Aviation Logistics Knowledge Lecture – Choice of Different Charter Types

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Aviation Logistics Knowledge Lecture – Choice of Different Charter Types

Hello everyone, at the beginning of this new year, I would like to wish everyone good health and all your wishes come true. In the subject of reading, everything goes smoothly; the business of work is booming, and the goods are in rotation. The last board type article was sought after by many small partners, and I am also very grateful for your support here. If you want to review it, you can click here to review it. There are also some friends who have put forward other opinions, and I also very much welcome you to communicate with me more. If you are interested, you can click “Find the author” in the lower right corner of the official account menu to contact me directly.


Well, without further ado, let’s start the content of this issue right away.


As we said before, due to the epidemic in the past two years, charter flights have suddenly sprung up, allowing many small partners who have never been in contact with the charter business to participate in the charter business at once. There are also many agents who also want to try charter flights. But do we really know what we need? This article is to briefly explain the current mainstream charter forms and how we should choose different charter businesses.


First of all, the so-called charter plane is a charter business, and the carrier contracts all or part of the positions on the plane in the form of a dead contract. The current charter flights are usually in the form of wet leases, that is, the cost of the charter flight includes the cost of the crew, maintenance, aviation fuel, and on-site operations. So, when we deliver, we can have the same service as a normal commercial flight. We don’t feel much difference except that the shipping needs to be paid in full in advance.


And this charterer can be an individual, a freight forwarder, or any organization that can pay for the charter. Therefore, its identity could not be determined by the action of the charter flight. Sometimes, government departments can also carry out charter flights to carry out some urgent supplies and personnel transportation.


Next, the charterer allocates the storage space based on the purpose and reason for the charter. In the past, the most common reason for charter flights was simply because there were some large-scale project cargoes, and commercial flights could not meet the project requirements in terms of timeliness and storage space, so the charter business was born. And these charter planes, ordinary agents can’t intervene, because the entire plane is the cargo of that project. Yes, even if you have money, you can’t go there. For example, if there is a park that is privately owned, it doesn’t mean that you can go in and visit by paying the entrance fee.


Later, some charter operators found that the storage space was not fully utilized after chartering the flight, which would lead to a waste of storage space, and once calculated, the freight per kilogram would increase, so they put the remaining storage space on the market for sale. , only this one class, no waiting after expiration. This is the pattern we see a lot now. Usually this is done by an agent (ie, a freight forwarder).


Later, some charter operators, who were originally agents, left the commercial flights due to the epidemic, their capacity was greatly reduced, or even suspended, resulting in the inability to meet their own needs, so they discussed with the carrier to do a long-term charter flight to meet the After your own needs, put the remaining positions on the market to sell. This model is also very similar to ordinary commercial flights. It is equivalent to the charterer and the carrier doing a BSA, and then back-to-back positions to other agents in need.


However, there are some agents who do not know much about the charter business. When they see others charter flights, they are eager to charter flights, thinking that there is a high profit margin here. But I can tell you bluntly that such an approach is reckless and does not conform to the logic of charter flights. It can also lead to the negative impact I mentioned earlier: misleading the carrier into thinking that the market demand is high, which in turn leads to inflated charter prices. However, I do have capacity needs, and if I do a charter flight, customers will think it’s great when they hear it, right? Should I go for a charter flight at this time?


Well, let’s analyze it. The logic of the three charter flights has been described above. I don’t know if you have noticed that, no matter which one, the starting point is one: demand. When we consider whether to charter a flight, the final decisive factor is our needs. Let’s start with a simple example: Suppose now I have a 100T cargo that needs to be shipped to LAX urgently, and it must not be batched. At present, none of the commercial flights on the market can help me ship them in a batch in a short period of time. Then, at this time, I need a whole machine charter business, and only charter flights can meet my needs.


However, if I only have 10 tons of cargo on hand, should I go for a charter flight? At this time, in fact, there is no need to charter the plane by yourself, you can sublease the storage space of others. Because 10T cargo is not a lot, there is no model that can be fully utilized by you, and the consequence of not fully utilizing the storage space is that the cost per kilogram soars. At this time, there is no need for brain fever to do charter flights. Why does the cost per kilogram soar? Let’s do the math: Suppose the price of a charter flight is 1 million, and the cost is fixed. If 100T cargo is loaded on the plane, then the freight per kilogram is 1000000 / 100000 = 10 yuan/kg; if 10T cargo is loaded on the plane, then the freight per kilogram is 1000000 / 10000 = 100 yuan/kg. You see, it will come out as soon as it is calculated, right?


