practical significance, as it helps the government work out achievable national’s strategic development plans with prioritized strategies for enhancing the competitive advantages of Taiwan’s air cargo industry.

With the air cargo industry being the fastest growing sector in the dynamic global freight market, Taiwan’s air cargo industry faces strong competitors in an increasing competitive regional and global market. To gain competitive advantages and to ensure the sustainable development for Taiwan’s air cargo industry, the government needs to identify development strategies for the national air cargo development policy. With limited resources available, it is of strategic importance for the government to evaluate and prioritize alternative development strategies in terms of their importance and achievability. It is thus the primary purpose of this paper to evaluate the policy implementation preference of alternative development strategies in a measurable form.

Fig.1. Development goals and strategies for Taiwan’s air cargo industry
To identify effective development strategies for establishing Taiwan’s air cargo development policy, the first author of this paper has chaired a series of workshops and extensive discussions involving government officials, academic researchers, air cargo practitioners in relevant public and private sectors. As a result, 18 development strategies are identified, which can be embodied by 6 development goals as shown in Figure 1. To ensure the 18 development strategies can be effectively implemented and supported by the government and the air cargo industry, these strategies are prioritized and categorized by integrating relevant stakeholders’ opinions. As such, we devise an expert survey process to evaluate these strategies in terms of their relative importance and achievability. Experts involved in the survey process include government aviation officials (representing the government), academic researchers (representing the general public), and air cargo practitioners from both common carriers and contract carriers (representing the air cargo industry), as the three stakeholder groups for the evaluation problem.

To facilitate the survey process on a newly formulated evaluation problem in a new decision setting, we develop a new fuzzy linguistic assessment method for the experts to give their subjective opinions. In particular, we develop a novel hierarchical approach to aggregate experts’ assessments on a large number of alternatives (e.g. 18 development strategies grouped into 6 goals). In addition to making the assessment process practically plausible, this hierarchical approach reduces the number of pairwise comparisons required for each expert from 153 to 36. This research work represents a significant methodological contribution to the decision analysis and policy evaluation fields.

Based on the notion that a balanced view among all stakeholders should be taken for developing a nation’s development policy, we develop two optimization models to maximize the overall preference value of the 18 development strategies in accordance with the best interests of the government and the air cargo industry as a whole. With the three stakeholder groups holding different views of how these 18 strategies should be prioritized in order to maximize their own best interests, the optimization models generate the best compromised solution by maximizing the overall interests of all three stakeholder groups. The overall preference value of the 18 development strategies will decrease if we consider only the best interests of individual stakeholder groups. This research finding clearly suggests that, to maximize the overall national interests, a nation’s development policy should consider the best interests of all stakeholder groups as a whole, and not merely the best interests of a particular stakeholder group.

In addition to prioritizing the 18 development strategies, we have developed a flexible approach to categorizing these strategies into four planning zones, including (a) priority zone - high weight and high achievability, (b) long-term zone - high weight and low achievability, (c) contingency zone - low weight and high achievability, and (d) non-priority zone - low weight and low achievability. Figure 2 shows the resultant policy planning matrix, where the 18 strategies are indicated with a dot corresponding to their optimal weights and achievability level. The rectangular area shows the possible planning positions of the corresponding strategy under various decision settings based on experts’ fuzzy assessments. The strategic development plans derived can be flexibly accommodated to practical policy decision settings, thus providing a guideline for setting up a national development policy. Under various settings, both S13 (improving operational efficiency) and S51 (expediting the establishment of free trade zones) have the highest priority consistently.

Fig. 2. Four planning zones of development strategies
The research findings of this paper provide useful insights in planning Taiwan’s national air cargo development policy for enhancing the competitiveness of the air cargo industry. The novel optimization-based evaluation approach developed has general application in evaluating policy alternatives based on subjective judgments of experts in different stakeholder groups.
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