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From the Editor The Air Cargo Industry in India is at a tipping point where transformational innovation enabled by modern technologies has become a reality. The most innovative carriers are now data-driven businesses that are responding dynamically to market changes, using cloud, sensors, analytics and digital business. Such organisations are differentiating themselves with speed, control and new value by re-thinking all aspects of their business. India has set for itself an ambitious target of increasing the contribution of manufacturing output to 25 per cent of gross domestic product (GDP) by 2025, from the 16 per cent at present. According to a report by Mckinsey & Company, India’s manufacturing sector could touch US$ 1 trillion by 2025. Investments, including Foreign Direct Investment (FDI) are likely to increase and many multinationals are placing their bets on India. All this is certainly music to the ears of the Indian air cargo industry, who despite its best efforts, has remained somewhat languished and is waiting for the right kind of push. There is a sudden realisation for the creation of technology and how it is an important cog in the wheel of development. In May 2015, air cargo industry experts participating in the Unisys Cargo User Group (UCUG) community report stated that disruptive innovations driven by cloud computing collaboration, sensor technology, and digital business are radically transforming the way air cargo organisations work and integrate in the supply chain. This is creating a fast-growing gap between leaders and laggards. The air cargo industry in India has grounds for increasing optimism as the rise in e-commerce and the Make in India programme begin to flourish. India Air Cargo Handbook 2016 is a product conceived from our utmost and sincere dedication towards the air cargo fraternity in India. Since it is an industry which is growing at a rapid rate, it becomes necessary to mark the key developments and changes that the air cargo industry strives for. India Air Cargo Handbook is our earnest attempt in that direction, which aims at making our readers acquainted with the opinions and views of key industry players who have been a major force in escalating the growth of air cargo industry. We have brought together different components, be it the policies that govern the working of this industry, loopholes that need to be addressed immediately and vision that the air cargo sector has set for itself. We hope that our ardent efforts in engaging with the intricacies of the air cargo sector would bear the fruits of global development and pave the way for a burgeoning industry.

Smiti Suri (Editor)


OVERVIEW

INFRASTRUCTURE

POLICIES

Editor Smiti Suri Principal Correspondent Ritika Arora Bhola Special Correspondent Sana Husain

28

12 TECHNOLOGY

TOGETHER WE CAN

72

44 TRENDS

Director Marketing Ajeet Kumar Manager Marketing Niti Chauhan Marketing Executive Chetan Pathak Rajesh Basu Asad Mohammad Mehuli Choudhury

100

Marketing Support Sheetal Singh Administration Vipin Marwah Lavish Thakur

TOWARDS THE FUTURE

Designer & Visualiser Shaique Ahmad Mayank Bhatnagar

66 INSIGHTS

Feature Writer Tariq Ahmed Nikhil Mishra Nicin Varghese

All material printed in this publication is the sole property of India Warehousing Handbook. All printed matter contained in the magazine is based on the information of those featured in it. The views, ideas ,comments and opinions expressed are solely of those featured and the Editor and Publisher do not necessarily subscribe to the same. India Aircargo Handbook is printed, published and owned by Smiti Suri, and is printed at Compudata Services, 42, Dsidc Shed, Scheme–1, Okhla Industrial Area Complex, Phase–II, New Delhi-110020, and published at 6/31-B, Jangpura–B, New Delhi-110014.

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Upfront “It’s impossible to think of an industry in any country that isn’t affected by aviation. It’s also the life blood of social development and interaction.”

“We believe India needs to aspire to create a world-class and competitive airline industry that can hold competition.”

Tony Tyler, Director General, IATA

Phee Teik Yeoh, CEO, Vistara

“Make in India, along with a strong push from the private sector, will boost Indian air cargo movements in the short term.”

“The strongest areas of growth for air travel have been in the Asia Pacific region and also the Middle East. The outstanding market has actually been India, where we see a growth of 20 per cent.”