Of course, there are actually quite a few agents who are very wolfish and feel that although they only have 10T cargo, they are confident that they can receive 90T cargo in the market to fill the position. Then, he may also package a plane. After the package is finished, the remaining storage space is released. This is not uncommon. The risk is that if the cargo is not collected by take-off time, but the plane is about to fly again, the charter will be a loss. The carrier wants to charge the entire aircraft in full, because you are a charterer, and how to use the space is your problem. As long as it can be packed without affecting the safety of the operation, the carrier will not stop you.


If it is a semi-package or a partial package (Partial Charter), then it is necessary to see if the carrier is willing to give you this way. Take the half package as an example, that is, half of the storage space on the flight is packaged, and the remaining half is controlled by the carrier. At this time, the carrier has to see if there are other people in the market who can take on the half of the position. If so, then everyone is happy; if not, the carrier is unlikely to rent out half of the position. Unless, the chartered plane commercialized the price of the whole machine and went to the half of the package. At this time, the carrier has no loss, so he is willing to try. But I think, no chartering business would be so IQ dropped, to do such outrageous behavior, right?


Then, let’s discuss again. Some charter companies and carriers have chartered aircraft for a certain segment for a long time. Although they also have some goods, they are mainly sold in the market. In fact, in this form, the charterer has already played the role of GSA to some extent. Because he is mainly responsible for the sales task of the carrier in the local market (maybe even the foreign market). But at the same time he also has his own goods. For some hot destinations, this approach is advisable, but market prices should also be considered. Because the current market price is unpredictable, the quotation today is more than 70, and it may become more than 30 tomorrow (for example, don’t be surprised). However, the charter contract is signed for a long time, and the price is relatively fixed. Cargo owners will choose flights based on market price fluctuations. This situation is very unfavorable to the charterer. In order to receive the goods, they have to adjust their selling price according to the market price. If you can’t fill the plane with your own cargo, you may lose money.


Of course, I don’t recommend everyone to cut the leeks at this time. As the saying goes: Heaven is good for reincarnation. Everyone is just doing business, and there is no need to go to the bottom of things and lower prices when others are losing money. Such an approach is unkind. If one day demand explodes and prices recover, people who might gloat at the misfortune will switch identities.


Having said so much, I want everyone to have a more rational analysis when considering the charter plan. Don’t slap your thigh and say you’re going to a charter flight. Many times, being a charter business is actually walking on thin ice, and the money is not so easy to make. As long as the profit is reasonable and the demand can be met, cooperation can be considered.


The above are some general charter thinking. In fact, when we were doing charter flights, many people thought in one direction, thinking that if I had the goods on hand to ship, I needed to charter the flight. However, when we really play charter flights, we must not only consider export goods, but also consider Return shipment. For example, now I have PVG-AMS cargo, and the cargo volume is large and stable. I really can consider the whole package. However, if I also have demand on the AMS-PVG return cargo, then this charter flight can be considered a fun. Because after adding the return freight, my cost is further reduced, and it is more conducive to the operation of the flight, and it is more likely to maintain the long-term operation of the flight.


Here, too, I have to say a fair word for carriers and charterers. The carrier will launch the flight after fully analyzing and studying the market. For the carrier, it is actually very difficult to operate a flight. Nowadays, many cargo owners often feel that the carrier is a gold-sucking beast, exploiting the cargo owner, and trying every means to reduce the transportation cost. In fact, the carrier is constrained by many factors. Local market operation characteristics, government support, local civil aviation policies and regulations, market price fluctuations, etc. will affect the carrier’s earnings. So in fact, being a carrier is also difficult. In the same way, the charterer and the carrier are also bound, so he is not guaranteed to make a lot of money, and there are also a lot of risks. Many cargo owners do not have a scientific understanding of international transportation, and feel that both the agent and the carrier want to frantically harvest wool, but it is not necessary. The agent must educate the owner, eliminate this misunderstanding, and make the cooperation between the two parties based on mutual respect, so that everyone can be profitable, and the cooperation between the two parties can be further deepened. As long as we maintain an objective attitude and choose the most suitable charter flight according to our own needs, the development of the international air transport market will become more and more healthy.


Well, we are here for this issue, thank you again for your support. I hope that everyone can continue to gain more knowledge of dry goods by air here. See you next time!

NB: Karron is the owner of the “NatureCalls” Wechat Official Account.

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