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Shyam G. Menon

Outlines three-pronged strategy; roadmap to be readied by Sept-Oct

A FILE picture of cargo being loaded on to a carrier

Mumbai , May 2

In the glamorous world of airlines, the Blue Dart plane may be just a cargo carrier. For Mr Charles A. Adams, board member with the country's biggest airline, it is revenue worth tracking.

South Asia's largest integrated air express, courier and logistics player almost doubled net profit this March quarter. What has impressed Mr Adams, Director, Jet Airways (India) Ltd, is Blue Dart's erstwhile 100 per cent subsidiary and now associate company, Blue Dart Aviation. In June 1996, Blue Dart Aviation had pioneered domestic freighter operations with two old Boeing 737 aircraft acquired from Alliance Air.

Ten years later, despite rising operating costs in the aviation business and helped by its continued lone presence in domestic airfreight movement, Blue Dart Aviation has grown into a five aircraft-strong fleet. After Blue Dart Express (it is now 81 per cent owned by DHL) divested 60 per cent stake in the aviation subsidiary in March 2005, the freighter operation was locked into exclusively servicing the parent.

`A commendable job'

Typically older planes reduce ownership cost but tend to offset such benefits with higher maintenance and operating costs. For example, they drink more fuel than new generation aircraft, worrisome when fuel price spirals up as at present. The express company's March quarter statement said nothing on the financial health of its 40 per cent associate, yet fact is, Blue Dart Aviation has survived.

"They have done a commendable job,'' Mr Adams said on Sunday. The former President (Asia Pacific) of UPS is keenly interested in the freight market Blue Dart Aviation services and the earnings from which has kept the cargo airline going even as several new airlines upped competition and tightened yields in the passenger carrier space.

In fact, Jet, the country's biggest passenger airline, has been hurt. The practice may be regular in the transport business (shipping companies do it), but in results disclosed last week, it was money from sale and leaseback of aircraft that grew profits at the airline. Jet has now mooted a feasibility study to start a domestic cargo airline, which if begun, could challenge Blue Dart Aviation.

Three-pronged strategy

Mr Adams outlined a three-pronged strategy. In Phase-1, the airline would seek to have a domestic freighter operation linking the major Indian cities with cargo to move around.

In the second phase, it would feed London-bound cargo thus accumulated, to its own Mumbai-London flights (by July, the airline should be flying wide-bodied A340/A330 on the Mumbai-London route). Phase-3 proposes the cargo accumulated at Mumbai being fed to other international cargo carriers, most of which have the city as Indian hub.

Given its stated policy of young aircraft to fly passengers, which in turn requires regular culling from its own fleet, Jet can easily source planes and convert them for the domestic freight circuit. Should it not want that, Mr Adams said, Boeing 737-300F aircraft are available in the market.

The first phase can kick off with a couple of planes. By the second and the third phase, Jet would need to make a major decision. Growth on the domestic circuit to 4-5 freighters may open up potential for a true blue long haul freighter for overseas runs, the likes of the 747F, A330-600F or the yet to be built 777F.

The feasibility study would throw light on all this, including ground handling for the cargo airline.

Whether that should be evolved in-house or sourced from somebody else.

"Our business plan should be ready by September-October,'' Mr Adams said. Of further help to this freighter scenario, resembling building blocks waiting to fall in place, would be the joint venture UPS Jetair Express (Jetair is GSA for Jet Airways), authored during Mr Adam's days at the global express major.

More Stories on : Air Cargo | Jet Airways (India) Ltd | Airlines

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