Incoterms for Air Freight Explained: EXW FCA CIF & More

What Are Incoterms The experts at Private Jets Connect break down the key points below.

Incoterms (International Commercial Terms) are international trade rules published by the International Chamber of Commerce (ICC) that define the respective obligations of seller and buyer in an international commercial transaction. The latest version, Incoterms 2020, has been in effect since January 1, 2020.

In the air freight context, Incoterms determine:

• Who organizes the transport
• Who pays for transport, insurance, and customs clearance costs
• Who bears the risks of loss or damage during transport
• Where risk transfer occurs between seller and buyer

The Incoterm choice directly influences freight costs, insurance responsibilities, and customs clearance formalities.

Incoterms Applicable to Air Freight

Of the 11 Incoterms 2020, 7 are multimodal (applicable to any transport mode including air) and 4 are reserved for maritime transport. For air freight, only multimodal Incoterms are recommended.

Multimodal Incoterms (Recommended for Air Freight)

Maritime Incoterms (Not Recommended for Air Freight)

FAS, FOB, CFR, and CIF are designed for sea transport and should not be used for air freight, even though the practice persists in some industries.

Key Air Freight Incoterms in Detail

EXW (Ex Works)

Seller’s obligations: make goods available at their premises, packaged for transport.

Buyer’s obligations: everything else – collection, loading, transport, export and import clearance, insurance.

Air freight usage: suited when the buyer has their own forwarder and wants to control the entire logistics chain. Not recommended for novice buyers as the seller does not even handle export clearance.

FCA (Free Carrier)

Seller’s obligations: deliver goods to the carrier designated by the buyer, export cleared.

Buyer’s obligations: main transport (air freight), import clearance, insurance, final delivery.

Air freight usage: the most widely used Incoterm. The seller delivers goods to the forwarder or airline at the departure airport. Risk transfers at that point.

CPT (Carriage Paid To)

Seller’s obligations: organize and pay for transport to the agreed destination. Risk transfers upon handover to the first carrier.

Buyer’s obligations: import clearance, insurance (optional), unloading, final delivery.

Air freight usage: the seller organizes and pays for air freight, but risk passes to the buyer upon handover to the carrier at departure. Note: if damage occurs during the flight, the buyer bears the risk.

CIP (Carriage and Insurance Paid To)

Seller’s obligations: same as CPT, plus the obligation to subscribe all-risks insurance (ICC Clause A) for the buyer’s benefit.

Buyer’s obligations: import clearance, unloading, final delivery.

Air freight usage: recommended when the seller wants to provide comprehensive coverage for their client. Since Incoterms 2020, CIP mandates all-risks insurance, unlike CIF which requires only minimum coverage.

DAP (Delivered at Place)

Seller’s obligations: organize complete transport to the agreed destination, goods ready to be unloaded.

Buyer’s obligations: unloading, import clearance, taxes.

Air freight usage: suited when the seller wants to deliver to destination without handling import clearance. Risk transfers upon arrival, simplifying management for the buyer.

DDP (Delivered Duty Paid)

Seller’s obligations: everything – transport, insurance, export and import clearance, customs duties, taxes, delivery to destination.

Buyer’s obligations: receive the goods.

Air freight usage: the most comprehensive and simplest option for the buyer. The seller assumes all costs and risks. Demanding for the seller who must master customs regulations of the destination country.

Responsibility Comparison Table

S = Seller / B = Buyer

Common Mistakes to Avoid

Using FOB or CIF for Air Freight

FOB and CIF are exclusively maritime Incoterms. Using them for air freight creates legal ambiguity and can complicate insurance claims. Use FCA instead of FOB and CIP instead of CIF.

Confusing Risk Transfer with Cost Transfer

Under CPT, the seller pays for transport but risk passes to the buyer upon handover to the carrier. The buyer must therefore subscribe their own insurance for the air leg, even though the seller paid for freight.

Neglecting Customs Clearance

Under EXW, the seller is not even responsible for export clearance. If the buyer is foreign, obtaining export documents can be complex. FCA is preferable in most cases.

How to Choose the Right Incoterm

The choice depends on your position (seller or buyer) and your objectives:

• You are the seller and want to minimize obligations: FCA
• You are the seller and want to offer complete service: DDP
• You are the buyer and want to control transport: FCA or EXW
• You are the buyer and want turnkey delivery: DDP or DAP
• You want insurance included: CIP

For personalized advice on choosing the right Incoterm for your cargo shipment, contact Private Jets Connect. Our team optimizes your transport conditions based on your commercial objectives.

Conclusion

Incoterms are an essential tool for defining responsibilities and costs in international air freight. An informed choice prevents disputes, optimizes costs, and secures every link in the logistics chain.

For any questions about Incoterms or to obtain an air freight quote tailored to your commercial terms, contact Private Jets Connect.

To go further, request a personalized quote from Private Jets Connect.