Eric Hartmann, Vice President, Cargo Alliance, SkyTeam Cargo

“Connectivity is the key, as the airfreight business is not an integrated chain. The bottleneck, with the highest risk of making mistakes, is at any transfer point of cargo or documentation.” Steven Verhasselt, VP Commercial, Liege Airport 10 india aircargo handbook - 2016

Brian Pearce, Chief Economist, IATA

“I truly appreciate the government’s efforts to revitalise the logistical infrastructure namely air and sea ports, but a chain is no stronger than its weakest link.” Martin Roos, Managing Director, DSV Air & Sea Pvt Ltd


“It is survival of the fittest with innovation and therefore an integrated approach is the only way forward. My understanding is that unless air freight forwarders, airlines and airports work in tandem, forwarders will become redundant.” Bharat J Thakkar, Co-Founder and JMD, Zeus Air Services Pvt Ltd

“The steps taken by the government towards better infrastructure and efficient logistics have raised hopes for a good future for the Indian cargo market.” Ozer Guler, General Manager, Northern & Eastern India, Turkish Airlines

“India has all the potential to become one of the leading countries in air cargo. The country has a huge size, population and good infrastructure.”

“‘Make in India’ aims at developing the economic growth of India by enhancing infrastructure, boosting manufacturing, easing business and lastly, opening up FDI in construction.”

Bertrand Schmoll, Chairman and CEO, ECS group

Huseyin Ceyhan, Regional Cargo, Director, Asia Pacific, Turkish Airlines

“There’s great growth potential but we are unable to handle it due to poor infrastructure, lack of committed service level and high prices.”

“The Indian market as of now is booming and the economy is very good. India is a very lucrative hub of cargo where so many carriers operate and the competition is so high.”

Suraj Agrawal, President, DACAAI

Anwar Mumtaz, Incharge-Cargo Operations, Pakistan Airlines 2016 - india aircargo handbook 11


Overview 12 india aircargo handbook - 2016


Air Logistics in India Growing Bigger and Better

India’s domestic air cargo industry, no doubt, is growing at a very fast pace. The domestic air cargo industry is currently witnessing a revolution with the domestic segment growing faster than the international segment. With airlines introducing more freighters, the government and private entities working towards developing low cost airports while promoting regional connectivity in tier-II and tier-III cities and investing whopping amounts in infrastructure, technology and air-road-rail connectivity, and with the Civil Aviation Policy and Goods and Services Tax (GST) in the pipeline, the industry foresees a great ‘Growth Potential’ and is expected to grow by leaps and bounds in the coming years.

14 india aircargo handbook - 2016


Srinath Manda, Associate Director, Automotive and Transportation, Markets&Markets

A report titled, ‘Growth Opportunities in Indian Air Cargo Market’ estimates that the domestic segment of the air cargo market is likely to grow at a faster pace (around six per cent) compared to the international segment (around four per cent) during the next three years. This growth is similar to the few fast growing air cargo markets during this period, such as UAE. As per IATA estimates also, India is likely to be the second fastest growing air cargo market after Middle East, during the next three years.

01

Recently the government proposed to set up 51 airports to enhance air connectivity to small cities in Andhra Pradesh, Jharkhand, Bihar, Punjab, Uttar Pradesh, Assam, Arunachal Pradesh, Madhya Pradesh, Rajasthan and Maharashtra. And of the 51 low-cost airports, Airports Authority of India (AAI) was planning to start the work on 15 airports this calendar year. Promoting regional connectivity will not only improve cargo operations but will also help in overall economic development.

02

Only 22 airports have been given Common User Terminal (CUT). But, it should have a proper design, dockyard, parking, storage system, movement system, etc.

03

The Indian air cargo industry, domestic or international, needs high class infrastructure considering the increase in the number of cargo traffic and global participation. Cargo Terminal Operators, whether Airports Authority of India (AAI) or private entities should augment investment in advanced technology and equipment if they want to compete globally.

