Air cargo companies flying into Indian markets3 min read . Updated: 08 Jun 2011, 11:01 PM IST
Air cargo companies flying into Indian markets
Air cargo companies flying into Indian markets
Mumbai: Local air cargo companies such as Deccan Cargo and Express Logistics Pvt. Ltd and Aryan Cargo Express (Pvt.) Ltd may be still struggling to take off in the competitive domestic market, but that hasn’t deterred foreign companies from entering the business by launching dedicated freighters and reviving defunct cargo airlines.
The world’s leading logistics company TNT NV of Netherlands has started a dedicated freighter service with Boeing 767 planes between India and Europe, the country’s largest trade partner. The service will run five times a week between New Delhi and TNT’s European hub in Belgium, with a stopover in Dubai on the way back to India.
Another local air cargo company, Quikjet Cargo Airlines Pvt. Ltd, is being revived by a group of international promoters. Quikjet was promoted by investors including Infrastructure Leasing and Financial Services Ltd, Infrastructure Development Finance Co. Ltd, Tata Capital Ltd and AFL Pvt. Ltd. In November, FedEx Corp., the second largest parcel-transportation firm in the US, bought the Indian delivery businesses of AFL Pvt. Ltd. It is not clear whether FedEx purchased AFL’s investment in Quikjet.
“A bunch of international companies that are into contract flying for global logistics operators including FedEx and TNT are coming together to revive Quikjet. If the plan is executed, Quikjet will fly for all (these companies) including FedEx," said a person close to the development, who did not want to be identified. FedEx Express acquired the logistics, distribution and express businesses of AFL Pvt. Ltd and its affiliate Unifreight India Pvt. Ltd in February 2011, Kenneth F. Koval, vice- president of operations at FedEx Express India, said in an emailed response. FedEx does not comment on its corporate development activities, nor does it comment on market speculation, he said.
Air cargo agents who have a longstanding grouse about the lack of space in the belly space of passenger carriers for general cargo say the arrival of more freight airlines will provide more capacity at economical rates.
According to an International Air Transport Association (Iata) note released Wednesday, air freight volumes peaked in the second quarter of 2010. Since then, volumes have declined despite the further economic expansion but trade lanes have differed markedly: Atlantic markets have picked up, while Asia is down.
“In spite of a reduction in the number of freighter aircraft, the cargo carried by freighters rose further above pre-recession levels than that carried in the bellies of passenger aircraft. At the peak in the second quarter 2010, freighters carried 10% more cargo than pre-recession peak levels. Freight carried in belly capacity remains close to pre-recession levels," Iata said.
Iata represents 230 airlines accounting for 93% of scheduled international air traffic.
Michael J. Drake, regional managing director (Asia Pacific) at TNT said his company would be looking at adding more flights to, and destinations, in India.
He said shipments depart from New Delhi at the end of each work day and arrive in Europe before the start of the next working day. The return flight allows TNT to collect and lift shipments from Europe on the same day.
Abhik Mitra, managing director of TNT India, said his company wasn’t late to start a dedicated freighter and had spent time building the ground infrastructure to transport cargo from cities such as Kanpur to Delhi.
In April, FedEx inducted the Boeing 777F, a bigger plane on the Indian route.
Amid all this activity, the G.R.Gopinath-founded Deccan Cargo is changing its business plan.
“Deccan Cargo is well on its course. But we are slightly reworking the business model. We are replacing Airbus 310 freighter planes with Airbus 300 and buying ATR and Boeing-made planes," said Gopinath.
He declined to divulge more details, but said his company recently bought two small ATR freighters.
Reliance Industries Ltd took a strategic stake in Deccan Cargo last year.
Another cargo airliner Aryan Cargo that had suspended its operations since June 2010 owing to a working capital crunch is trying to resume its operations by August.
“We have tied up debt funding from banks by 15 June. We will be then leasing planes to resume our operations," said Mukut Pathak, chairman and managing director at the company. “Aryan Cargo will be connecting both international and domestic routes as planned."
Deals India, published jointly by Mint, Dow Jones Newswires and The Wall Street Journal, is a one-stop destination for investment professionals following deal flow, deals news, private equity and venture capital activity in India.