Greedy Tactics? Airlines Raising Rates
Co-loaders in China are complaining about an underhand approach instigated by a number of Middle Eastern and Asian carriers. They have accused the airlines of “greed” and “sneaky practices” following the breaking of BSA contracts.
The airlines are now resorting to “greedy” tactics in an attempt to recoup lost income. The sharp practice is a bid to raise rates by three or four times the amount originally agreed.
What’s going on?
Master co-loaders make deals a year or a season in advance, based on the ULD allotment on individual flight numbers.
Airlines have begun cancelling their scheduled flights and offering an alternative flight number instead.
By offering an alternative, the airline is covered for breaking the agreement.
·However, the ‘new’ flight, promoted as an ad-hoc charter, is now three times the original price.
Christos Spyrou from Neutral Air Partner, confirmed that master co-loaders were increasingly angry at this behaviour.
“This is not just normal price rises because of demand – this is carriers increasing their prices in a sneaky way.”
“Consolidators in China have invested so much money in the BSAs with the airlines. Some business owners have used their houses as collateral, as their deposits with carriers can reach millions of dollars, and they have to gamble with pre-booked ‘dead-freight’ capacity from 2,000 to 5,000 tons all year round."
"They will often lose money in the low season and try to make up in the peak – it’s a lot of cargo and a lot of money.”
Why is this happening?
Current challenges in China have made the situation more volatile:
The International Import Expo has led to limitations on charters, oversized cargo and cancellations. This has resulted in soaring rates, with dramatic overnight price hikes.
China’s strict Covid isolation policies have led to a shortage of labour at airports.
Airlines are also offloading booked-freight for higher rates, leaving cheaper-rate freight behind.
Mr Spyrou said the current turmoil in the market was making it easier for airlines to renege on master co-loader agreements.
“The charter issue, and the expo, gives the airlines another reason to play games. Airlines often cancel flights anyway when there are restrictions in China, as it’s easier than dealing with them.”