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E-commerce has changed the dynamics of domestic air cargo and we can see not only growth but also induction of skilled manpower and technology into the industry.

04

Also, latest technologies like Elevated Transfer Vehicle (ETV), Radio Frequency Identification Devices and Terminals (RFID), Automatic Storage and Retrieval System (ASRS), X-ray machines for cargo screening, etc., are required to be deployed at cargo terminals.

05

Temperature-sensitive products like perishables, pharmaceuticals and dangerous goods, etc., which are transported mainly via air need special handling facilities. Therefore, investments should be made in this area also.

06

In a developing country like India, an efficient logistics infrastructure can reduce the cost of transportation, which in turn can contribute directly to global competitiveness of the country. Despite all the progress, the industry is still facing several challenges like lack of well-organised and efficient implementation and execution of plans and policies, skilled manpower, increasing service tax and cargo handling charges at the terminals, etc.

16 india aircargo handbook - 2016


07

Airlines experts predict that at present, hardly 30 per cent capacity is being utilised and average loading per departure is not more than 600 kg compared to the available 2.5 tons. Also, experts hope that the number of aircrafts will rise by 2020. But then the industry would need better infrastructure to manage the growth.

08

The current estimated cargo handling capacity available at six major airports in India is about 5.2 million tons, while the total air cargo handled was about 2.4 million for 2014, indicating there is a gross under-utilisation of the capacity. However, several non-major airports lag behind the required capacity, and some addition is expected in such airports.

09

Allowing airlines to grow by hiking FDI, increasing the number of players in the civil aviation sector will generate capacity for domestic cargo. Establishing more cargo terminals in major cities in each state will also boost domestic cargo business.

10

The Indian air cargo industry is rapidly expanding. Hence, there is a commensurate increase in the requirement of skilled personnel to handle this growing industry. Cargo handling functions are now dealt by the Ground Handling Agents (GHA) at the airports.

11

The brand aspirations of smaller town consumers will be the driving force for growth of cargo to smaller towns and cities. As of now, the demand is more than the capacity. We need capacity expansion in the market so that the services can be improved.

12

The market place or the Merchant Model of e-commerce has given increased cargo loads across destinations. We have seen major growth in places like Hyderabad, Ahmedabad, Surat, Raipur, etc.

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Skilled Manpower Need of the Hour The domestic air cargo industry lacks skilled and trained manpower. Also, there is a lack of willingness on the part of stakeholders to invest in human resources for carrying out efficient business operations mainly cargo handling and transportation. In addition, congestion at cargo terminals especially during peak hours is also a major problem.

Congestion can be avoided if LSPs and agencies train their personnel to carry out operations efficiently without chaos during peak hours. There is the need to adequately invest in human resources, as the future growth of the air cargo industry is crucially dependent on the availability of skilled manpower.

Perspective on air-road-rail connectivity: Road: The improvement in the condition of roads has improved the road turnaround times. There is a huge gap in the cost of transportation in case of road, train and air. This gap makes road transportation a preferred mode for shippers. Train: The new policy in train leasing is making train transportation more professional. The cost of train leases has seen a steep rise. This has reduced the costing gap between train and air. Safety and security are the main issues hampering the growth of train cargo. If these concerns are addressed, rail transport will get a major boost. In fact, we have seen a major shift by shipper to train cargo from air due to the congestion at airports. Air Cargo: With the increase of e-commerce, air cargo has seen a major boost. In fact the demand has surpassed the supply. There is congestion at certain airports like Delhi and Bangalore. There is a desperate need to increase the carrying capacity. The northeast connectivity remains a major issue. The rates for air cargo are increasing. Due to lack of capacity in air, we have seen a shift of cargo to train.

