Tuesday, July 8, 2008

Indian carriers get ready to launch cargo flights abroad

By CNA Staff New Delhi

With competition hotting up from big-time players such as FedEx and UPS as well as the established international cargo airlines, two of India's top express players have chalked out plans to go overseas.

Over the past few years, the number of cargo carriers has gone up significantly. From the lone Blue Dart, the only Indian cargo carrier, there are today at least half a dozen more players.

Blue Dart Aviation, a subsidiary of express cargo carrier Blue Dart Express, has drafted a plan to start flying abroad. The plan, said Tulsi Mirchandaney, formerly senior vice-president, marketing and projects, and now managing director of Blue Dart Aviation, is in the initial stage.

"The Blue Dart flying abroad plan is there, but it is still early days,'' she said.

Even though the plan is still in its infancy, a lot of work has already gone in. Mirchandaney should know because she was not only instrumental in marketing air cargo products but also involved in route planning and space allocation.

The decision to fly abroad has been prompted by the under-utilisation of Blue Dart's fleet. Blue Dart has seven planes - four Boeing 737s and three Boeing 757s - that fly around the country for only eight hours at night.

In 2005, DHL Express completed the acquisition of 81.03 per cent of the equity capital of Blue Dart Express. Under the deal, Blue Dart continues to operate as an independent brand and provides a complete spectrum of domestic services through synergies with DHL.

The company is currently in talks with its parent DHL to find out ways in which the two could work together and ensure that Blue Dart planes can be used for international operations.

Blue Dart Express managing director Anil Khanna said that as part of Blue Dart's business expansion, "if we find that it (flying overseas with the help of DHL) makes commercial sense and can be operationally put together, we will explore it".

Sources in the company's logistics division maintained that the narrow-body planes could fly to a number of destinations within close proximity of India such as Thailand and Malaysia. Blue Dart's planes have operated cargo charters to Sri Lanka and Bangladesh.

Flying to the other four SAARC (the South Asian Association for Regional Cooperation) nations - Bhutan, Maldives, Nepal and Pakistan - would boost trade ties between the seven nations.

While Blue Dart firms up its plan, GATI, an express cargo delivery major with experience in distribution and supply chain management solutions, has started its foreign air cargo operations with Air India.

GATI's managing director and chief executive officer Mahendra Agarwal said that his company had an agreement with Air India to take cargo overseas. This would be a follow-up to GATI's tie-up late last year with the national carrier.

According to that tie-up, three of AI's Boeing 727-200 freighters operate with the GATI logo within the country.

Keen to establish its presence globally, GATI has set up offices in China, Japan, Dubai, Hong Kong Thailand, Nepal and Sri Lanka and has plans to foray into other markets. The express major's revenues have grown from US$1.46 million to $7.04 million over the past three years.

In May this year, GATI established its international regional headquarters in Singapore.

Agarwal said: "This is a dream come true. When we decided to spread our wings beyond India, Singapore was our first choice, because of its infrastructure, support services, world class reputation as a shipping, logistics, trading and financial hub, geographic location as a springboard to Asia, and lastly because of the long-standing business and cultural ties between Singapore and India."

GATI hopes to enter the European market through its Amsterdam-based partner General Logistics Systems' (GLS). GATI ensures that shipments brought into India by GLS reach remote destinations - GATI serves 594 of 604 districts in the country - and in turn GLS is willing to help the Indian express distribution major to get into Europe.

"GLS would act as a strategic partner for GATI in Europe. It will enable GATI to penetrate and capture a significant market share in Europe," said Agarwal.

On its part, GATI has drawn up a $100 million investment blueprint. The money will be spent over the next two years for warehouses, building IT and entering new business areas.

Waiting in the wings is Aryan Cargo Express (ACE), another of the home-grown air cargo carriers. Scheduled to start operations in mid-August or mid-September.

Aryan has already firmed up orders for three 747-400s, each with a capacity of 112 tonnes. By December this year, the number of freighters will go up to seven.

Director Mukut Pathak is optimistic about the growth in the sector.

Pathak said: "Today India has about 400 million people in the middle income group. This figure is likely to touch 550 million by 2015 as a result of India turning into a major manufacturing base."

"Aryan," he emphasised, "is entering a segment of air cargo industry that does not have any India-based operator. We are more international oriented than domestic. We will be competing with the real big boys of this game, such as FedEx, DHL and UPS."

Aryan will be looking at the SAARC nations and markets such as China, Far East, Southeast Asia, Middle East, CIS and Europe, according to Pathak. "We will have a domestic network, but that will be only to feed our international network," he added.

Regarding the competition in the sector, Pathak said: "There is enough sky under the sun for everyone. The air cargo boom in India is still a couple of years away."

No comments: