New Delhi: Deccan 360, the cargo and logistics airline promoted by low-cost airline pioneer G.R. Gopinath, will double its cargo capacity and add new aircraft by next year to tap a fast growing domestic cargo market.
Deccan 360 is owned by Deccan Cargo and Express Logistics Pvt. Ltd, in which Mukesh Ambani’s Reliance Industries Ltd (RIL) picked up a 26-49% stake in April. RIL’s Reliance Retail unit has a presence in at least 85 cities across 14 states in India, with at least 1,000 stores.
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“The business has actually picked up; effectively, the customers are giving more and more, and in order to meet the requirement, we have taken the direction to move forward and introduce more capacity in the country,” said Thomas Mathew, the carrier’s new CEO, formerly of UPS. “If you look at stats of all the airports of the country, there is huge demand for cargo, especially since (with) all the MNCs (multinational companies) setting up manufacturing, there will be more and more demand in the local market itself.”
Starting this month, the airline will increase its on-air carrying capacity from 40 tonnes to 120 tonnes with the help of a fleet of five turboprops ATRs and three Airbus A310s. This will be supported by 225 vehicles for door-to-door express and parcel services.
“We have plans of actually bringing more wide-bodied aircraft by next year, so we, in fact, will double the capacity come June-July. We are looking at maintaining the fleet type or bringing in Boeing 757s to complement the A310s,” Mathew told Mint on the sidelines of the World Economic Forum’s India Economic Summit in the capital.
India has a total of just 20 freighter aircraft, with Air India Cargo and Blue Dart being the main rivals of Deccan 360.
According to European plane maker Airbus SAS, this fleet size will expand to 210 by 2028, comprising 39 new freighters and 171 converted passenger planes.
If the market continues to grow at the current pace, Deccan 360 will have three more Boeing 757s or Airbus A310 aircraft by 2011.
India’s cargo growth is expected to accelerate to an annual pace of 11.8% by 2011-12, from 5% in 2008-09, according to the aviation ministry.
The primary concern for the new chief executive officer, who took over two months back, is to be profitable in the next 12 months.
The privately held firm has not made its losses public.
“The primary aim is to become profitable within the next year,” Mathew said. “We have revamped the whole business plan, we are improving service levels, simplifying the technology a bit.”
The new business plan focuses more on domestic operations and scrapping Nagpur as the hub until the airline is big enough and the airport is ready.
“In fact, as an organization, our core business is domestic express. We are not actually competing with the integrators. We are the only freighter operation from India,” Mathew said. “What we have done is, with the introduction of domestic freighters, extended the three flights a week into Hong Kong to five; so we have given additional lift.”
Deccan 360 will use ATRs to connect Bangalore, Hyderabad and Ahmedabad and A310s will connect Delhi, Mumbai Chennai, he said.
The Bangalore-based firm, which has 500 employees, will start building warehousing and cold storage facilities at Nagpur airport next year and then build distribution to be able to integrate and get involved with Reliance Retail’s fresh produce business.
That would help it shift from carrying the Nokia phones, Lenovo laptops, Samsung electronic items and Madura garments that it ferries currently.