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Oil prices force cargo carriers to ground plans

Oil prices force cargo carriers to ground plans
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First Published: Sat, Jul 19 2008. 02 18 PM IST

Expensive: A Jet Airways plane being fuelled. Soaring oil prices have hit India’s cargo airline sector, with many carriers suspending operations. Photograph: Madhu Kapparath / Mint.
Expensive: A Jet Airways plane being fuelled. Soaring oil prices have hit India’s cargo airline sector, with many carriers suspending operations. Photograph: Madhu Kapparath / Mint.
Updated: Sat, Jul 19 2008. 02 18 PM IST
Mumbai: Skyrocketing jet fuel prices continue to take a toll on India’s nascent cargo airlines sector.
While one cargo airline has already temporarily shut operations, plans by others to enter the field have come to a halt for now.
Expensive: A Jet Airways plane being fuelled. Soaring oil prices have hit India’s cargo airline sector, with many carriers suspending operations. Photograph: Madhu Kapparath / Mint.
Chennai-based cargo airline company, Crescent Air Cargo Services Pvt. Ltd, which runs Crescent Air, has temporarily suspended its operations due to mounting losses. Crescent Air was operating a Fokker 50, a turboprop-powered aircraft, on the Visakhapatnam-Kolkata route, carrying perishable commodities.
“This Fokker aircraft, with a capacity of 7,000kg, was a fuel guzzler and we were losing money. Operating a single aircraft was a potential mistake...,” said one senior executive with Crescent Air, who didn’t want to be named.
Another carrier, Flyington Freighters Pvt. Ltd, promoted by a Hyderabad-based business family whose members also own the Deccan Chronicle newspaper, has also delayed the launch of its dedicated cargo plane operations. As per the original plan, Flyington was supposed to launch its operations in July.
“With the changed economics and current turmoil in domestic aviation, we are opting for a wait-and-watch mode,” said Deepak Parasuraman, managing director of Flyington Freighters.
This, after India’s second largest courier firm, First Flight Couriers Ltd, closed its cargo airline operations last year.
Still, attracted by the growth opportunity, other companies had hoped to take off this year, until the fuel prices started soaring.
According to an Airports Authority of India report, domestic freight traffic has increased 8.1% in April-December from the same period last year. The country’s domestic freight traffic increased to 423.43 tonnes in that period from 391.83 tonnes in the 2006 period.
The Crescent Air executive said his company will re-start its operations by either having two more Fokkers, or ATR type planes with same cargo carrying capacity. Crescent Air started operations in 2002 and its financial performance is not known since it is a closely held company.
“Since Santhosh Lad (an industrialist from Bangalore) took over the company in 2005, we had received several proposals from the cargo industry for partnerships with us for freight operations. We are expected to start operations with more planes and more routes,” the Crescent Air official claimed.
Flyington Freighters’ Parasuraman said his firm had planned to launch operations with two, old A330-type cargo aircraft from a leasing company, arranged through Toulose-based plane maker Airbus SAS.
“But we found that there was some serious technical problems with those machines. Therefore, we do not want to take any risk in the changed environment. We would like to fly with new planes,” he said.
The company has signed for six A330-200F type planes, the newest freighter from Airbus and the first aircraft will join Flyington’s fleet in the second half of 2009. “I cannot give a time frame for launching our operations considering various external conditions, but we will be able to start shortly,” said Parasuraman.
Bangalore-based Quikjet Cargo Airlines Pvt. Ltd was planning to launch its operations by June, but hasn’t started yet. Mint couldn’t immediately reach Quikjet executives for comment.
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First Published: Sat, Jul 19 2008. 02 18 PM IST