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Nina Varghese

Drop in volumes, excess capacity step up competition

Chennai , May 15

A sudden drop in air cargo volumes out of India combined with excess capacity has triggered a price war among the airlines.

Sources said that airlines have dropped their rates by almost 25 per cent to compete for the westbound cargo.

On the Chennai-New York sector, the current rates are about Rs 100 per kg (for a break weight of 500 kg) while in March it was about Rs 140 per kg.

The real competition comes from the Gulf carriers which operate out of India through their hubs.

The sources said that some Gulf carriers are offering rates as low as Rs 60 per kg to any point in Europe.

Dip in volumes

Air cargo volumes dropped from 9,700 tonnes out of Chennai airport in March to 7,400 tonnes in April.

The first two weeks of May have registered exports of about 2,200 tonnes, they said.

The volumes out of Mumbai airport are still high because of mango exports, while exports out of Chennai and Delhi airports have shown a decline.

Garment exports

The drop in garment exports is mainly because exporters have completed their spring and summer sale shipments by the first three months of the year.

Garment industry sources said that it was a slack time at the garment factories around Chennai.

Volumes are expected to go up by July when exporters will start their fall shipments.

Capacity problem

The market is also facing the problem of additional capacity with a number of airlines operating on both east and westbound sectors.

Competition on the eastbound sectors too is intense, the sources said.

Some airlines offer Rs 38 per kg from Chennai to Kuala Lumpur and about Rs 50 per kg for Beijing.

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