final report topic air freight transportation

Through their membership, these airlinesnot only gain access to the vast resources and expertise offered by IATA but alsocontribute to the collective efforts aimed at shaping the future

MULTIMODAL TRANSPORT

FINAL REPORT

AIR FREIGHT TRANSPORTATION

Professor : Pham Thi Be LoanClass : 47K01.4Group : 7

Members : Ho Hoang Nhi

Nguyen Thi Ngoc PhuongNguyen Hoang Thu

Nguyen Bao Trinh

Da Nang, April 5th, 2023

II OPERATION IN AIR TRANSPORTATION 7

1 Structure of the industry 7

1.1 International Civil Aviation Organization (ICAO) 7

1.2 International Air Transport Association (IATA) 8

1.3 Airlines 8

1.4 Cargo agents 9

1.5 Airport authorities 9

2 Air hubs and spokes 9

III INFRASTRUCTURE IN AIR TRANSPORTATION 11

1 Types of air freighter 11

i

2 Air cargo handling 12

2.1 Unit load devices (ULDs) 12

2.2 Air cargo handling equipment 13

IV TYPES OF CARRIERS 14

1 Private carriers 14

2 For-hire carriers 15

V DOCUMENTATION 16

1 Air waybills (AWB) 16

1.1 Making out of air waybill 17

Multimodal Transport - Group 7 – 47K01.4

1.5 Montreal Additional Protocols 1975 26

2.6 The time limit for suit 31

VIII.COMPARE AIR FREIGHT WITH OTHER MODES 32

IX NEW TRENDS IN AIR FREIGHT SHIPPING 49

1 The digital revolution in logistics and automation 49iii

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2 E-commerce and air cargo 49

3 Air transport innovations 50

4 Sustainable aviation fuel - SAF 50

X INVESTMENT POTENTIAL IN VIETNAM'S AVIATION INDUSTRY 51

XI THE ROLE OF AIR FREIGHT TRANSPORTATION 53

1 Enhancing supply chain dynamics 53

2 Global trade enabler 53

3 Job creation 54

4 Stimulating economic growth 54

CONCLUSION 56

REFERENCES 58

LIST OF FIGURES

Figure I-1: Air transportation 2

Figure II-1: Hub-and-Spoke 10

Figure III-1: Air cargo pallets being loaded on to an air freighter 13

Figure III-2: A Cargolux air freighter being loaded through the side door 14

Figure VII-1: International legal framework 25

LIST OF TABLESTable III-1: Common cargo-carrying aircraft types and their carrying capacities .11

Table V-1: Compare MAWB and HAWB 19

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In the interconnected web of global transportation, air freight transportationemerges as a dynamic force, seamlessly bridging continents and delivering goods withunparalleled speed and efficiency This report discourse navigates through thecharacteristics and the intricate facets of air freight, highlighting its role as a cornerstoneof modern logistics It briefly contrasts the unique advantages of air freight withalternative modes of transportation such as sea, road, and rail, showcasing thedistinctiveness of each method while emphasizing the swift and expansive reach of aircargo services Furthermore, this discussion delves into the current trends shaping theaviation industry, from the transformative impact of e-commerce on supply chaindynamics to the integration of advanced technologies for optimizing operations andensuring sustainability By unraveling these complexities, this report uncovers the pivotalrole air freight plays in facilitating global trade and driving economic growth in today'sinterconnected world.

I.CHARACTERISTICS1.Air freight transportation

Transporting goods by air is the process of moving goods from one point toanother through the use of aircraft as the main means of transportation This processincludes packing, loading, unloading, transporting, and delivering goods from the originairport to the destination airport.

Figure I-1: Air transportation

2.Freight cost

The majority of freight using air service is high-value or emergency shipments.The high cost of air transportation is usually prohibitive for shipping low-value routinecommodities unless there is an emergency.

For emergency shipments, the cost of air transportation is often inconsequentialcompared to the cost of delaying the goods For example, an urgently needed part for anassembly line might have a $20 value, but if the air-freighted part arrives on time toprevent the assembly line from stopping, the opportunity value of the part might becomehundreds of thousands of dollars Thus, the $20 part might have an emergency value of$200,000, and the air freight cost is a small portion of this emergency value.

Examples of commodities that move via air carriers include mail, clothing,communication products and parts, photography equipment, mushrooms, fresh flowers,2

industrial machines, high-priced livestock, racehorses, expensive automobiles, andjewelry Normally, basic raw materials such as coal, lumber, iron ore, or steel are notmoved by air carriage The high value of the products that are shipped by air provides acost-savings trade-off, usually but not always from inventory, that offsets the higher costof air service

3.Speed of delivery

The major service advantage of air transportation is speed, especially over longinternational movements due to rapid airport-to-airport transit times over these longerdistances The terminal to terminal time for a given trip is lower via air transportationthan via any of the other modes

The shippers that use air carriers to transport freight are primarily interested in thespeed and reliability of the service and the resultant benefits, such as reduced inventorylevels and inventory carrying costs Acceptable or improved service levels can beachieved by using air carriers to deliver orders in short periods Stock-outs can becontrolled, reduced, or eliminated by responding to shortages via air carriers.