18 india aircargo handbook - 2016


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Indian civil aviation industry has been witnessing tremendous growth for the last few years and is expected to become the world’s third largest aviation market by 2020 and the largest by 2030. No doubt the industry is on a high growth trajectory albeit with minor hiccups like inadequate infrastructure, lack of skilled manpower and poor connectivity. Experts feel that the commercial and cargo sector of the Indian aviation industry has huge untapped potential which needs to be recognised

20 india aircargo handbook - 2016


India is already a key hub and will continue to be so. The country has a huge size, population and good infrastructure. That’s why we are very happy to be here. I come here every quarter and I find the country changing. It is becoming more organised and the market is growing fast.

Bertrand Schmoll, Chairman and CEO, ECS Group

India is expected to become the world’s third largest aviation market by 2020. According to a report presented by the CAPA (Centre for Asia Pacific Aviation) and SITA, air transport IT specialist, Indian aviation industry is examining whether the country has the right investment, infrastructure and regulatory system to enable this growth. Also, over the next ten years, all six metropolitan cities- Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Mumbai are expected to have provision for a second airport for both cargo and passenger, and Mumbai will need to start preparing for a third. Several non-metro cities such as Ahmedabad and Pune will also outgrow their existing infrastructure and require new airports.

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The forecast is very promising and this gives a lot of confidence about the aviation sector’s potential. The aspects of ease and cost of doing business are two major challenges that need to be addressed as soon as possible. To catapult India onto the world aviation platform, a liberal, forward looking, pro business aviation policy is a prerequisite. India needs to be at par with global aviation hubs like Singapore and Dubai as it has a large domestic demand to support direct operations and a prime geographical position on the crossroads of North Asia, East Asia, Africa, SAARC, Europe, East America, Middle East and SWP. Giam Ming Toh, Former Chief Commercial Officer, Vistara

All six metropolitan cities - Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Mumbai - are expected to have provision for a second airport, over the next ten years, for both cargo and passenger, and Mumbai will need to start preparing for a third. Total investment in the sector between 2004 and 2020 is expected to reach USD120 billion, of which USD80 billion is represented by aircraft, USD30 billion in airport infrastructure and USD10 billion in ancillary services such as ground handling, maintenance, cargo handling air traffic management, security and training. A report presented by FICCI and KPMG states that India has the potential to become the third largest aviation market by 2020 and the largest by 2030. The industry has ushered in a new wave of expansion driven by Low Cost Carriers (LCC), modern airports, Foreign Direct Investments (FDI) in domestic airlines, cutting-edge Information Technology (IT), growing emphasis on No-Frills Airports (NFA) and regional connectivity. At present, the Indian civil aviation industry is among the top ten in the world with a size of around USD 16 billion.

22 india aircargo handbook - 2016


As per the data from the AAI, passenger throughput grew to 159 million (FY 2013) and cargo throughput to 2.19 million tons (FY 2013), thereby registering an impressive growth of 13 per cent and ten per cent CAGR respectively over the period FY 2003-2013. On the global front, aircrafts transported around 3.1 billion passengers and over 51.6 million tons of freight in 2013-2014. The most significant development in the Indian domestic market is the growing dominance of the low cost carrier model, which in FY 2013 accounted for almost 70 per cent of the domestic capacity. Also, Indian carriers plan to double their fleet size by 2020 to around 800 aircraft. As per the analysis, Indian aviation has changed hugely since 2000 when just one carrier flew overseas, while today, there are many. Passenger traffic has increased from 42 million to 150 million and the country’s fleet has grown from 119 aircraft to 437.

