Air Charter operators are facing various pressures in an increasingly competitive aviation industry with tighter regulations, congestion issues and uncertain economic conditions, but the flexibility and customizability of air charter operations will continue to fill a gap left by scheduled flights.

Industry operators said global air charter services will see tapered volumes this year compared to 2018, but the outlook for the industry in general remains positive as businesses will continue to need a service that could meet all their requirements in terms of the flight route, timing, surface logistics and other ad hoc air transportation.

Tapered volumes in 2019

Antonov Airlines saw volumes decline in 2019 – reflecting a general industry trend – but noted an uptick in the final quarter of the year driven by charter of heavy cargoes.

“There has been a decrease in the volume of operations, but this applied to the air charter market as a whole. There has been an upturn as we enter the final quarter, although not as strong as we’ve seen in previous years,” Paul Bingley, Antonov’s commercial manager told Asia Cargo News.

Being a pure cargo operator, Antonov’s strongest sector remains aerospace, and in the first six months of the year, Bingley said the company was able to retain 67% of the outsize and heavy air cargo market.

“With the increasing production of new aircraft for passenger airlines, we are increasingly assisting aircraft manufacturers to meet tight deadlines for delivery to their customers.

The space industry also continues to provide us with long-term projects, certainly throughout 2020-21,” Bingley added.

The European Union, the United States and China, “countries with the strongest economies are driving the demand,” he said.

For AirBridgeCargo Airlines, the first eight months of the year was also slower, although expectations of continued robust growth in the perishables, live animals and automotive segments could push the airline to hit the same level as 2018.

Increased air charter for live animals, perishables

“Commodity-wise, we have seen a stable and robust demand from customers with live animals, automotive goods, flowers, and aerospace. The highest contributor to charter volume growth remains transportation of live animals – cows, horses, cattle, pigs, etc,” Nikolay Glushnev, general director, AirBridgeCargo Airlines, told Asia Cargo News.

“For the first eight months of 2019 we have organized more than 180 charter flights delivering up to 3% of the total ABC cargo carried, which is slightly less year-on-year, although we expect to hit the same level as in 2018 till the year-end,” Glushnev added.

For UK-based worldwide passenger and cargo air charter broker Air Charter Service (ACS), bookings for both private jets and cargo charters were also less for the year, driven mainly by economic uncertainties.

“2019 has seen slightly lower than expected growth in our private jets and cargo divisions but our commercial jets department is having a much better year than forecast,” said Stephen Fernandez, ACS regional director, Asia Pacific.

He noted that private jet flight volumes have increased “with more flights being booked, but the average value is slightly less.”

“Our cargo division [meanwhile] has been buoyed by more charter flights taking place for the resources sector, mining, oil and gas, but this has been tempered with less demand for automotive and consumer electronic charters,” he added.

Global market research firm Technovo said in its Global Air Charter Services Market 2018-2022 report that the global air charter services market is expected to hit a revenue of close to US$31 billion by 2022, driven by the increasing demand for cargo charters. It said volatility in aviation fuel prices is a challenge for the industry as well as airport congestion and the use of air space, which is becoming increasingly crowded as the big airlines launch more routes.

Challenges to air charter operators

Regulations and congestion problems are becoming more challenging for air charter operators, though the main advantage of the industry still lies on being able to cater to specific needs and requirements of clients – in terms of destination, time and other tailor-made requests to suit specific needs.

“Stringent environmental and navigational regulations mean we have to keep pace. The boom in low-cost passenger flying also means that many regional airports have become more and more congested, forcing us to seek other more cargo-friendly airports,” Bingley said.

“Advantages are the ability to operate to the charterer’s requirements and to save significant time and money,” he added, explaining that ‘just-in-time’ requirements, sensitive shipments such as space satellites, and the ability to reach remote destinations and land-locked countries that are not well-served or hindered by poor infrastructure is also served by air charters.

Fernandez said another challenge the industry faces are the risk of airline bankruptcies. “Bankruptcies are an ever-present risk, but one that is heightened when the macroeconomic landscape isn’t good,” he said.

Serving a gap in the industry

Glushnev said air charter solutions are chosen when the customer needs speed, safety and reliability. It could be the delivery of brand-new cars for the model release; pigs, cows or horses for a breeding programme; flowers in time for Mother’s Day; or many other types of urgent cargo.

“Charter flight is a highly-customizable solution which is chosen when we talk about failure in planned logistics, in emerging situations or when we deal with special cargo. For so many major businesses today, using air cargo is their preferred option because when they look at the entire risk/opportunity and price/quality /time ratios, they see air cargo as being highly competitive, and it gives them the certainty they need,” Glushnev said.

“Even though air freight costs are always higher compared to the sea, rail or auto-delivery, the customers we work with are looking at more than just the transportation cost.”

Outlook remains positive

“We expect a positive dynamic in both the short and long term,” Bingley said. “Scheduled carriers are unable to provide the flexibility that air charter can provide. The movement of outsize cargo by scheduled carriers always presents a problem, but with a charter the customer will always enjoy a greater amount of freedom.”

Fernandez said over the business cycle the demand for charter flights will “wax and wane,” but the outlook remains optimistic. “Chartering an aircraft to transport cargo is normally the most expensive choice and one chosen due to a lack of other options, or it is the lesser of two evils, i.e. the cost of not having the cargo delivered by charter in terms of lost time is more than the cost of the flight itself.”

By Charlee C. Delavin

Asia Cargo News | Hong Kong