On the other hand, there can be occasions when time can be lost due to airportcongestion and handling, paperwork and customs delays This advantage of highterminal-to-terminal speed has been dampened somewhat by reduced frequency of flightsand congestion at airports Airports, especially major hubs, often face congestion due tohigh volumes of flights This congestion can lead to delays in take-offs, landings, andtaxiing, ultimately affecting the overall speed of delivery Additionally, handlingprocedures at airports, such as baggage handling, security checks, and customs clearance,can further contribute to delays Paperwork and customs procedures are essential aspectsof international travel, but they can also cause delays Customs inspections, documentverification, and other bureaucratic processes can add significant time to the overalljourney, especially for freight transportation where compliance with regulations iscrucial.

4.Service reliability

The reliability of air freight is usually high due to the more predictable schedules,lower risk of loss or damage, and better tracking and tracing capabilities Airlines operateon strict schedules with daily flights across the globe which leads to more consistentdelivery times for air freight Moreover, advancements in tracking allow for real-timemonitoring of shipments throughout the entire air freight journey, providing greatertransparency and assurance for businesses While air travel can be impacted by severeweather, flights are usually rerouted or delayed for shorter periods compared to othermodes that can face unpredictable ocean conditions.

5.Location flexibility

Air transportation provides unparalleled access to virtually any locationworldwide This enables businesses to tap into global markets and reach customers orsuppliers across continents with relative ease Moreover, the ability to access numerouscountries and markets quickly and easily allows businesses to adapt to changing marketconditions rapidly Whether it is responding to shifts in demand, exploring new businessopportunities, or sourcing materials from international suppliers, air transportation offersunparalleled market flexibility.

In addition, air transportation becomes even more flexible when seamlesslyintegrated with trucking services Airports are typically connected to extensive roadnetworks, allowing for smooth transfer of goods between air cargo terminals anddistribution centers via trucks Trucks play a crucial role in providing last-mileconnectivity, delivering goods from airports to their final destinations, whether it is retailstores, warehouses, or directly to consumers This integration ensures that airtransportation remains a viable option for businesses seeking fast and reliable delivery,even for locations not directly served by airports The combination of air and trucktransportation enables the development of multi-modal logistics solutions that optimizesupply chain efficiency Therefore, businesses can leverage air transportation for long-

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haul, time-sensitive shipments, while relying on trucks for local distribution and door delivery, resulting in streamlined operations and reduced transit times.

door-to-On the other hand, poor accessibility is one disadvantage of air carriers Air travelrelies heavily on airport infrastructure, which tends to be located outside urban centersdue to space requirements and noise considerations This means passengers and freightmust travel to these airports, which can be inconvenient and time-consuming, especiallyif the distance to the airport is significant Unlike other modes of transportation such asrailways or highways, airports are typically not directly connected to the transportationnetwork Passengers and freight often need additional transportation, such as cars, buses,or trains, to access airports This leads to an extra layer of complexity and cost to theoverall journey Airports in remote or rural areas may have limited accessibility, as theremay be fewer transportation options available to reach them This can pose challenges forresidents and businesses in these areas who rely on air transportation for connectivity

Air transportation offers unique advantages for certain types of goods due to itsspeed and efficiency, but there are also limitations and considerations to take intoaccount, including size and weight restrictions as well as security and safety concerns.

Goods that have a high value relative to their weight benefit greatly from airtransportation This includes items such as electronics, pharmaceuticals, luxury goods,and certain types of machinery Despite potentially higher transportation costs, the speedof air travel ensures quick delivery, reducing inventory holding costs and improvingoverall supply chain efficiency Perishable items like fresh produce, seafood, flowers, andpharmaceuticals often require rapid transportation to maintain their quality and shelf life.Air transportation provides the necessary speed to ensure these goods reach theirdestination quickly, minimizing the risk of spoilage and maximizing market accessibility.Furthermore, fashion industry relies heavily on timely delivery of products to meetconsumer demand and stay ahead of trends Air transportation enables fashion brands toquickly move seasonal collections, new releases, and time-sensitive merchandise to

markets around the world, ensuring they remain competitive in the fast-paced industry.Industries such as automotive, aerospace, and manufacturing rely on air transportation forurgent delivery of spare parts and critical components to minimize downtime andproduction delays The speed of air travel ensures that essential items reach theirdestination quickly, keeping operations running smoothly.

On the other hand, while air cargo planes vary in size and capacity, they aregenerally limited in terms of the volume and weight they can carry compared to othermodes of transportation such as ships or trains This means that large or bulky items maynot be suitable for air transportation unless they can be broken down into smaller, moremanageable shipments Even if the weight of a cargo is within the allowable limits, itssize may pose challenges for air transportation Cargo compartments on aircraft havespecific size limitations, and oversized or irregularly shaped items may require specialhandling or may not be feasible to transport by air.

