In a highly competitive air cargo industry, companies need to differentiate their services by adopting strategies that aim at satisfying the customers. Air cargo service providers must focus on improving their service quality to meet the expectations of customers and enhance market share. Good service quality can be achieved by deeper knowledge on customer’s needs and how they can be satisfied by the service provider. To foster the competitiveness through quality in the air cargo industry, in this study, a framework for designing and developing innovative services was proposed by reconciling Kano’s model with the quality function deployment (QFD) technique. The Kano model helps managers differentiate among various types of customer requirements so as to obtain an understanding of their underlying needs. These deeply analyzed customer needs are then conveyed into the QFD process which guides service design managers through the creation process of a new service. This study also includes an application of this proposed integrative framework in an airline’s cargo sector. The results show that, in order of importance, capability to handle special cargo, standard operating procedures, website with enquiry methods and warehousing are in greatest need of improvement. In terms of design requirements, the four most important items focus on redeveloping and improving IT infrastructure, cargo loading and offloading management, container and pallet packing data and professional ability and skills.