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Air cargo companies spreading wings to tap ‘business of future’

Air cargo companies spreading wings to tap ‘business of future’

At least two start-up air cargo firms will begin operating in India this year to service demand from customers engaged in high-tech manufacturing and an expanding retail sector. At least two other firms are awaiting regulatory approval to start similar services.

The civil aviation ministry has approved a plan by Mumbai-based Aviation Consultants Pvt. Ltd to start a scheduled cargo service, dubbed QuickJet, with two leased Boeing 737-300 aircraft.

AFL Logistics, a unit of the AFL group controlled by businessman Cyrus Guzder, and Singapore-based Cardinal Aviation Partners, are the promoters of the new freighter airline, which is also backed by Infrastructure Leasing and Financial Services Ltd and Infrastructure Development Finance Co. Ltd.

Flyington Freighters, a Hyderabad cargo airline company promoted by Deccan Chronicle Holdings Ltd, the publisher of Deccan Chronicle newspaper, received approval from the government last year and expects to also start operations this year.

Meanwhile, the country’s largest aviation group by passengers, Jet Airways (India) Ltd, and Reliance Industries Ltd, the largest conglomerate by sales, have been considering entering this market with air cargo operations.

And two other cargo-only airlines, Mumbai-based Avicore Aviation Pvt. Ltd and Delhi-based Aryan Cargo Express Pvt. Ltd, are also awaiting government permissions.

“Just like the low-cost carriers, we are trying to open the cargo space," said Ramesh Natesan, chief operating officer of QuickJet, confirming the cargo carrier’s launch by early April.

Natesan said the regional cargo airline will be headquartered in Bangalore and focus on local as well as the Asia-Pacific region, with a base probably in Singapore to connect with China’s bustling Guangzhou city.

For years, India’s domestic cargo market has been served by just one scheduled cargo airline, Blue Dart Aviation Ltd. More recently, state-owned carrier National Aviation Co. of India Ltd’s Air India has joined hands with logistics firm Gati Ltd. The two players run five freighter planes each, accounting for about one-fifth of the nearly 50 such planes operating in China.

By the end of the first year, QuickJet will add to those numbers. It expects to increase its fleet size to five cargo aircraft backed by the $70 million, or Rs275 crore, that it says it has raised.

Flyington has already signed an agreement to buy six freighter aircraft from Airbus SAS for $1 billion, at sticker prices, which are likely to be delivered next year. In the meantime, it has secured a leased 1999-made Airbus 300-C4-605 RF aircraft from Ireland’s GAF Leasing Ltd. While import permissions for the aircraft are pending, the Airports Authority of India has allotted a parking bay in Chennai. The aviation firm’s managing director Deepak Parasuraman couldn’t immediately be reached for comment.

“Cargo is going to be the big business of the future," civil aviation minister Praful Patel had told an industry gathering in the Capital last week, adding that cargo, apart from airport infrastructure, will be his ministry’s focus in the next one year.

But Sunil Arora, northern region head of the Air Cargo Agents Association of India, an industry body representing the majority of the country’s air cargo industry, said whichever airline enters the market right now may face a tough time ahead, especially in international operations where cargo service prices are dropping along with the dollar weakening against most currencies.

Air freight rates have dropped considerably in the past year. Sending a consignment to the US from India that cost about Rs110-120 per kg is now hovering around Rs70-75, Arora said.

“The demand is pent up. You will have to present air freight as an option that makes business sense and is guaranteed (on time)," said Avicore Aviation’s chief operating officer Shankar Devarajan.

Cargo Ahoy

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