Jet Air puts cargo airline plan on the backburner

Jet Airways has shelved its idea of starting a cargo airline, at least for now. The carrier will continue to concentrate on increasing its cargo uplifts through the belly space of aircraft, a senior company official said.

“We do not foresee the plan for full freighter airline taking off in the near future,” the Jet Airways Vice-President - Cargo, Mr Jay B. Shelat, told Business Line .

Investment

In the last few years, the airline had expressed its intention to start a cargo airline and had wanted to invest around $8 million-9 million in the venture as an initial sum. There were also media reports suggesting that Jet was in talks with German carrier Lufthansa and then later on with the US-based FedEx Corporation to begin cargo operations.

None of that seems to be moving forward. “Any successful freighter venture would require a good integration system of the first mile and last mile connectivity, and at this point in time, getting that matrix is difficult. The infrastructure in the country is another deterrent,” said Mr Shelat elaborating on the hurdles for the plan.

Cargo carriage

However, officials are perturbed by the plan not taking off. The cargo carriage through belly space continues to grow, says Mr Shelat. The growth, he says is attributable to the increase in domestic network of Jet Airways and addition of services to international routes — Milan, Italy and Johannesburg, South Africa.

“In FY2011 Jet's cargo revenues are expected to touch $250 million which is up from $180 million recorded in FY2009. We are targeting $280 million-290 million in revenues for FY2012,” he said.

Of this, cargo moved within the domestic market contributes 50 per cent, while the remaining 50 per cent is from movement to international markets, and international-India-international routes. In terms of volumes, the company carries 400 tonnes of cargo a day, of which 150 tonnes are domestic and 250 tonnes, international.

JetCargo Plus

To keep the momentum going, the carrier has also added a new product called JetCargo Plus — an express, airport-to-airport cargo delivery service. “It is a premium service expected to get fully operational in the next 3-4 months. We expect 10 per cent of our cargo uplifts will be through this product,” he said.

The key features include — no booking required till the cut-off time for handover of shipment, with cut-off time being three hours before departure.

Capacity induction

At present, cargo contributes between 8 and 8.5 per cent to the overall revenues of Jet Airways, he said. However, going forward, a lot would depend on the capacity induction plan of the carrier, says Mr Shelat.

Jet Airways is yet to take a call on whether to induct leased out aircraft back into its fleet as they complete their leases this year, or re-lease them.

These include four Boeing 777-300 ERs, which are operated on long-haul international routes and have larger belly space. In addition, Jet has 49 aircraft on order to be delivered between April 2012 and the end of 2016.

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