Charter Report Market Intelligence

COVID-19: Impact on Charter – Charter Report 2020

by Global Sky Team

COVID-19: Impact on Charter – Charter Report 2020

Among its various impacts, the COVID-19 outbreak has disrupted aircraft operations around the world. The influence of quarantining and border control policies on the aviation world has been etched into its every tentative stage of transition. As governments enact disease-control measures on modes of travel, the aviation industry finds itself adapting to many changes with regards to international transportation, with many numbers taking a toll.

Based on results from the Asia-Pacific business jet operators and brokers surveyed, most interviewees experienced an increased amount of inquiries for both domestic (60%) and international (65%) flights, which may reflect the constantly changing travel restrictions and quarantine measures imposed by Governments worldwide. Still, while inquires increased, there are some discrepancies regarding the
number of both domestic and international flights operated. Of those interviewed, most believe there were an increased number of domestic flights and fewer international flights during the first half of 2020. Regarding charter rates, approximately half of this survey’s respondents believe the pricing of domestic
charter flights has remained the same, while 40% believe pricing on domestic flights has increased. An overwhelming majority of this survey’s respondents (85%) believe pricing on international charter flights has increased.

The purpose of charter has varied throughout the pandemic, but the majority of charters appears to be individuals returning to their home countries. In second place are flights conducted for business purposes or for VIP travel. In third place is a number of charters handling the citizen repatriation, as coordinated by the government. Finally, the remaining flights deal with the transportation of cargo.

Among interviewees for the survey, only around 10% expressed pessimism about the fate of business aviation onwards. In contrast, a resounding 60% of interviewees responded that they were optimistic about the future of the aviation industry as it pertains to the evolving global health crisis. In accordance to the ever-changing tides of “these uncertain times,” a remaining 30% expressed “uncertainty.” 

A look at the above map may reveal connections between popular flights paths and the reasons behind those flights. According to Air Charter Service (ACS), in the early stages of COVID-19, the Asia charter market witnessed a higher demand than normal after the typically busy Chinese New Year holiday. This came as many looked to flee the region.

During the later period of this pandemic – which saw the US and Europe heavily hit – most flights completed were for repatriation efforts, rather than business or travel. March, in particular, saw a high demand for flights returning to the Asia-Pacific region – according to ACS.

As expected, long-haul flights have been much more common during the COVID-19 period rather than regional flights, particularly as Asian countries have implemented strict travel restrictions and quarantine measures. 

Enquiries on charter flights are still up, although, the logistics of flying throughout Asia remain tricky. With varying restrictions from country to country each flight requires more support and logistics. Once countries begin to open up, ACS expects to see stronger than normal demand for charter from different types of customers.

Since the start of COVID-19 cargo flights have been crucial in transporting goods, particularly medical supplies and personal protective equipment, to areas in need. As travel restrictions have limited the movement of people, air cargo has seen far fewer restrictions. Still, global supply chains have been interrupted and demand for cargo has seen a spike. Regional Director, Stephen Fernandez, of global air charter brokerage company, Air Charter Service, shared insight on the air cargo market in the Asia Pacific and some of the factors to consider when flying cargo.

AIRCRAFT CARGO CHARTER

Since the start of COVID-19 cargo flights have been crucial in transporting goods, particularly medical supplies and personal protective equipment, to areas in need. As travel restrictions have limited the movement of people, air cargo has seen far fewer restrictions. Still, global supply chains have been interrupted and demand for cargo has seen a spike. Regional Director, Stephen Fernandez, of global air charter brokerage company, Air Charter Service, shared insight on the air cargo market in the Asia Pacific and some of the factors to consider when flying cargo.

Air Cargo Flight Demand in APAC

Seasonally, the summer months are not a peak time for cargo charters. That said demand for capacity has not fallen by as much as the supply of capacity (due to the lack of commercial airliners flying). Generally, across the board in Asia Pacific, figures are up from the prior year. 

There was an enormous spike in bookings in January 2020, with the transport of medical supplies and other materials into China to support efforts to contain the initial COVID-19 outbreak. This continued into the first half of February, but by the second half of the month the market made a 180-degree turn. Medical supplies were then flying out of China. 

As the factories on the mainland reopened, commercial cargo joined the scramble to secure capacity out of China. Both intra-Asia and Asia to the world, we’ve seen a sizeable increase in demand for cargo charters for both medical supplies, and commercial cargo.  Underlying the demand for chartered capacity is, of course, the huge reduction in passenger aircraft cargo capacity.

