What is Air Waybill?
In case where goods are sent by air, an air waybill is used instead of B/L (Bill of Lading). The major difference between the air waybill and B/L is that the former does not have the function of securities, but the latter has. It is basically an order to the airline company in terms of transportation of the goods. At the same time it functions as an agreement between the shipper and the carrier which details terms of air transportation.

It also has the function of certifying the receipt of the goods to be shipped by the airline company. It is usually prepared by the freight forwarder for the shipper and signed by the airline company. Three originals are made; the first one is retained by the airline company, the second one is sent to the consignee (recipient of goods) to facilitate the receiving of the goods, and the third one is kept by the shipper.

If the transaction is on the pre-payment terms, the buyer's name should be written as a consignee on the airway bill. Therefore, the buyer is entitled to receive the goods from the airline company at the airport of destination.

Why is the consignee the Bank?
If the transaction is based on L/C, D/P and D/A, the consignee is made out in the name of the bank (reimbursing bank or L/C opening bank) in the country of destination. The air waybill and documents should not be sent by airmail as the goods will arrive at the airport of destination before the documents arrive. In this case, the importer cannot take possession of the goods until the documents have arrived and made payment at the reimbursing bank.

This inconvenience may reduce the merit of air transportation which is speed. Therefore, the air waybill and other documents are usually sent by the same aircraft together with the goods. As soon as the goods arrive at the airport of destination, the airline company informs the bank, which in turn informs the importer. When the payment is made to the bank by the importer, the bank will make the endorsement in the airway bill so that the importer can take delivery of the goods from the airline company.

The exporter may sometimes send the documents by airmail including the air waybill to the bank in the country of destination. In this case the exporter has to send them before he executes the shipment in order for the documents to arrive at the bank before the goods arrive at the airport of destination so that the importer can prepare to pay the cost. Upon payment of the cost, the importer receives the documents from the bank and takes them to the airline company and receives the goods in exchange at the airport.

Why is Air Waybill non-negotiable?
An air waybill is not negotiable, therefore, it cannot be endorsed and the ownership of the goods cannot be transferred. The reason is that air cargo can be transported to the airport of destination within a short period of time, say 2 days, and if the owner of the goods is changed during the period of this transportation, inconvenience such as piling-up of cargo at the airport while awaiting the new owner to come to the airport could happen.