Air cargo transportation is subject to strict regulations and security protocols toensure the safety of passengers, crew, and cargo Certain types of goods, such ashazardous materials or live animals, may require special permits and compliance withstringent safety standards Security measures, including cargo screening and inspection,are implemented to detect and prevent the transportation of prohibited or dangerousitems While these measures enhance safety, they can also introduce additionalprocessing time and logistical challenges for shippers Some cargo, such as perishablegoods or pharmaceuticals, may require temperature-controlled environments duringtransportation to maintain product integrity Air cargo carriers can offer specializedfacilities and equipment to meet these requirements, but additional costs may be incurredfor such services.

7.Security

Security is a critical aspect of air transportation, offering several advantagescompared to other modes of transportation in terms of protecting consignments fromdamage, breakages, theft, and other security threats.

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Air cargo undergoes relatively minimal handling compared to other modes oftransportation such as maritime or road transport This reduces the risk of damage andbreakages during transit, as consignments are less susceptible to rough handling, impacts,and vibrations that may occur in other transportation modes Cargo compartments inaircraft are typically pressurized and temperature-controlled, providing a stableenvironment that helps preserve the integrity of sensitive or fragile goods This controlledenvironment minimizes the risk of exposure to extreme temperatures, humidity, or otherenvironmental factors that could potentially damage consignments.

Air cargo shipments often require strict adherence to packaging and sealingstandards to deter tampering and ensure the integrity of the cargo Tamper-evident sealsand packaging techniques help detect and deter unauthorized access to consignments,providing an additional layer of security during transit Besides, airports and air cargoterminals are equipped with robust security measures, including surveillance cameras,access control systems, and security personnel, to safeguard cargo against theft,vandalism, and unauthorized access These secure facilities provide a controlledenvironment where consignments are less vulnerable to security breaches Airlines andair cargo operators assume custodial responsibility for the security of cargo from themoment it is accepted for transport until it is delivered to the consignee Thisaccountability ensures that adequate security measures are in place throughout thetransportation process to mitigate the risk of theft, damage, or loss.

II OPERATION IN AIR TRANSPORTATION1.Structure of the industry

1.1.International Civil Aviation Organization (ICAO)

The International Civil Aviation Organization (ICAO), a specialized agencywithin the United Nations, fosters collaboration among 193-member countries tooptimize airspace use Since its establishment in 1944, ICAO has promoted diplomaticand technical cooperation, resulting in a robust global air transportation network WhileICAO sets international aviation standards, it respects national regulatory frameworks,

emphasizing sovereignty Vietnam, an active member of ICAO since 1980, not onlycontributes to enhancing global aviation standards but also benefits from the expertiseand resources provided by ICAO.

1.2.International Air Transport Association (IATA)

The International Air Transport Association (IATA), established in 1945, stands asthe preeminent trade association representing a significant portion of the global airlineindustry with a membership comprising approximately 290 airlines, accounting forapproximately 82% of the total air traffic worldwide IATA's multifaceted roleencompasses various functions, including providing support to airline activities andactively contributing to the formulation of industry policies and operational standardssuch as safety, security, training, and the development of unit load devices (ULDs),among others By establishing and upholding these standards, IATA endeavors toenhance operational efficiency, promote safety, and facilitate seamless connectivitywithin the global aviation network Notably, Vietnam Airlines, Vietjet, and BambooAirways have all joined IATA as members, with Vietnam Airlines joining in 2006,Vietjet in 2017, and Bamboo Airways in 2020 Through their membership, these airlinesnot only gain access to the vast resources and expertise offered by IATA but alsocontribute to the collective efforts aimed at shaping the future of the airline industry forthe betterment of all stakeholders involved.

Airlines are central to the aviation industry, responsible for owning, leasing, andoperating aircraft for passenger and cargo transport In some nations, national airlines,known as flag carriers, are government-owned and represent both aviation interests andnational identity The airline industry is diverse, with companies offering specializedservices to meet specific market demands Budget airlines provide affordable, no-frillstravel options Others focus solely on cargo transportation, meeting the increasingdemand for efficient freight services Some specialize in heavy-lift air cargo operationsfor oversized goods The crucial point is that airlines extend beyond their core services,8

with passenger aircraft often carrying cargo alongside luggage This integrationdemonstrates the flexibility of modern aviation, highlighting how airlines adapt to meetthe increasingly diverse needs of customers and market trends.

1.4.Cargo agents

Cargo agents, also known as freight forwarders, are authorized by the InternationalAir Transport Association (IATA) to manage freight shipments on behalf of clientsseeking air transportation services for their cargo They act as intermediaries betweenshippers and airlines, ensuring smooth cargo movement Under IATA supervision, cargoagents follow standards for efficient freight handling IATA oversees their insurancecoverage, assuring clients and stakeholders of their reliability Cargo agents issue airwaybills, streamlining documentation and enhancing efficiency They play a vital role inair freight logistics, ensuring timely and secure cargo delivery, and sustaining the globalair cargo market.

1.5.Airport authorities

Airport authorities are responsible for the ownership, leasing, and management ofthe intricate infrastructure that constitutes an airport This encompasses various elementssuch as terminals, runways, taxiways, aprons, hangars, and ancillary facilities necessaryfor the smooth operation of air travel services These authorities play a crucial role inensuring the functionality, safety, and efficiency of airport operations, thereby facilitatingthe seamless movement of passengers, aircraft, and cargo within the aviation ecosystem.Additionally, they oversee the implementation of regulations, maintenance protocols, andsecurity measures to uphold operational standards and ensure compliance with nationaland international aviation guidelines

2.Air hubs and spokes

Air hubs play a pivotal role in the global air cargo network, strategicallypositioned relative to geographical locations and market proximity to optimize theefficiency of transporting goods over vast distances These hubs serve as critical

junctions where cargo is consolidated by either freight forwarding companies or airlinesbefore being transported between destinations This process involves the deconsolidationof cargo at intermediate hubs, where it may be transferred onto feeder aircraft oralternative modes of transportation for final delivery While the primary objective is tominimize transport costs, the route taken may not necessarily be the shortest but ratherthe most cost-effective.

The utilization of air hubs is essential due to the high unit costs associated with airtransport, attributed to factors such as lower cargo volumes compared to other modes oftransportation, long distances, and the substantial operating expenses of aircraft Byleveraging strategically located hubs, airlines, freight forwarding companies, and aircargo customers can maximize carrying capacity and operational efficiencies overextended distances.

It is crucial to recognize that while the hub system is prevalent on major traderoutes worldwide, some regions may not be adequately served by this network In suchcases, smaller cargo aircraft may be deployed for direct deliveries, provided suitableairport facilities are available Otherwise, cargo may need to be transferred to alternativemodes of transportation for final delivery, highlighting the importance of adaptablelogistics solutions in meeting diverse transportation needs.

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Figure II-2: Hub-and-Spoke

III INFRASTRUCTURE IN AIR TRANSPORTATION1.Types of air freighter

A diverse array of aircraft is utilized for air cargo transportation, ranging fromsmaller aircraft like the Piper PA-31 Seneca with a payload capacity of 600 kilograms tolarger planes such as the Antonov An-225, capable of carrying up to 250 tonnes of cargo Helicopters are frequently employed, especially in areas inaccessible to fixed-wingaircraft, offering flexibility in cargo transportation, with capacities typically ranging from4 to 20 tonnes Helicopters also possess the unique capability to sling loads beneath theaircraft, facilitating tasks like positioning equipment atop tall structures or accessingoffshore oil installations.

Moreover, many passenger aircraft contribute significantly to air cargotransportation by carrying cargo in their belly holds alongside passenger baggage Thisdual functionality enables passenger planes to transport a substantial volume of air cargoworldwide.

While Table III-1 provides examples of common large-capacity air freighters, it'simportant to note that the list is not exhaustive and merely offers a glimpse into thepossibilities of air cargo transportation For instance, as of the present, there is only oneoperational Antonov An-225 aircraft, highlighting the limited availability of certainaircraft models for specific cargo needs.

Table III-1: Common cargo-carrying aircraft types and their carrying capacities

Aircraft Type Maximum Payload(Tonnes)

Maximum Load Volume(Cubic Metres)

In essence, ULDs serve as the airborne equivalents of traditional shippingcontainers, facilitating the efficient and secure stowage of cargo while optimizingavailable space These devices come in diverse forms but share the common objective ofenabling cargo transportation Many ULDs are custom-designed to conform to thecontours of specific aircraft holds, ensuring compatibility and maximizing loadingefficiency.

Air freighters typically feature main and lower decks within the fuselage, eachaccommodating distinct types of ULDs The main deck often utilizes flat metal pallets ofspecific dimensions, secured by netting, while lower deck ULDs may be shaped to mirrorthe fuselage and constructed of lightweight metal, incorporating doors or netting tofacilitate cargo stacking.

IATA has established a comprehensive system for identifying ULDs This systemincludes type coding, utilizing three capital letters to denote container description, base12

dimensions, and specific physical characteristics For in-depth guidance on ULDs andcargo handling procedures, the IATA ULD Technical Manual offers valuable informationencompassing the entirety of the cargo handling system, providing insights into theirintricate operations and management.

Figure III-3: Air cargo pallets being loaded on to an air freighter

2.2.Air cargo handling equipment

In response to the physical constraints imposed by aircraft design, sophisticatedcargo handling systems have been developed to facilitate the rapid and safe transfer ofcargo from airport cargo handling centers to the aircraft itself These systems employfixed conveying mechanisms comprising tracks equipped with powered rollers, enablingefficient movement of Unit Load Devices (ULDs) within airport facilities Moreover,these conveying systems possess the capability to maneuver ULDs, allowing them tochange direction as needed during transportation.

For instance, when ULDs are being transferred into the cargo hold of an aircraft,they may require rotation to ensure proper alignment for safe stowing within the aircraft.

