FDI limit in aviation cargo may go up

As published in Business Line (The Hindu) on June 29, 2008

Minister proposes to increase limit from 49% to 74%

The civil aviation sector, which is already getting attractive for foreign investors, would have another sector opened up. This time, the Minister for Civil Aviation, Mr Praful Patel, is proposing to increase the FDI limit in cargo from 49 per cent to 74 per cent.
However, the Foreign Investment Promotion Board (FIPB) and the Ministry of Commerce are examining the issue, said Mr Patel, at the flagging off ceremony of Air India’s first freighter aircraft.
The state-owned carrier had earlier said that it plans to convert two of its Airbus 310 passenger aircraft to operate as freighters. The first aircraft has been deployed on the Europe route flying from Mumbai and Bangalore via Damam to Frankfurt. The aircraft with a capacity of 34 tonnes each have been converted at a cost of $7.95 million per aircraft. Market share
Air India’s current market share in the export segment is in the range of 9 to 11 per cent and between 5 and 7 per cent in the import segment.
Second converted aircraft will be operational in July. While currently, cargo operations will tap the growing European market, plans are to look at countries such as China, Japan and even the US with the induction of more capacity in the long run, said Mr V. Thulasidas, Chairman and Managing Director of Air India.
He also said, “One of the main business components of the merged airline will be cargo.” Mr Thulasidas added that with Indian Airlines also converting its Boeing 737-200 into cargo carriers, the company is looking at the emergence of a cargo airline in the future.
The Minister, Mr Patel further said, “There should be at least 500 cargo planes in India in the next 10 years,” and that the operations remain “high on Government’s agenda”.

Chennai airport must spruce up cargo infrastructure

As published in Business Line (The Hindu) on June 23, 2008

Chennai airport risks losing its cargo business to Bangalore if infrastructure at the air cargo complex does not improve, feel members of the cargo trade.
Chennai airport’s monthly cargo import is touching around 12,000 tonnes, compared with the average 4,000 tonnes per month five years ago. Except for adding two sheds, there has been no improvement in infrastructure in the air cargo complex in the last five years, says Mr J. Krishnan, Vice-President, Air Cargo Agents Association of India, and Chairman, Logistics Committee, Madras Chamber of Commerce and Industry.
The Chennai air cargo complex is handling cargo beyond its capacity. It handled 2.34 lakh tonnes in 2007-08, against the capacity of 2.22 lakh tonnes. For the Airport Authority of India (AAI), Chennai, out of the total revenues of Rs 430 crore in 2007-08, cargo contributed the maximum of Rs 140 crore. This does not include the aircraft parking and handling charges, he says.
According to Mr Krishnan, the Chennai air cargo complex is not geared to handle large-sized parcels. Five years ago, cargo used to arrive in small pallets and in low-weight cartons. Today, however, Nokia’s pallet weighs 800 kg, and most parcel sizes are over 100 kg.
Last year, the free period to keep cargo at the air cargo complex was reduced to three days from five. The scene today is such that Chennai needs almost three days for the AAI to make cargo ready for clearance. The free days are all used by the AAI for its own internal working. The shortage of manpower and machinery adds to the problem, says Mr Vijaya Kumar, Vice-President, Chennai Custom House Agents’ Association.
The AAI consumes five times the transit time of air-lifted cargo from origin to destination. Consequently, the very purpose of routing imports by air to meet critical requirements is defeated due to the ‘mishandling’ of cargo by AAI, he says. The Minister of State for Finance, Mr S. S. Palanimanickam, in his inaugural address at the Golden Jubilee Celebrations of the CCHAA recently, said: “If you look out of the aircraft’s window you see cargo everywhere in the airport.” He was referring to the way cargo is scattered around the air-cargo complex. “Cargo should be readily made available to customers and the only time cargo is not available should be when it is carried by an aircraft.”
Agents handling consignments for some of the multinational companies say that companies in Sriperumbudur, a hub for electronic manufacturing two hours away from Chennai, working on just-in-time, will divert cargo to Bangalore if infrastructure does not improve at Chennai.
“If there are delays in Chennai, we will explore the option of moving to Bangalore in future,” Mr Sachin Saxena, Director, Operations and Logistics, Nokia India, told Business Line during a recent visit to the company’s plant in Sriperumbudur. “We need to work out the overall savings in the logistics cost by such a diversion.”
It takes 36-38 hours to move the cargo from the aircraft ‘belly’ to the ground, compared to three-four hours in developed countries. Another six-eight hours is added for binning — which is data entry in the airport authority system for storage of cargo in the earmarked location, according to Mr N. Siva Subramaniam, Chairman, Air Cargo Agents Association of India-Southern Region (ACAAI-SR).
Multinationals may be willing to spend more on road transport if their cargo is available on time. It takes nearly 50 hours in Chennai for clearance of import cargo. By moving to Bangalore, if the cargo is cleared in 12 hours and another four hours is lost in road transport, companies can still save more than half the time, says Mr Asad Caasim, Committee Member, ACAAI-SR.
“There is no concerted effort from AAI to overcome the problems at the air cargo complex,” he says. The proposal to move cargo to an off-location Air Freight Station has also been ‘scuttled’ by AAI. The AFS will ease the pressure on AAI and create space at the air cargo complex, he says. Mr Dinesh Kumar, Chennai Airport Director, says the infrastructure-related problem was there two years ago. But the new sheds provide a lot more coverage now. The situation looks better now than two years ago. “We will keep expanding the facilities,” he says.
Mr Subramaniam of ACAAI-SR says the roofs of the sheds leaked during the unseasonal rains that lashed the city recently. With the onset of the monsoon just a couple of months away, the AAI should take immediate steps to ensure that cargo is not kept in the open and that the sheds are well protected. “We should not have a situation like two years ago when tonnes of cargo were exposed to the heavy rains. Companies such as Nokia lost heavily then,” he says.

