Logistics

Air cargo industry seeks domestic capacity

TE RAJA SIMHAN Chennai | Updated on January 22, 2018 Published on November 18, 2015

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Says this will reduce dependence on foreign carriers



Development of domestic air cargo capacity should be given top priority, as shippers are heavily dependent on foreign carriers for movement of cargo.

This should be one of the main focus areas to be incorporated in the Civil Aviation Policy, say sources in the air cargo industry.

The Ministry of Civil Aviation had last month released a draft policy to get comments from the trade on various issues.

Comments may be sent by November 21. A strong domestic air cargo capacity will augur well with the Centre’s Make in India programme, and will help shippers reduce cost, said B Govindarajan, Chief Operating Officer, Tirwin Management Services (P) Ltd, a consultancy firm on aviation. According to J Krishnan, former president of Air Cargo Agents Association of India, any economic superpower seeks a dominant logistics of their own flag or else this is a serious threat to the economic prosperity.

During the late 1990s, when there was a demand and supply mismatch, foreign carriers providing freight capacity out of India demanded premium airfreight rates (express rates below 100 kg rate) to accept and move the cargoes. The Centre, under the Open Skies Policy and de-regulated tariffs, was helpless to intervene and help the exporters. Nor was Air India equipped to charter cargo aircraft and provide capacity.

Similarly, when supply exceeded demand, Lufthansa was the first to offer ‘zero’ freight from Delhi, to ensure it successfully raided the market share of Air India, and from a long-term perspective, inhibit any attempt by an Indian operator to consider dedicated freighter operations, he said.

National player

Unless a nation creates a sustainable and robust home grown international logistics player, the threat of economic security remains constant. With a national player, our exports can move to a CIF (Cost, Insurance and Freight) terms from the current FoB (Free on Board) term, which indirectly supports the foreign interest.

China has a formidable shipping capacity and a airline network. Cargolux is tied-up with Chinese carriers to ensure regular feed, he said.

However, some in the industry feel such a system is only a dream. Any effort to start such a domestic air cargo capacity will be with an intention to sell off to a multinational company later, and hence may not work out.

Published on November 18, 2015
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