Aircraft holds, accessed through side, front, or rear doors, are subject to dimensionallimitations, influencing the handling process.

ULDs, having reached a designated position adjacent to the aircraft, are lifted bypowered lifting devices, commonly known as hi-loaders, to the aircraft's door.Subsequently, they are conveyed into the hold, typically equipped with roller floors tofacilitate movement Larger heavy-lift aircraft may feature front or rear doors that lowerto ground level, allowing cargo to be loaded using fork-lift trucks Additionally, overheadgantry cranes are often installed in the cargo area of these aircraft to aid in the loadingprocess.

Figure III-4: A Cargolux air freighter being loaded through the side door

IV TYPES OF CARRIERS

Air carriers can be categorized into two main segments: private carriers and hire carriers

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1.Private carriers

Private air carriers, specifically, refer to firms that operate aircraft to transportcompany personnel or freight in support of their core business operations While theprimary focus of private air transportation typically revolves around the conveyance ofcompany personnel, there are instances where these carriers may also transportemergency freight However, it is uncommon for a private air carrier to be specificallyestablished for the routine transportation of freight.

2.For-hire carriers

The for-hire carriers are no longer regulated on an economic basis by the federalgovernment and cannot be easily categorized into specific types because carriers providemany types of services For our purposes, the for-hire carriers will be discussed accordingto the type of service offered (all-cargo, commuter, charter) and annual revenue (majors,nationals, and regionals).

The categories used to classify air carriers in terms of revenue are as follows:- Majors—annual revenues of more than $1 billion.

- Nationals—annual revenues of $100 million to $1 billion.- Regionals—annual revenues of less than $100 million

Major carriers have $1 billion or more in annual revenues and provide servicebetween major population areas The routes served by these carriers are usually high-density corridors, and the carriers use high-capacity planes The majors also servemedium-sized population centers.

National carriers have revenues of $100 million to $1 billion and operate betweenless-populated areas and major population centers These carriers operate scheduledservice over relatively short routes with smaller planes They “feed” passengers fromoutlying areas into airports served by the majors

Regional carriers have annual revenues of less than $100 million and haveoperations similar to the nationals The carriers operate within a particular region of thecountry and connect less-populated areas with larger population centers

The all-cargo carrier, as the name implies, primarily transports cargo Thetransportation of air cargo permits the all-cargo carriers to freely set rates, enter and exitmarkets, and use any size aircraft dictated by the market

Commuter air carriers, a type of regional carrier, operate on specific routes linkingless-populated areas with major cities They often step in to serve routes abandoned bylarger carriers, particularly those with low demand Their schedules are designed to alignclosely with connecting flights at larger airports

Charter carriers, also called air taxis, utilize small to medium-sized aircraft fortransporting individuals or cargo Unlike scheduled carriers, supplemental carriers lackset schedules or routes They charter entire planes for specific origin-to-destination trips,commonly used by travel tour groups and the Department of Defense for personnel andsupply transport Rates and schedules are negotiated within contracts.

V DOCUMENTATION1.Air waybills (AWB)

“Air waybill is a document of cargo carriage by air and constitutes an evidence ofthe conclusion of the contract, the receipt of the cargo and the acceptance of theconditions stated in the contract." (Article 129, Vietnam Civil Aviation No.66/2006/QH11) An air waybill, issued by the carrier airline, serves as a formal contractfor the transportation of goods via air (Rushton et al., 2014) It delineates the terms andconditions of carriage, including details of the goods being transported and the associatedcharges for the service provided

In essence, the air waybill acts as evidence of the contractual agreement betweenthe shipper and the carrier airline, documenting the conclusion of the transportationcontract, the receipt of the cargo, and the acceptance of the terms outlined therein Whileprimarily utilized for air cargo shipments, air waybills may also serve as through deliverydocuments in cases where the majority of the journey distance has been completed by air,but further transportation by road is required This document is instrumental in

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facilitating both domestic and international carriage of goods, ensuring clarity andaccountability throughout the transportation process.

1.1.Making out of air waybill

According to Article 129, Vietnam Civil Aviation No 66/2006/QH11, thepreparation of the air waybill involves the creation of three original copies, each servingdistinct purposes:

1 The first original copy, signed by the consignor, is submitted to the carrier Thisdocument initiates the transportation process and provides essential informationabout the goods being shipped.

2 The second original copy, bearing signatures from both the consignor and thecarrier, is designated for the consignee This copy serves as confirmation of thecontractual agreement between the parties involved and outlines the terms andconditions of the transportation service.

3 The third original copy, signed solely by the carrier, is retained by the consignorupon receipt of the cargo This copy serves as a receipt, acknowledging thesuccessful completion of the cargo's transportation and confirming the carrier'sacceptance of responsibility for the goods during transit.

By providing multiple original copies of the air waybill, this process ensuresclarity and accountability throughout the shipment's journey, facilitating effectivecommunication between all parties involved in the transportation process.