Air India cargo service

The Telegraph, June 17, 2008

Air India is set to launch its cargo service this month-end and long-distance non-stop flight to the US from August 1. Air India will launch its cargo service on the Frankfurt and Paris routes with Airbus A-310s, two of which have been converted into cargo freighters, Air India chairman V. Thulasidas said, adding that “the non-stop US flight to New York will start on August 1 with the new Boeing 777-200 er to be delivered sometime in July”.

Enormous growth in cargo movement

K.R. Wadhwaney, The Tribune, June 15, 2008

The steep rise in fuel prices has left all airlines, government and private, bleeding profusely. The fares have risen and airlines losses have increased.
The minister of state for civil aviation Praful Patel knocked at the doors of Prime Minister Manmohan Singh and finance minister P. Chidambaram. Sadly, he did not get any assurance from them.
"This downgrade scenario is likely to affect growth of airport infrastructure development programmes throughout the country", fears the minister. The situation has turned murkier than it was until recently.
As there is no possibility of arresting overhead expenses, quite a few scheduled and no-frills carriers have decided to reduce their operations.
Some are even facing the possibility of closure. As the current situation exists, there is a scope for only the fittest three or four carriers to survive.
While dark clouds are hovering around Indian skies, the minister is trying to secure relaxation in rules so that more private airlines are able to fly on international routes.
This will be possible only if the government relaxes the rule of the minimum five years of operations.
While passenger traffic has hit turbulent weather, there is an enormous growth in cargo movement on both national and international sectors.
The airline bigwigs are convinced that what they lose on passenger traffic can be offset through cargo uplift.
The National Aviation Company's rating has risen from ninth position in September 2007 to number one in March-April 2008.
The director of commercial (cargo) Anita Khurana is optimistic that airline's operation from new hub of freighter in Nagpur will be immensely successful.
This has been her theme song even when she was heading cargo section of the merged identity, Indian Airlines.
Equally optimistic in this regard is Blue Dart's managing director Tulsi Mirchandaney. "Time is money" and majority of corporates are now concentrating on sending their goods through air instead of depending upon road, rail or steamer. "The quick turnover of the money is the key to success", say cargo handlers.
The congestion at the Indira Gandhi International Airport (IGIA) will continue to worry operators and passengers as new runway, 3rd, will not be ready until end of this year. It was scheduled to be ready by March 2008 and then by June 2008.
Now much work remains to be done and the authorities fear it will not be operational until middle of 2009.
The civil work like construction of road on the runway remains far behind. Until this work is completed, the gadgets cannot be installed.
"We are besieged with several other unforeseen problems and the operations will be delayed for a considerable period", said one official.
The authorities connected with civil aviation have, in the meantime, issued certain 'tips' to the commanders how to save fuel and cut costs. Some commanders, however, do not subscribe to the views of the authorities.

Efficient air cargo system must for growing economy

15 May, 2008, 0225 hrs IST,Gunjan Pradhan Sinha & Nirbhay Kumar, TNN

Newly-commissioned greenfield and brownfield airports seem to be focussing on air passengers. Cargo facilities at these airports are yet to draw the full attention of airport developers. “In our country, cargo is still a neglected area even though it generates 30% revenue for the airport operator. After privatisation things have improved but only in the passenger side,”said an official of a leading air-cargo company. Given the lax attitude of private players in ensuring proper facilities at cargo terminals and involving freight forwarders at the concept and design stage, the government has made it mandatory for all new greenfield airports to provide separate cargo facilities — storage, ground handling and loading. Further, in a bid to bring Indian airports on a par with international hubs like Dubai and Singapore in handling air cargo, the government has also decided to float a separate air cargo policy, revamp the entire electronic data interchange (EDI) system and set up an Airport Economic Regulatory Authority (AERA). Cargo operators have also been facing flak over the state of delivery of cargo. Indian airports have some of the worst turnaround time for freight. “We are still far behind in handling air cargo and there are many reasons for it. Infrastructure alone is not to be blamed for it. Documentation process is also too complex. As compared to airports in Singapore, Hong Kong and Dubai where air cargo is cleared within two hours, the physical check-up of cargo alone takes about 12 hours on an average in India. In some cases clearance time ranges between 24 hours and 36 hours. In countries like Thailand and Singapore, agents have custom-bonded warehouses. This provides less waiting time for the consignment at the airport. Unlike at major airports in India, 95% cargo comes in built-up condition at Hong Kong airport. This enables the airport handle 36 lakh tonnes cargo. Indian airports are not handling even 10% of that,” said the official. “The documentation process for cargo at all the airports in the country is too complex and requires too much formalities. While one invoice can serve the purpose, airport authorities and other government agencies ask for 10 different documents,” said Delhi Exporters Association president S P Agarwal. “Dwell time for import and export cargo at Indian airports is three and seven days, respectively despite many steps taken by the airport operators,” the official added. While dwell time for imported cargo in Singapore is 12 hours, at Delhi airport it takes 165 hours. At Sharjah airport, the dwell time for export cargo is just four hours. On the recommendation of an inter-ministerial group, chaired by civil aviation secretary, airport operators across the country, including GMR Group-backed Delhi International Airport (DIAL) and GVK Group-led Mumbai International Airport (MIAL), have reduced free time for cargo at airports. While for import cargo the free time has been reduced to 72 hours from five days earlier, for export cargo it has been retained at 24 hours.