Market Analysis – 90121503 – Chartering services

Market Analysis Brief: Chartering Services (UNSPSC 90121503)

Executive Summary

The global charter services market, encompassing air and ground transport, is valued at an estimated $75 billion and is experiencing robust growth, with a projected 3-year CAGR of 6.8%. This expansion is driven by a resurgence in corporate travel, MICE (Meetings, Incentives, Conferences, and Exhibitions) events, and a sustained preference for private group transit. The primary threat to cost stability is extreme price volatility, driven by fluctuating fuel costs and labor shortages. The most significant opportunity lies in leveraging digital brokerage platforms to consolidate spend, increase transparency, and drive process efficiencies.

Market Size & Growth

The global market for charter services (air and ground) is projected to grow from an estimated $75.2 billion in 2024 to $101.5 billion by 2029, demonstrating a compound annual growth rate (CAGR) of 6.2%. Growth is fueled by the corporate, entertainment, and sports sectors' demand for flexible, private, and efficient travel solutions. The three largest geographic markets are 1. North America, 2. Europe, and 3. Asia-Pacific, with North America holding the dominant share due to its large corporate base and mature aviation infrastructure.

[Source - Aggregated analysis from Mordor Intelligence, Grand View Research, 2023]

Key Drivers & Constraints

1. Demand Driver: Corporate & MICE Recovery. A strong post-pandemic rebound in corporate travel, team offsites, and large-scale industry events is the primary demand catalyst.
2. Cost Constraint: Fuel & Labor Volatility. Jet fuel and diesel prices remain highly volatile, directly impacting operational costs. A persistent shortage of qualified pilots and commercial drivers is inflating labor costs and constraining supply.
3. Regulatory Driver: ESG & Emissions Scrutiny. Increasing pressure from regulators and stakeholders is pushing operators towards sustainable aviation fuel (SAF) and lower-emission ground vehicles, adding a "green premium" to costs but also creating a new basis for supplier differentiation.
4. Technology Shift: Digital Brokerage Platforms. The rise of technology platforms that aggregate supply and offer instant quoting is disrupting traditional phone-and-email brokerage, improving efficiency and price transparency for buyers.
5. Demand Driver: Preference for Privacy & Efficiency. For high-value travel, charter services offer significant time savings (bypassing commercial airport terminals) and a controlled, private environment, a preference that has persisted since the pandemic.

Competitive Landscape

The market is highly fragmented, consisting of large global brokers, asset-heavy operators, and a growing number of technology platforms. Barriers to entry are High due to immense capital intensity (aircraft/vehicle acquisition), complex safety and regulatory hurdles (e.g., Air Operator Certificate), and entrenched broker relationships.

⮕ Tier 1 Leaders * Air Charter Service (ACS): Global brokerage giant with extensive worldwide presence and expertise in complex, multi-location charters. * Chapman Freeborn (part of Avia Solutions Group): Deep-rooted broker with a strong reputation in VIP, corporate, and cargo chartering; extensive global network. * VistaJet (VIST): Asset-heavy operator known for its owned, branded, super-midsize to ultra-long-range fleet, offering a consistent luxury experience. * NetJets (part of Berkshire Hathaway): Primarily a fractional ownership model, but its scale and fleet make it a major player in on-demand charter availability.

⮕ Emerging/Niche Players * XO (part of Vista Global): Technology-forward platform offering on-demand charter and per-seat sales on shared private flights. * Wheels Up (now part of Delta Air Lines): Membership-based model with a large, diverse fleet, now leveraging Delta's operational backbone. * CharterUP: Digital platform focused on the bus charter market, aggregating thousands of independent operators for streamlined booking. * Blade Air Mobility (BLDE): Focuses on short-haul "air taxi" services via helicopter and seaplane in congested urban markets.

Pricing Mechanics

Charter pricing is built from a base cost plus multiple variable surcharges. For air charter, the price is typically composed of a fixed hourly rate for the specific aircraft type, which covers the asset, crew, and maintenance. Added to this are variable costs: fuel surcharges (often pegged to a market index), landing and handling fees at airports, crew per diems and accommodation, and positioning fees if the aircraft must fly empty to the pickup location. Bus charter pricing is simpler, often based on a daily or hourly rate plus mileage, fuel, and driver costs (gratuity, accommodation for multi-day trips).

Pricing is highly dynamic and subject to real-time supply and demand. The three most volatile cost elements are: 1. Fuel (Jet A / Diesel): Can fluctuate dramatically. Jet fuel prices saw swings of over +/- 30% in the last 18 months. [Source - IATA, 2023] 2. Dynamic Demand Surcharges: For major sporting or corporate events, charter prices can increase by 50-200% over baseline due to concentrated demand. 3. Crew Costs: Pilot and driver wages have seen an estimated 10-15% annual increase in some segments due to persistent labor shortages.

Recent Trends & Innovation

• Industry Consolidation (Aug 2023): Delta Air Lines acquired private aviation provider Wheels Up, signaling a strategic move by major commercial carriers to integrate premium, high-yield charter services into their portfolio.
• Sustainability Focus (Ongoing): Major operators like VistaJet have formalized "book and claim" systems, allowing clients to purchase Sustainable Aviation Fuel (SAF) credits to offset the carbon footprint of their flights, even if SAF is not physically available at the departure airport.
• Digital Platform Growth (2023-2024): Ground charter platform CharterUP secured significant venture funding and expanded its national footprint, demonstrating investor confidence in technology's ability to modernize the fragmented bus charter industry.
• On-Demand Cargo Conversion (2022-2023): Some passenger charter operators have maintained the capability to quickly convert passenger aircraft for "preighter" (passenger-freighter) use, a flexibility learned during the pandemic to capitalize on urgent cargo demand.

Supplier Landscape

Regional Focus: North Carolina (USA)

North Carolina presents a strong, diversified demand profile for charter services. The Charlotte metro area, a top-tier US financial center, drives significant corporate demand for private air travel from firms like Bank of America and Truist. The Research Triangle Park (RTP) region, with its high concentration of pharmaceutical, biotech, and technology companies, requires charter for executive travel, clinical trial logistics, and corporate events. Furthermore, the state's major universities and professional sports teams (NFL, NBA, NHL) create consistent demand for group bus charter. Local supply is a mix of regional jet operators based at hubs like Charlotte Douglas (CLT) and Raleigh-Durham (RDU), and numerous local and regional motorcoach companies. The state's competitive corporate tax environment is favorable, but operators face the same national labor shortages and fuel cost pressures.

Risk Outlook

Actionable Sourcing Recommendations

1. Mitigate Price Volatility through Supplier Consolidation. Consolidate air and ground charter spend across 2-3 preferred national providers who can offer volume-based discounts and more transparent fuel surcharge models. Target a blended portfolio approach: one global broker for complex international trips and one asset-heavy operator for consistent domestic routes. This can reduce spot-market price premiums by an estimated 5-10% annually.

2. Pilot a Digital Brokerage Platform for Group Travel. For recurring ground transport needs (e.g., inter-campus shuttles, MICE events), pilot a digital platform like CharterUP. This can automate the bidding process, reducing sourcing cycle time by over 40% while increasing visibility into a fragmented supply base. Target an initial pilot in the North Carolina region to leverage strong local demand.