The function of an air waybill is multifaceted, serving various essential purposesin the transportation of goods by air Unlike a sea-freight bill of lading, an air waybill isconsidered a non-negotiable document Its primary functions include:

- Receipt for goods shipped: The air waybill serves as a formal receipt for the goodsshipped, containing detailed statements regarding the quantity, description, andcondition of the cargo This information serves as crucial documentation, formingthe basis of any cargo claim in the event of damage during discharge or other

transportation-related incidents By accurately recording the state of the goods atthe point of shipment, the air waybill facilitates the resolution of disputes andensures accountability throughout the transportation process.

- Evidence of the contract of carriage: Additionally, the air waybill functions asevidence of the contract of carriage between the shipper and the carrier It servesas tangible proof of the conclusion of the transportation contract, documenting theterms and conditions agreed upon by both parties This aspect of the air waybill isessential in establishing the legal framework governing the transportation of goodsby air, providing clarity and certainty regarding the rights and obligations of allparties involved.

- House Air Waybill (HAWB): Issued and signed by the freight forwardingcompany, the HAWB assumes the liability as the carrier, similar to theresponsibilities held by the airline carrier in a MAWB Each individual shipmentconsolidated by the freight forwarder is detailed in a separate HAWB TheseHAWBs are then consolidated and referenced within the overarching MAWB,providing a comprehensive overview of all shipments included in theconsignment

In essence, the classification of air waybills into MAWBs and HAWBs facilitatesthe efficient organization and documentation of air cargo shipments While the MAWBoutlines the overarching contract between the carrier airline and the freight forwarder, the

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HAWBs provide detailed information on individual shipments, ensuring clarity andaccountability throughout the transportation process.

Table V-2: Compare MAWB and HAWB

Parties on AWB Carrier Airline and freight

Shipper andConsignee

Freight forwarder and freight

forwarder’s agent Real seller and buyerAWB No 11 numbers in which Airline code

is the first 3-digit number

Normally numbers and letters included

AWB form Name and logo of Carrier Airline Name and logo of Freight forwarder

Payment method Normally Prepaid Collect or prepaidCargo name Normally “Consolidation shipment

as per attached manifest” Specifically namedAWB

modification Normally more difficult Normally easier

2.Other documentation

In addition to air waybills, various other types of documentation are oftennecessary for the smooth handling and clearance of air cargo shipments These includepacking lists, commercial invoices, certificates of origin, and a diverse array of cargo orcountry-specific documents Airlines, security services, and customs authorities at bothorigin and destination airports may require these documents to ensure compliance withregulatory requirements and facilitate efficient cargo handling processes.

Packing lists provide detailed information about the contents of the shipment,including descriptions, quantities, and packaging details, aiding in cargo handling andinventory management Commercial invoices outline the financial aspects of the

transaction, including pricing, terms of sale, and payment details, serving as essentialdocumentation for customs clearance and accounting purposes Certificates of originverify the country of origin of the goods being shipped, which is crucial for assessingimport duties, taxes, and trade agreements Additionally, various cargo-specificdocuments, such as hazardous materials declarations or perishable goods certificates, maybe necessary to comply with safety regulations and ensure the proper handling ofspecialized cargo types.

Given the diverse regulatory requirements and operational considerations involvedin air cargo transportation, ensuring the accuracy and completeness of these documents isessential for the timely and efficient movement of goods across international borders.Effective coordination between shippers, freight forwarders, airlines, and customsauthorities are key to ensuring compliance and minimizing delays in the transportationprocess.

VI PRICING IN AIR TRANSPORTATION1.Air freight

In air transportation, pricing plays a crucial role in determining the costsassociated with shipping goods by air Specifically, air freight refers to the amountpayable or charged for the transportation of goods via air, commonly referred to as"freight costs" or "freight charges".

One of the key components of air freight pricing is the Air Cargo Tariff This tariffencompasses the charges levied by the carrier for transporting a unit of weight, typicallycovering transportation services from airport to airport exclusively These sectoral aircargo rates are established by individual air carriers or at the industry level, reflecting theprevailing market conditions and operational costs.

Furthermore, the Air Cargo Tariff is instrumental in determining the amountdocumented in the Air Waybill (AWB) This figure serves as the basis for calculatingcharges related to transporting special commodities, such as live animals, human remains,valuables, and vulnerable goods By incorporating these specific rates into the AWB, the

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pricing structure for specialized cargo categories is transparently outlined, ensuringaccurate billing and adherence to regulatory requirements throughout the transportationprocess.

1.1.Weight charge

In the realm of air transportation pricing, the Weight Charge constitutes asignificant component, encompassing various rates and classifications tailored todifferent types of cargo:

- General Cargo Rate (GCR): This rate applies to the transportation of commoditiesthat haven not been assigned a specific commodity rate or classification Ittypically comprises a minimum rate (M), a normal rate (N), and a lower charge forhigher weights (Q)

- Specific Commodity Rate (SCR): SCR is tailored for particular commodities froma designated origin to a specific destination These rates are designed to optimizethe airline's cargo capacity for specific routes and often offer more competitiveprices compared to GCR SCR rates are subject to minimum weight requirementsand generally take precedence over General Cargo Rates.

