New Delhi: Cargo airline start-up Aryan Cargo Express Pvt. Ltd plans to start global operations by October even as most other aspirants in the segment say they are still putting their logistics systems in place.
India currently has just two dedicated cargo carriers—National Aviation Co. of India Ltd‘s Air India Cargo and Blue Dart Express Ltd’s Blue Dart, with a combined fleet of just over 24 dedicated aircraft— though the civil aviation ministry has given out at least five more air cargo licences in the past 18 months to various firms.
New Delhi-based Aryan Cargo said it was choosing its international routes carefully. The carrier intends to connect cities such as Tashkent, Amsterdam and Shanghai from New Delhi. Amsterdam and Shanghai are ranked the world’s fifth and 14th biggest cargo hubs, respectively, by industry grouping International Air Transport Association, or Iata. The airline will be fed by cargo forwarding and handling firms that include Malaysia’s Abda Aviation Sdn BHd and Düsseldorf, Germany-based Leisure Cargo GmbH.
In the wings: A Boeing 747-400 freighter plane at the final stage of assembly in Seattle, US. Aryan Cargo Express, which plans to start global cargo operations by October, has secured permission from the civil aviation ministry to lease two Boeing 747-400F aircraft.
“One of the biggest threats as a new start-up for us is the predatory pricing by established players on routes which we will operate,” said Aryan Cargo’s managing director Mukut Pathak, referring to the launch of a new international service even as Iata announced on Monday a decline of 0.8% in international freight traffic in June—the first such decline since May 2005.
But it’s not all bad news. “In a situation where the industry is down and yields are under pressure, especially across Atlantic and across Pacific, due to American economic slowdown, the air cargo segment is growing in Asia,” Pathak said.
“We expect the established players will be seriously constrained to resort to any kind of predatory pricing on our routes without taking a massive hit themselves,” he added.
Pathak said the civil aviation ministry has granted import permissions for two leased Boeing 747-400F aircraft from Iceland-based Avion Aircraft Trading—the largest Boeing Co.’s freighter series used by the likes of China’s Great Wall Airlines Co. Ltd—to ply long-haul routes.
A senior ministry official, who did not want to be identified, confirmed the approvals were granted in July.
Aryan will face challenges in the short term, an industry expert said. “It is better for players to use existing and untapped capacity unless the new cargo can differentiate its offering with reliability or pricing,” said Kapil Arora, partner, risk advisory services, at audit and consulting firm Ernst and Young. “It’s not going to be easy, and profitability would be a challenge.”
International air freight to and from India stood at nearly 1.02 million tonnes for 2006-07, the latest year for which data is available, up from 920,150 tonnes in 2005-06, according to airports regulator Airports Authority of India. The domestic freight business is roughly half that at 529,640 tonnes in 2006-07.
Others Indian air cargo operators that have received government approvals including Flyington Freighters Ltd, Avicore Aviation Pvt. Ltd’s Avicore, Aviation Consultancy Services Pvt. Ltd’s QuikJet and Deccan Cargo Pvt. Ltd are yet to take wing.
One firm said there were mutliple reasons for the delay. “We may start a little later but it makes sense to do it,” said Avicore’s chief executive Shankar Devarajan, referring to a delay in the August launch date by at least three-four months. It plans to acquire and convert old Boeing 737-300 aircraft. More than 400 of these planes are being parked or retired by US and European carriers due to high fuel costs and an industry slowdown.