India's fledgling air cargo market is poised for explosive growth as local operators plan to expand their fleets to meet soaring demand
There are only nine freighters currently operating in India and last year only one million tonnes of cargo was flown on routes to, from and within India. But the market is expected to chalk up double-digit growth over the next five years (see chart). In response, India's two existing operators plan to rapidly expand their fleets and several carriers are vying to become India's first widebody freighter operator.
Indian civil aviation minister Praful Patel estimates 150 freighters will enter service in India over the next five to 10 years. "Cargo is one sector in our country which we have completely neglected over the years," Patel told IATA's annual general meeting in June.
Manufacturers, which relied on Indian carriers to drive record passenger aircraft orders last year, are also bullish on India's cargo market. "Cargo is hardly scratched in India," says Boeing vice-president of sales Dinesh Keskar.
Boeing in July sold four 777 freighters to Flyington Freighters, a start-up that will not take delivery of the aircraft until 2009 but plans to launch in March with three Airbus A300-600s. Flyington, which plans to initially serve China and the Middle East and later Europe, says it will be India's first widebody freighter operator. But Air-India is also aiming to launch freighter operations next year by converting some of its A310s.
Air-India and Indian Airlines, which is seeking to convert some of its 737-200s, have been looking at freighters for several years but their cargo expansion plans have been set back by a steady stream of delays. Jet Airways and GoAir are also studying freighter operations.
"Overall the economy is doing well and every sector is growing," says First Flight Couriers deputy general manager Rajkumar Saboo. "I'm not at all concerned about new airlines coming."
Adds Flyington managing director Deepak Parasuraman: "The supply is very little compared to demand and the GDP is growing very strongly."
First Flight and Blue Dart Aviation focus on the domestic express market, which they point out is growing at a 20-25% annual rate compared with 12-15% for general freight, which most of the start-ups are targeting. "I am confident the growth will be there for the next seven to eight years," Saboo says.
"We believe it [20% growth] will happen for quite some time," says Blue Dart Aviation chief executive Niteen Gupte, adding freighters must be acquired at an even faster clip because new regulations may restrict the use of bellies. Most domestic cargo is now carried in passenger aircraft - last year Blue Dart flew 42,000 tonnes while domestic passenger carriers flew about 250,000 tonnes.
Blue Dart, India's largest domestic express cargo company with a 42% market share, was established in 1987 and began operating its own aircraft in 1996. Last year its Indian owners sold Blue Dart Express to DHL but they have retained 60% of Blue Dart Aviation. Gupte says 95% of the cargo it flies comes from Blue Dart Express. It operates five 737-200s and two 757-200s and plans to add three more 757s by 2009.
Domestic express
First Flight Couriers launched its airline division in September. It had been purchasing belly space from passenger carriers and is now moving more and more of its packages on its fleet of BAe ATP turboprops, operated by Taneja Aerospace. It has leased two ATPs, will place a third into service in November and is now looking to acquire three 737s as part of the second phase of its freighter project.
"Three to four months after this operation gets settled we'll move onto the second phase," says Saboo. "Today the ATP is adequate but in a years' time it won't meet our growth requirement."
First Flight and Blue Dart are both now studying international services to other South Asian countries but they say for now demand is not sufficient.
Infrastructure issues are their biggest challenges, but the government's recent promotion of cargo, the privatisation of India's two biggest airports and new airport construction could provide relief.
"We do have an airport infrastructure problem," says Gupte. "Space is a problem at all airports - parking space and airside warehouse access."
"Certainly no more space can be added," adds Saboo. "We need to re-organise and re-engineer the whole process. It will definitely take time."
Parasuraman says Flyington should not have any airport access problems because its freighters will be based in smaller Hyderabad and operate at Delhi and Mumbai during non-peak hours.
Source: Airline Business
