Cargo business to see a lot of action in air

Six airlines to take off in the next 18 months, infrastructure constraints remain.

Lured by the massive expansion of India's trade, more than six cargo airlines plan to start operations in the country in the next 18 months. Apart from Air India (post-merger) and Jet Airways, both of which will have dedicated cargo units, start-ups like Flyington Freighters and non-scheduled cargo operators like Aryan Cargo Express and Air Cargo Express are planning to start operations by the end of this year or the beginning of next year.

According to a Centre for Asia Pacific Aviation (CAPA) study, India ranks among top 30 freighter markets in the world. Cargo volumes grew nearly 11 per cent last year. The market is projected to grow 20-30 per cent for the next ten years.

Though export cargo still dominates in terms of volume (by 3:2), domestic cargo is growing at a faster rate. According to the Airports Authority of India figures, there was a 7.3 per cent increase in international cargo for April compared with the corresponding period of the previous year. Domestic cargo for the same period increased by 13.4 per. "People now want faster means of transport. Also, with food retail coming up in a big way, speed becomes very important," said Mukul Pathak, the promoter of Aryan Cargo Express, which is set to launch around September.

Indian carriers handle 12-15 per cent cargo volumes while international players handle the rest. Bluedart, which has a market share of around 40 per cent, is the only carrier with dedicated cargo services. It is followed by Jet Airways, which has around 30 per cent market share after merger with Sahara. The share of Indian carriers is slated to rise significantly.

Flyington Freighters, promoted by Deccan Chronicle Holdings, is being looked at as one of the most prominent upcoming players in the air cargo business and the only dedicated international cargo airline in India. The airline, which will have Hyderabad as its hub, will have scheduled operations to China, East Asia, Hong Kong, Japan, Malaysia, West Asia, Los Angeles, New York and Europe. The airline is expected to start this month with two leased A330-200Fs. It has placed orders for four other A330-200Fs and four Boeing 777 freighter aircraft. It is also interested in Airbus' freighter version of A380, the largest air plane ever built.

Aryan Cargo Express is set to begin non-scheduled domestic and international operations around October. It will operate from Delhi, Mumbai, Kolkata, Chennai and Kochi, and will fly cargo flights to China, Korea, Japan, Hong Kong, Vietnam and Dubai. "We are awaiting permission from the Ministry of Civil Aviation for scheduled operations. We have a fleet of three Boeing 757-200 freighter aircraft. We will have a fleet size of eight by March next year which will help us get into scheduled operations," said promoter Mukut Sharma. The airline is looking at 30 per cent investment from foreign cargo companies.

Air Cargo Express, with its dedicated fleet of ATRs, is also supposed to start operations this year. Reliance Retail is also considering starting a cargo airline for its supply chain.

Post merger, Air India will have a strategic business unit dedicated to cargo. There are also plans to convert five 737-200s used by Alliance Air for cargo operations. The merged airline plans to have around 15 cargo aircraft servicing the Gulf, the US and the Asian markets in the next three years.

Jet Airways is planning to rope in Lufthansa as a partner in its freighter unit. According to CAPA, Jet is the second largest domestic freighter player after Bluedart. According to CAPA estimates, after partnering with Lufthansa, it could increase its services in Germany, which accounted for 13 per cent of the total international freighter market, ousting Bluedart from the top position.

Analysts see a huge demand-supply gap in the sector unless the airports are upgraded. "None of the major airports in the country have adequate facilities for cargo operations, for instance, high throughput distribution facilities. There supply-side and infrastructure constraints will only be filled if the airports are properly upgraded," said Kapil Kaul, CEO, CAPA.