All-in pricing grows alongside charter market

The COVID-19-driven shortage in bellyhold capacity has led to intense growth in the charter market over the past year and a half. Alongside the “traditional” pricing model for charters, so-called “all-in” charters offer forwarders a single price for an ad-hoc charter, but at an inflated price. [caption id="attachment_95314" align="alignright" width="450"] Cargo loads for a JAS charter flight operated by Atlas Air. Photo courtesy of JAS Worldwide.[/caption] Estonian charter carrier AVEM AERO first began offering all-in charters in early 2020. The price includes “everything you can imagine,” said Nikolay Kurbanov, managing director at AVEM AERO, including deicing fees and demurrage. “It also includes diversion to alternative airports,” he said. AVEM AERO charters operate using smaller aircraft like the SAAB 340, which can carry up to 3.8 tonnes, or a maximum of 10 Euro pallets. The company arranges between two and five charters weekly, according to Kurbanov. The model has been around for decades, according to Pierre Vanders, group cargo operations director at Chapman Freeborn, which has long offered all-in pricing. It offers a quick solution for forwarders without “the capacities to arrange all the peripherals that make a flight happen safely,” he said. However, Chapman Freeborn defines the all-inclusive price differently than AVEM AERO. “There are some misconceptions of the word ‘all-inclusive,’” Vanders said. Customs clearance, cargo screening and aircraft deicing are often not included in the broker’s all-inclusive offering. Essentially, the all-in pricing model offers forwarders peace of mind, according to Ed Gillett, co-founder and director of U.K.-based booking platform CharterSync. Forwarders pay a single price up front and avoid long email chains and additional invoices after the shipment has been completed, Kurbanov said. “Interestingly, chartering was slowly losing its popularity over the last decade until COVID-19 arrived, and now the world has quickly learned that cargo and logistics play a very important role in our daily lives,” Vanders said. AVEM AERO saw a massive increase in charter requests since it began offering all-in pricing, but Kurbanov couldn’t say for certain whether COVID-19 or the "all-in" model itself was mainly responsible. AVEM AERO in 2020 saw a 50% year-over-year increase in the number of charters arranged. CharterSync, meanwhile, saw a 383% YoY increase in charter bookings on its platform. Still, the all-in pricing model is more appealing to some forwarders than to others. “Old guard” customers tend to prefer the traditional model, according to Kurbanov, while younger ones are happy to make use of the streamlined approach. CharterSync’s Gillett painted a slightly different picture. All-in pricing tends to be attractive to less-experienced forwarders, he said, because they’re unfamiliar with the extra charges that might be involved in traditional pricing. Experienced forwarders, on the other hand, know how to account for additional fees like security screening and prefer to work out the most cost-efficient price. “You have to be a bit cautious with all-in pricing,” Gillett said. “If we’re looking at the widebody market, what tends to happen is, if anyone is offering all-in pricing, there’s a level of uncertainty involved.” Airlines often don’t have time to gather accurate pricing information from airports and handling agents prior to shipment, leading them to inflate the prices of all-in charters to avoid a loss, according to Gillett. “That’s why we try to encourage airlines not necessarily to offer all-in pricing, because we want to be as competitive as possible,” he said. “I would say that COVID has probably increased the number of customers wanting an all-in price,” Gillett noted. “And that’s, again, just down to simplicity.” As the world comes to grips with COVID-19, demand for all-in pricing will probably revert, he speculated.

All-in pricing grows alongside charter market

All-inclusive pricing streamlines ad-hoc charters, but is it worth the extra cost?

DHL sees added air cargo capacity easing supply chain snarls

CFS: More e-tailers pursue own-controlled air as a competitive advantage

Related Posts

Challenge Group launches engine dolly at LGG

New de minimis executive action targets Chinese retailers

CVC willing to bump DB Schenker bid after losing to DSV

CFS: More e-tailers pursue own-controlled air as a competitive advantage

Cargo Facts Free Newsletters

Cargo Facts Connect Podcast

Follow Us

Welcome Back!

Retrieve your password