China, Thailand, Malaysia, Singapore, Japan, and Indonesia have been where we have experienced the highest demand. Still, across the region it’s above normal.

Operational Requirements

ACS at the outset was purely a specialist in chartering cargo aircraft.  The vast number of years of experience contained within our body of cargo aircraft specialists results in there not being too many things we haven’t seen before and know to prepare for.

When planning any cargo charter flight, the following factors determine the appropriate type of aircraft and airline(s):

  • Largest piece(s) of cargo amongst the load to be carried;
  • Total amount of cargo to be loaded;
  • Nature of the cargo, specifically whether it’s dangerous goods, live animals, or requires some form of special handling;
  • Airport suitability (runway length, pavement strength, equipment to load / offload, etc.);
  • Traffic rights.

Aircraft & Crew Availability 

Cargo aircraft availability on everything from a Boeing 757F-sized aircraft and larger had been severely limited during those early months of the pandemic. In the first half of 2020, it was an enormous challenge with aircraft availability changing hourly. You could have a solution in the morning, and it may be booked a few hours later. 

Additionally, there are some restrictions on aircraft types that need to be known prior to cargo flight. For example, in Singapore you can no longer operate Antonov 12s nor can you take in any aircraft with Stage 2 engines, due noise restrictions.

At ACS, we maintain a global record of current availability and pricing which is published for internal use twice a day. Through this we’ve seen – since the first week of May – demand has reduced availability has returned, and prices are almost back to normal levels.

In terms of crew availability, we’ve seen instances where certain airline crews have refused to fly to certain locations due to COVID-19. Still, for the most part, crews have been undaunted. The bigger issue has been changing travel restrictions where some countries have required crew to undertake the same quarantine measures as passengers.

Charter Operators Reconfiguring for Cargo

Many passenger airlines were very fast to recognize that there was money to be made flying their aircraft just to carry cargo. However, not a very large number have reconfigured (removed the seats) their aircraft to accommodate more. When cargo aircraft availability was severely limited and prices astronomical there were many cases where chartering a passenger airliner to move just cargo made sense. With more cargo aircraft available and prices almost back to normal in most cases the cargo aircraft is once again the more economical solution.

Now, as long as travel restrictions suppress passenger travel numbers, and cargo demand out paces, air cargo capacity airlines will continue to restructure themselves to maintain or grow their share of the air cargo pie.

RESTRICTION & REGULATION

Beginning March 2020, widespread regulations began echoing across the Asia Pacific. Among Asian countries, Singapore was among the first to introduce preventative measures targeting international travelers. In March 16th, Singapore imposed a 14-day quarantine on travelers from ASEAN countries, Japan, Switzerland, and the U.K. On March 18th, Macau prohibited the entrance of all non-Macau residents, except for Mainland China, Hong Kong, and Taiwan residents. Malaysia introduced a full travel ban. South Korea expanded its list of restricted regions to include Mainland China, Hong Kong, Macau, Japan, Italy, Iran, and Russia. Nearing the end of March, Japan and Singapore tightened its borders, Australia introduced domestic flight restrictions, South Korean airports limited GA parking due to grounded commercial jets, and the 2020 Tokyo Olympics deferred for a year following pull-outs by multiple countries. However, the end of March also witnessed an increase in humanitarian flights from China, as well as the opening of select Chinese airports, with flights requiring permission from the CDC and with regulations varying per case.

In April, Japan introduced new restrictions on the U.S. and removed the overnight option for U.S. crew, but its airports nevertheless remained viable options for crew rest as long as aircraft crew rested onboard. Other countries, such as China, South Korea, and Thailand, also offered rest stops, while supporting cargo and humanitarian missions. 

May witnessed Seoul becoming a major tech stop in the region, but entrances into Korea or Japan were challenged by long waiting hours and limited hotels. The next month continued many of the same regulations, but in the end of May, Cambodia was notable for allowing the entrance of foreign nationals under qualifying circumstances—including requirements for a visa, medical insurance, and a medical certificate.

June saw the loosening of travel restrictions in the Asia Pacific—in contrast to areas such as North America, which continued to tighten its borders. Mainland China has largely remained open for humanitarian, cargo, and repatriation flights, and has scheduled for the easing of restrictions on travel between the mainland and Hong Kong. Taiwan has allowed arrivals by residents, diplomats and business travelers. A number of countries have also announced an upcoming renewal of visas. Additionally, Singapore and China have been preparing for the establishment of travel “fast tracks” to facilitate official and essential business movement between the two countries, and many other countries have been following suit.

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