Gulf carriers leading the Indian air cargo growth

Middle East region is the most important region when it comes to Indian air cargo trade. Airlines from the region have been on the top in the Indian market with their expansions, tie-ups and initiatives, which is of course giving tough competition to other carriers from Europe, Asia and America. Jasleen Kaur

According to the International Air Transport Association (IATA) Industry Forecast 2014-2018, India has emerged as the second fastest growing air cargo market after the Middle East and is expected to grow at a compound annual rate of about seven percent over the next five years. Though both regions are in the race, the other side of the story narrates a strong relationship between India and the Middle East air cargo fraternities, which help both the nations to strengthen their air cargo growth. The rise of the gulf carriers in the Indian air cargo industry has been a much-talked about topic among the fraternity. Irrespective of the competition or downslide in the industry, the Middle East airlines keep on hogging headlines for their expansion in the Indian sky.

Emirates SkyCargo is a successful cargo airline in the Indian air cargo market. Though Emirates SkyCargo has conquered the Indian skies, other airlines have left no stone unturned to mark their presence in the Indian market and have been working strategically. The recent deal between Indian carrier Jet Airways and Middle East based Etihad brought a very significant move in the Indian air cargo sector. India is the largest air cargo market in the South Asian region, but very few airlines based out of the country have dedicated air freight services. Jet Airways announced in March that it has plans to launch freighter services, becoming the first private Indian passenger airline to offer all-cargo services. If the deal happens, the freighter services will be operated using an A330-200F aircraft that was wet-leased, a leasing arrangement where an airline provides an aircraft, crew, maintenance, and insurance to another from its strategic partner, in this case it is Etihad Airways. “With e-commerce expanding and ‘Make in India’ initiative fuelling growth of domestic cargo, in addition to access to over 100 destinations through Etihad’s Abu Dhabi gateway, Jet has the opportunity to do well on both origin-destination and trans-shipment cargo,” said Bharat Thakkar, Past President of Air Cargo Agents Association of India and Joint Managing Director of Zeus Air Services.

The airline’s decision brought a positive environment among the Indian air cargo fraternity. However, in early June Jet Airways announced that the freighter plans on hold citing “market conditions not being favourable” for such a plan. The spokesperson of the airline told a daily newspaper, “Internal processes and framework are in place at Jet Airways and our strategic partner Etihad Airways to allow the initiative to progress at a later date.”

Though the initiative has been on hold for some time, there are key players from the Middle East region who are ruling the Indian skies and giving tough competition to European and American carriers.

Emirates: the premium player
To begin with the topmost carrier Emirates SkyCargo, had a momentous 2014 with the move of its freighter operations to Dubai World Central’s (DWC) Al Maktoum International Airport. Its new cargo terminal at DWC offers the capacity that positions Emirates SkyCargo for future growth, and enables the cargo division to provide a better experience for its customers. Keki Patel, Cargo Manager – India and Nepal at Emirates SkyCargo said, “India provides a huge opportunity for trade, business and travel. From the beginning of this calendar year, we have witnessed a considerable amount of growth in the export segment for Emirates SkyCargo. Across our 10 India stations, Emirates Airlines has seen month on month outbound load improvements and that is a positive sign for India 2015.” Adding, “We are hopeful that industry initiatives like e-freight which involves participation and synchronisation of platform connectivity and exchange of information amongst various regulatory authorities takes place to usher in electronic paperless air carriage of shipments and international trade.” Emirates operates 185 weekly passenger wide-bodied flights serving 10 destinations across India providing the Indian market a pan-India business opportunity for exports and imports. In addition, it operates two freighter services a week from India; one weekly turn-around freighter B777F service from DWC to Mumbai and back and the second B777F service operates from DWC to Chennai and onwards to Hong Kong. Each freighter offers additional uplift market capacity of 100 tonnes per week adding up to over 13,000 tonnes a month of cargo load capacity in each direction.