- Commodity Classification Rate (CCR or Class Rate): CCRs are published forspecific classes of commodities from a specified origin to a designated destination.They are usually indicated as Surcharged (S) or Reduced (R) compared to GCRand are expressed as a percentage of the GCR CCRs take precedence over GCRirrespective of comparisons For instance, commodities such as Newspapers,Magazines, Periodicals, Books, Catalogues, Braille-Type Equipment, and TalkingBooks for the Blind may be assigned a CCR at 50% of the normal GCR Theminimum charge will be either the minimum charge for the specified sector or theproduct of this discounted rate per unit weight and the minimum chargeableweight, whichever is higher.

- Bulk Unitization Charge (BUC): BUC is assessed by carriers to shippers or freightforwarders based on the utilization of Unit Load Devices (ULDs), such as

containers or pallets It includes the minimum charge for the sector carried and theULD used, along with any excess weight charges beyond the pivot weight (themaximum weight permitted at the minimum charge) BUC usage is restricted forcertain items, including dangerous goods, live animals, human remains, andvaluables.

This comprehensive pricing structure ensures that various types of cargo areappropriately priced and accounted for, optimizing efficiency and transparency in airtransportation operations.

1.2.Weight charge calculation

The process of calculating the weight charge for air freight involves several stepsto accurately determine the cost of transporting cargo between airports:

- Measurement of Actual Volume and Gross Weight: Cargo's actual volume andgross weight are measured and recorded.

Actual volume = length × width × height

- Calculation of Chargeable Weight (CW): CW considers how cargo occupies spaceon the aircraft It is determined by comparing the actual Gross Weight (GW) withthe Volume Weight (VW), and choosing the higher one.

Volume Weight (kg) = Cargo volume (cm3)/ 6,000 = Cargo volume (m3) x 166.67

- Weight Charge Calculation: Multiply the applicable rate by the chargeable weight.The applicable rate varies depending on factors such as the nature of theconsignments and the specific sector being served, as well as the chargeableweight of the cargo It is important to note that if the calculated weight charge islower than the minimum charge specified for a particular sector, the minimumcharge shall apply to ensure a minimum fee for the transportation serviceprovided

Weight charge = applicable rate x chargeable weight

By following these steps, airlines can accurately determine the cost of transportingcargo by air, taking into consideration both the weight and volume of the goods being22

shipped This ensures fair and transparent pricing for air freight services, reflecting theresources and space required to transport cargo between airports efficiently and safely.

1.3.Valuation charge

The Valuation Charge is applicable when the shipper declares a value for carriageon the Air Waybill that exceeds a predetermined threshold, such as 22 Special DrawingRights (SDR) per kilogram In such cases, a valuation charge is imposed as a percentageof the declared value exceeding this specific threshold For instance, if the shipperdeclares a value for carriage that surpasses the designated threshold of 22 SDR perkilogram, a valuation charges equivalent to, for example, 0.6% of the excess declaredvalue will be levied

The valuation charge mechanism ensures that the carrier is adequatelycompensated for the increased risk associated with transporting goods that are higher thanthe value set by their transportation carrier This provides a safeguard against potentiallosses in the event of damage, loss, or other unforeseen circumstances during transit Italso incentivizes shippers to accurately assess and declare the value of their goods,promoting transparency and accountability in air cargo transportation.

2.Other charges

In addition to the base freight charges, various surcharges may be applied to airfreight shipments, each serving specific purposes and reflecting additional costs incurredin the transportation process:

- Fuel Surcharge (FSC): This surcharge, imposed by carriers, is typically calculatedbased on the chargeable weight of the cargo It is designed to offset regional orseasonal fluctuations in fuel costs, providing carriers with a mechanism to managethe impact of volatile fuel prices and maintain financial stability.

- Security Surcharge (SSC): Levied by terminal providers, the security surcharge isimplemented to cover the expenses associated with enhanced security measuresmandated by airport authorities These measures are essential for ensuring the

safety and integrity of air cargo operations in compliance with regulatoryrequirements.

- Airline Terminal Fee: Charged by terminal providers, the airline terminal feeencompasses the costs associated with the handling and processing of cargo atairport terminals This fee contributes to the operational expenses incurred byterminal operators in facilitating the smooth flow of air cargo.

- Delivery Order Fee (D/O fee): Carriers or freight forwarders may impose adelivery order fee to cover the administrative costs associated with issuing adelivery order, which authorizes the consignee to retrieve the goods from theairport upon arrival This fee reflects the paperwork and coordination effortsinvolved in facilitating cargo release to the consignee.

- Air Waybill Fee: Carriers or freight forwarders may charge an air waybill fee forissuing the air waybill, a crucial document that serves as a contract of carriage andprovides essential information about the shipment This fee compensates for theadministrative and documentation-related tasks involved in preparing the airwaybill.

