Lack of hub limiting India’s air cargo traffic
Major hurdle
Untapped potential
Initiatives
September 16, 2012:
On one side, Cathay Pacific, Lufthansa and other international carriers are increasingly hovering over the Indian skies with their freighters, scouring for a perfect landing to bring in and take back air cargo loads. And on the other, heaps of potential air cargo parcels are lying at the warehouses of the Indian industry, waiting to be air-lifted and flown to their global destinations.
But the rendezvous between the two is not happening, at least not on the scale and speed that it should. Nick Rhodes, Director Cargo of Cathay Pacific, said, “India is an exciting market for us. We expect India’s contribution to our global (cargo) revenues to increase from 3.5 per cent to five per cent this fiscal and 10 per cent in the next three to four years.”
Major hurdle
Clearly, India has the potential to play a much larger role in the air cargo market, especially with international carriers looking at Asia as a major growth driver for their air cargo business. But the major roadblock is the absence of a full-fledged air cargo hub, backed by strong regional air connectivity and road network for the last-mile transportation.
It is this gap that the Rajiv Gandhi International airport in Hyderabad is trying to fill. Located at the centre of India’s production theatre with a strong regional connectivity, the airport is speeding along to become the country’s first full-fledged air cargo hub. Its advantage — more than 20 key Indian and other South Asian cities are less than two hours of flying time away and South-East Asian cities, such as Singapore, Kuala Lumpur and Bangkok, and Middle-East cities are four hours away.
Untapped potential
Consider this: Hong Kong with a GDP of $230 billion handles an air cargo traffic of 4.2 million tonnes. The United Arab Emirates (UAE) with a GDP of $252 billion sees total air freight movements of 3.10 million tonnes at airports. And India, with a GDP of about $1.67 trillion, handles just 2.5 million tonnes. The country’s tonne-per-billion GDP works out to about 516, as compared to 12,883 and 16,951 of Hong Kong and UAE. The volume of air cargo is just over 1.5 per cent of the country’s total trade, but even then it constitutes 29 per cent of the trade value.
The 12th Plan estimates the domestic and international cargo to grow at the rate of 12 per cent and 10 per cent, respectively, with the total traffic projected to touch 5.9 million tonnes by 2020, with the share of international cargo at 3.5 million tonnes.
There is a significant untapped potential for air cargo in India. One can get an indication of this from the fact that the total volume of about 2.5 MMTA handled by all Indian airports is less than that handled by airports such as Memphis, Hong Kong, Shanghai, Incheon, Anchorage and Paris. A recent KPMG report has shown that the average weight load factor of air cargo during the last five years was about 62 per cent, reflecting significant unused capacity. In addition, the transhipment cargo, which constitutes as much as 60-70 per cent of total volumes handled by some of leading airports, is almost negligible for Indian airports.
“Thus, a significant potential lies for the Indian airports to become transhipment hubs,” the report pointed out. Hyderabad airport, which is currently handling cargo of about one lakh tonnes per annum (TPA), is favourably placed to take on this spot. Lufthansa has already nominated the airport as its pharma hub and Cathay Pacific recently added a twice-a-week Boeing 747 freighter service. Also, Thai Airways and Blue Dart are offering main-deck through their Boeing 747-400F MD-11F and Boeing 757F freighters.
In addition, about 18 scheduled airlines, including 13 international, have cargo bases here, operating close to 2,000 flights a week, thus, offering ample belly space for air cargo. The belly space ranges from two to three tonnes in a 737-type aircraft and 20-25 tonnes in the larger 747-type aircraft.
Initiatives
A senior officer of the GMR Hyderabad International Airport Ltd said, “We are taking several initiatives to become a hub, taking advantage of our location, infrastructure and connectivity. Our terminal capacity can be modularly scaled up to 1.5 lakh TPA, while our apron is being upgraded to Code F, capable of accommodating even A380s.” He explained that developing a cargo hub at Hyderabad can save both money as well as time for airlines and the trade.
Today, if a wide-bodied freighter flies in with a cargo load to Delhi, drops some of the load and hops on to another city to drop the remaining cargo, it would take a minimum of two hours flying time. “A wide-bodied freight consumes at least $25,000 worth fuel for one-hour flying time. This means, it would spend $50,000 just to ferry a part of the cargo parcel to the next regional airport. And this works out to about $16 million a year. Imagine, the carrier hopping to a few more ports to drop the remaining cargoes,” the officer added.
What the airport is looking at is that a freighter could land and drop its entire load here, which could then be dropped to at least 19 cities in its catchment area through its regional connectivity at much lower costs.
The regional frequencies from Hyderabad increased from 212 a week in March 11 to 347 a week in August 12. The airport already has a 33,000-tonne capacity dedicated temperature-controlled pharma zone, a 20-acre Free Trade Zone with warehousing and distribution and the integrated terminal operated by GMR and Menzies Aviation of UK.
New initiatives include cool container links for pharma products, general and temperature-controlled warehouses within the cargo village, promotion of road feeder services and 24x7 customs clearance of cargoes. The last initiative is particularly required for a full-fledged cargo hub as both Delhi and Mumbai airports have one-shift of customs operating hours, while airports such as Hong Kong, Dubai and Shanghai have 24x7 customs clearance.
All the airport needs now is a domestic carrier to turn it into its cargo hub. And on this count, the airport operator is in talks with a few airlines and hopes to seal a deal soon. “The infrastructure, connectivity and ancillary facilities are ready. Once we get a carrier, the airport will soon serve as India’s much-needed air cargo hub,” the officer from the airport said.
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