Saudia:– a heavy lift
Another airline from the Middle East which is bullish on Indian air cargo sector is Saudia Cargo, which recently started freighter operations in Mumbai with its B777F. The airline operates 15 freighters and operates a mixed passenger fleet of B777s and A330s to serve eight on line destinations such as Mumbai, Delhi, Lucknow, Hyderabad, Bengaluru, Chennai, Calicut and Cochin. From Mumbai only, Saudia operates double weekly B747F freighters with a capacity of 105 tonnes per flight. Keku Gazder, Regional Director Cargo – Indian Sub Continent, Saudia Cargo, said, “We have worked so hard in the past few years to establish ourselves with focus on delivering quality customer services and gaining the valued trust of our clients in the online stations, our next step will cater to clients, focusing on getting closer to them alongside the manufacturing centres such as tier 2 and tier 3 cities in India.”

Etihad: Jet has set a path
Abu Dhabi-based Etihad has been quite positive for the Indian market. One reason could be obvious the Jet-Etihad deal and as mentioned earlier, now Jet has started showing interest in cargo side too. The second reason could be – India and China are the two key markets for the airline, which boosted Etihad’s cargo revenue last year. The airline registered its strongest ever rise last year backed by good performances from India (32 percent) and China (14 percent). “India is easily among the biggest opportunities for the air cargo business, where the competition is very limited. And, with the ‘Make-in-India’ campaign, one can expect huge growth in export sectors such as pharmaceuticals, automobiles and electronic equipment. Right now, it is aptly applicable to Etihad as it is a strategic partner of an Indian carrier (Jet),” averred Thakkar, while supporting his statement with the statistics, mentioning that Directorate-General of Civil Aviation records show only Blue Dart Aviation has a fleet of five dedicated Boeing B757 cargo planes. Air India had stopped freighter aircraft operations in early 2012, due to financial problems. In 2013-14, Emirates was leader in the air freight business by carrying 184,753 tonnes, of which 131,748 tonnes was outbound cargo. Jet trailed with a total air cargo business 120,821 tonnes, of which outbound accounted for 67,186 tonnes.

Qatar: Continuing expansion programme
Qatar Airways Cargo is quite bullish on the Indian market and therefore, at the beginning of this year, it added its seventh freighter destination in India, flying twice a week to Ahmedabad. During the launch, Qatar Airways’ chief officer (cargo), Ulrich Ogiermann, said, “Our goal is to be a world-class air cargo service provider and in order to achieve that goal; we need to constantly increase frequencies and expand our number of destinations, so that our customers can benefit from our global reach. The addition of these new freighter routes clearly represents yet another milestone in the company’s growth strategy.”
The year 2014 was a highly productive one for Qatar Airways Cargo with the launch of QR Pharma for pharmaceuticals and healthcare products and QR Fresh for perishable products; and the migration to the fully automated, state-of-the-art cargo facility at Hamad International Airport. Qatar Airways Cargo also launched 11 dedicated freighter destinations in 2014, including Delhi and Hyderabad in India.

Competition in the air
In the competitive environment, everyone tries their hands at innovations to create value for customers and at the same time, to create their position in the market. Keki said, “Emirates is committed to excellence. Our services have been developed and constantly enhanced to provide our customers with cutting edge air-freight services. Our primary objective has always been to reach out with unique solutions and engage with the end customers.” Saudia, too, is quite active with its tools. “Focussed and dedicated leadership, quick response to market changes as an example the OK-2-KSA, an online tool that assists shippers for electronic approvals for their imports into KSA, most importantly our clients from all the major markets that want to do business with us,” Gazder mentioned, adding, “We are currently growing year-on-year at about 12 percent. In the past two years, we have seen a major increase in clients those who want to do business with us and those that who already want to do more with us. Saudia Cargo will take advantage of every opportunity that is available to expand its business and operations in India.” Qatar will come up with more destinations in India for freighter services and Etihad is also looking forward to enhance its revenue from Indian market. Even India is open to sign its first air service bilateral agreement with Qatar, which will give a further boost to the India-UAE relations and will lead to air cargo growth.