- Screening Fee (X-ray): A screening fee may be imposed for conducting X-rayscreening of cargo before loading it onto an aircraft This fee covers the costsassociated with security screening measures aimed at detecting and preventing thetransportation of prohibited or hazardous items, thereby ensuring the safety of airtravel.

These surcharges play a vital role in ensuring the sustainability and efficiency ofair cargo operations by accurately reflecting the various costs and expenses incurredthroughout the transportation process While they contribute to the overall cost of airfreight shipments, they are essential for maintaining the integrity, security, and reliabilityof air cargo services.

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VII.LEGAL REQUIREMENTS FOR AIR TRANSPORTATION1.Legal requirements

Figure VII-5: International legal framework

1.1.Warsaw Convention 1929

The Warsaw Convention is an international convention which regulates liability,in the event of accident, for international carriage of persons, luggage or goods performedby aircraft for reward The convention of 1929 came into force on 13 February 1933 Itwas the first comprehensive legal framework governing aviation at the international level,playing an essential role in supporting the development of the sector and establishing aset of principles, most of which are still effective and constitute the basis of modernaviation law.

1.2.Hague Protocol 1955

The Hague Protocol 1955 increased liability limits for air carriers, expandedcoverage to include various types of international carriage by air, and addressed somelimitations of the Warsaw Convention 1929 This includes expanding the application ofthe regulations to various types of various transportation such as passenger, cargo andmail transportation

1.3.Guadalajara Convention 1961

Guadalajara Convention 1961 is Convention Supplementary to the WarsawConvention for the Unification of Certain Rules Relating to International Carriage by AirPerformed by actual carrier signed in Guadalajara on September 18, 1961 (GuadalajaraConvention 1961) Actual carrier refers to a person authorized by the contracting carrierto perform all or part of the carriage, but is not considered a successive carrier.Guadalajara Convention 1961 focuses on unifying regulations on liability and insurancefor the carriage of goods and passengers by charter aircraft of parties other than thecontracting airlines It expands the scope of application of the Warsaw Convention toinclude these cases and defines the rules on court jurisdiction.

1.4.Guatemala City Protocol 1971

The Guatemala City Protocol of 1971 is an international treaty that amends theWarsaw Convention of 1929, as Amended By Hague Protocol 1955, signed at GuatemalaCity, on 8 March 1971 The protocol introduces several amendments to the originalconvention, primarily focusing on the liability of carriers and the rights of passengers andcargo owners in the event of damage, loss, or delay during international air carriage.

Key amendments introduced by the Guatemala City Protocol include changes toarticles related to the documentation required for passenger and baggage carriage,liability limits for carriers in cases of death, injury, or damage to passengers, baggage,and cargo, as well as provisions for legal proceedings and the application of theconvention to military authorities.

1.5.Montreal Additional Protocols 1975

The Montreal Additional Protocols 1975 are a set of measures amending andsupplementing the Warsaw Convention of 1929, adopted in Montreal on September 25,1975 These protocols expand and adjust the provisions of the Warsaw Convention,particularly in the areas of cargo and postal item carriage, passenger and baggagecarriage, as well as the legal responsibilities of the parties involved in these matters.

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Key adjustments include increasing the compensation limits for loss, damage, ordestruction of cargo, as well as for baggage and passengers Additionally, the protocolsregulate the liability of parties in cases of damage caused by negligent or intentional acts,as well as provisions related to burden of proof and liability limitations for airlines.

1.6.Montreal Convention 1999

The Montreal Convention 1999 (MC99) sets out the responsibility of airlinesregarding incidents involving passenger injury or death, as well as instances of baggageand cargo delay, damage, or loss It consolidates various international agreementsgoverning airline liability that had evolved inconsistently since 1929 MC99 aims toserve as a comprehensive, global treaty regulating airline liability universally.

Acknowledging the considerable advantages provided by MC99, the 39thAssembly of the International Civil Aviation Organization (ICAO) in 2016 passedResolution A39-9, encouraging all nations that have not yet done so to promptly ratifyMC99 IATA is endorsing this Resolution and collaborating with governments toadvocate for the benefits of MC99 and encourage its ratification.

The international conventions on air transportation, from the Warsaw Convention1929 to the Montreal Convention 1999, have developed sequentially, from establishingthe initial fundamental principles for international aviation to adjusting and expandingregulations to reflect changes and developments in the industry From increasing liabilitylimits and expanding the scope of application to clarifying provisions on liability andinsurance, these conventions have played a crucial role in ensuring safety and fairness ininternational air transportation, while promoting the sustainable development of theindustry.

1.7.Vietnam regulations

Vietnam regulates civil aviation through the Vietnam Civil Aviation Law No.66/2006/QH11, enacted on June 29, 2006, and its subsequent amendments, including theLaw amending and supplementing certain articles of the Vietnam Civil Aviation Law No.61/2014/QH13, issued on November 21, 2014 Additionally, Vietnam is a contracting