The Hindu Business Line : Air cargo biz attracts airlines, but faces infrastructure hurdles

GROWTH in air freight services to and from India, especially in the wake of the burgeoning trade in the pharmaceutical and gems and jewellery sectors, has been attracting new and existing airlines in this space. But inadequate airport infrastructure continues to be a major roadblock, which is stifling the growth in air cargo traffic vis-à-vis the potential available.

Apart from the national carriers, Indian Airlines and Air India, new entrants such as Jet Airways, GoAir and Kingfisher Airlines have charted out plans to play a bigger role in the air freight market.

A spokesperson of Air India said there was substantial growth potential in the air cargo segment, and the national carrier had chalked out a business plan for the segment.

The airline has a 7-8 per cent share of the air cargo market in the country. In 2004-05, air cargo business generated revenues of Rs 500 crore, representing 10 per cent of the total revenues. The airline hopes to raise cargo revenues to 15-20 per cent of the total in three-four years.

The airline has currently leased belly space on Falcon Aviation to meet demand on the Kerala-Gulf and the India-Germany sectors. Further, two of its A310 aircraft are scheduled for conversion into freighter aircraft by September 2007. As the airline takes delivery of its new fleet in the last quarter of 2006, its cargo capacity would also increase. Besides, A-I may augment its cargo capacity by leasing B747-400 aircraft, he said.

Mr Jeh Wadia, Managing Director, GoAir, said as more customers look to transport cargo by air, GoAir would look to commoditise this business. The airline was pushing forward with plans for air cargo services and may finalise its strategy in a month's time, he added.

The air freight cargo has steadily risen from 4.16 lakh tonnes in 1998-99 to 4.91 lakh tonnes in 2000-01, 5.84 lakh tonnes in 2003-04 and over 6.20 lakh tonnes last fiscal. The major commodities being air freighted out of India are garments, machinery, components, pharmaceuticals, dyes, chemicals and perishables such as fruit, vegetables, flowers, fish and meat.

In the domestic sector, Boeing had estimated that the domestic air freight market was in excess of 1.88 lakh tonnes in 2003, which could go up to 2.25 lakh tonnes in 2005. In fact, the domestic market received a shot in the arm in the first half of 2005, following the announcement that Indian Airlines would convert five of its Boeing aircraft into freighters and operate them from a hub at Nagpur. For several years, Blue Dart Aviation had been the country's sole dedicated cargo airline, operating for its parent courier company, Blue Dart Express.

A recent study by Drewry and APL Logistics has revealed that India's air cargo traffic could be reasonably expected to register annualised gains in the 8 to 10 per cent range over the next five to 10 years. "Clearly, this is good news for the airline service providers, which are now seeing more return cargo — a fact that will help the overall market to grow," the report says.

And not only that, but the rising cargo flows have resulted in improved freight rates, with further rises expected in the current fiscal.

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