Witnessing a strong growth in India with the recent addition of AirAsia to manage its cargo operations, ECS Group is working hard and aiming high with a greater focus on expansion in Asia. During a recent visit to India Bertrand Schmoll, Chairman and CEO of ECS Group, speaks to Jasleen Kaur about ECS Group’s network expansion and adding more clients from around the world, particularly from Asian countries. Schmoll is accompanied by the group’s India managing director Rajendra Dubey.
How has been the growth of ECS this year? Give us a sense of last year’s revenue and what is your target for this year?
Schmoll The growth has been tremendous. Last year, the revenue was almost Rs 100 crore. In this financial year (2015-16), we have set a target for twice that figure. A target of Rs 300 crore has been set.
Could you elaborate on your operations in India?
Dubey We have 19 offices. In the North we have Delhi, Chandigarh and Jaipur. In the West we have Ahmedabad, Mumbai, Pune. In South, we have Kochi, Bangalore, Chennai and Vishakapatnam and in the East we have Guwahati.
What about your subsidiaries?
Schmoll Well, we have a very good network in 36 countries, with main part in the Eastern Europe, moving on to Western Europe, then the US and now we are moving to Asia. We have started with India and we have been quite successful. Now we are into a partnership with the Middle East too. In India, we are covering 19 cities. India is quite big, however, 19 as a number is not bad for us. We are very happy with the development of our India operations. And we hope to develop the group in other parts of Asia in the same way.
What are your further expansion plans in India?
Schmoll In India, we have many plans for development. First of all, India is extraordinary because people fly more and more. Therefore, there is a strong future as there is a development of change, people, technology and of course, cargo. We are satisfied with our portfolio in the Indian market because we have created a company, rather than buying a company. The development has been great. So, for me, India is one of the top countries on the top list to work because right now you cannot expect growth in Europe due to recession. However, this is not the case with India where there is a huge population and huge scope for development.
Dubey We foresee very strong contribution of India operations in comparison to global presence in ECS. And we are satisfied with the growth. Today, it is about 5-6 percent of the total (global) business. Interestingly, foreign airlines generally outsource their cargo operations and it is becoming a trend in India as well.
Europe has been under stress for quite some time; add to this China, the world’s second-largest economy, has seen growth rate declining. What is your assessment and how do they impact your business?
Schmoll It has in fact helped the business in Europe due to a decline in the Euro. But the business in India has not declined. We are one of the fastest growing companies. We have taken the representation of an airline also recently.
What are your recent client additions?
Schmoll We have been with Saudi Arabia. In domestic, we have entered into representation with AirAsia. We are targeting many more economy airlines.
Dubey For AirAsia, it is a project from scratch. We are their cargo GSA from day one. They have five aircrafts. We are going to add three more aircrafts this year.
What prompted you to choose AirAsia, a new airline in India as against many already established domestic airlines?
Dubey This is not only AirAsia. We have been in talks with other airlines too. I can’t disclose it here now. We are focusing on both domestic and international airlines and we grab the opportunity that suits us better.
So what is your strategy when you acquire a GSA in a country?
Schmoll First, we always look for a new country when we enter into any GSA because it is a new implementation and then we propose that the airline will expand along with its network. When we choose an airline for GSA, of course, portfolio of an airline is important. And then management is important because we are giving services to the airline and management is the key. And we see that airline brings new contacts for us. So there is twice as much synergy when we make the acquisition.
What are specific demands from your partner airlines whey they appoint you as their GSA?
Schmoll Many airlines want dedicated staff, services and organisation. Which we can provide. If the volume is sufficient, we will have a dedicated organisation. Airlines demand commitments and we take them into our economic budgets. The cargo management has become more and more professionalised. And they want ideas also and we bring to them. So, the business is changing. We can’t only do representation from point A to B. From us they expect ideas that generate revenue.
When you say that you provide total cargo management, what does that mean?
Schmoll By total cargo management we mean that we are managing total cargo operations of AirAsia as the airline has no cargo department. We are their cargo department. So it is a good model but not for all the airlines which are very much focused on cargo; whereas low-cost carriers are very much focused on passengers and cargo is their additional revenue. This concept doesn’t exist in Europe but yes in Asia, it is very much there.
We have seen consistent growth for ECS year after year both for your India operations and for your global business; so what is the main reason behind such a good growth?
Schmoll First of course, acquisitions bring growth. It is not only about buying company which is quite complicated; the main point is to integrate the company and thus, bring value to the company. Bring new contacts, new airlines is the main point. I think, our strategy of building one group under which people work together and trying to bring value to one to the other, is the good model. And the growth comes from here.
And how do you see competition in the Indian market?
Dubey One is local Indian GSAs with whom we are competing and the others are multinational GSAs with whom we have to compete. And this is the way of doing business. One has to be better organised than the others. We have a very strong, young and dynamic team and they not only come from cargo background but from various other segments. These factors keep us competitive in the market.
What is your marketing strategy for ECS group?
Schmoll Advertising and exhibitions are the two ways we communicate. We have also a dedicated department for communication. Even in the GSA contracts, we focus on better communication and coordination with the airlines.
Where do you see ECS in the next five years? What is your vision?
Schmoll I want to see ECS growing completely in India. We look forward to expand in Asia, at least in 10 countries in Hong Kong, Singapore, Vietnam, etc. I hope we will be successful in this. We have reached $1.1 billion of turnover this year and we are hoping to achieve tremendous growth in the years to come. And the growth will come from Asia.
How do you look at the opportunity in Africa and what is your plan for the continent?
Schmoll In Africa, we are only present in Nigeria. I think freight export is quite limited at this moment, except some countries like Kenya or in South Africa. It is mainly perishable.