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Talking About Freight Rates

The world has now become a global village with the rapid growth of international trade, where air transport has acquired an important place in the transportation of goods. With a seven per cent gross

increase domestic

in

India’s product

(GDP), and the manufacturing sector seeing double digit growth rate, it has been expected that Indian freight industry will grow at a rate of ten per cent

24 india aircargo handbook - 2016


The Indian aviation industry, one of the fastest growing industries in the world, has seen a rapid change over the years. The air cargo aviation industry also has a major role in the country’s economic growth which is growing at a fast pace. Aviation holds a small share of India’s freight market, with freight market being expensive compared to other freights like rail and road. The demand for air cargo is growing with the domestic air cargo traffic registering a 25 per cent rise in the year 2009-10. Latest Trends in Air Freight Market The aviation logistics of the country is plagued with numerous challenges. The air freight industry is going through some tough and trying times. Though volumes indicate marginal growth, yields and load factors are under pressure. High dependency of certain airlines in some trade lanes is also risky. Though aircraft equipment is being realigned to optimize, it remains to be seen if it yields at the end. Some of the challenges faced by the industry are: • Inadequate infrastructure- This is a major problem faced by the sector. While in few airports air traffic is highly concentrated, in most of the Tier II cities the facilities are ignored. • Rising air traffic fuel (ATF) • Poor cargo handling facilities and clearance at airports • Poor connectivity- The movement of goods and delay in the movement of air cargo between Tier II and Tier III cities and gateway airports adds to the woes resulting to low cost efficiencies. Air freight rate The air freight rate is costlier than other type of freights because of its reach to almost any location in the world, because it is faster and safer and goods often reach the destination on time. Of course, the costs of the goods are based on its weight. Air Freight has the highest price for one obvious reason, their ability to deliver in the shortest time possible. Hence the pharmaceutical, raw materials, high value products, etc. still look at air freight as the answer and thus first choice of transportation. Deadlines are another factor which is an obvious advantage for an airline. It has been predicted that the cost of air freight will drop in the coming years which will open up new economic opportunities in India’s Tier-II and Tier-III cities which are now being added to the air network. Difference between air freight rate and other freight rates The air freight is a costlier affair, and has the highest price compared to other freight rates. High value products always tend to look at air as their primary mode of transportation because of its ability to deliver at shortest time possible. Some of the key features of air freight to look upon are• Cost of shipping by air is expensive compared to ocean or road freight, the reason being its speed, its timeliness to deliver goods. Shipping by air or sea requires custom and destination fees. The shipment cost of air freight is expensive than the sea freight and road freight. • Speed- When it comes to speed, there is no question that air freight is usually much faster. It takes a day or two to deliver goods to the destination whereas other freight takes around days and even months to deliver goods.

2016 - india aircargo handbook 25


• Reliability- Reliability is something which we look on people, businesses, products and services. Compared to ocean freight shipping, the air freight shipping has got much shorter history yet air freight tends to win the battle of reliability. • Provide web based technology- Nowadays, many air freight companies give the opportunity to track goods using web-based technology, which means one can follow the status of the cargo from departure to arrival. High value products will always tend to look at air as their primary mode of transportation. Though Ocean Freight has developed over the past few years and enjoys the lion share of business, they cannot compete in terms of delivery timeliness.

According to a research Bradley D’lima, Cargo Sales Manager-India, Kenya Airways

“Aviation still has its advantages compared to ocean and road freight, as we are not affected by land locked countries. In some continents especially Africa, South America & even parts of Asia cross border road transport is not developed due to poor infrastructure or security concerns.” 26 india aircargo handbook - 2016

The domestic air freight market in India was at 568 metric tons in 2007-08 amounting to a total of `20,147 million. The market is likely to grow at a Compound Annual Growth Rate (CAGR) of 12.9 per cent in the coming years and reach a figure of 1,043 metric tons by 2013-14. The international air freight market in India was at 1,146 metric tons of which about 55 metric tons gets into interline movement within India. It was estimated that the growth in the international sector will continue in the coming years at an estimated growth rate of around 12.8 percent on a year to year basis over the next five years.

What decides the rise and fall of air freight rates? The air freight rate climbs as demand creeps upward. It is a simple question of demand and supply. An increase in capacity can lead to a fall in price. In the first half of 2014, capacity grew slowly than volume in nearly every major regions of the globe. Capacity in Africa rose by 2.1 per cent, Europe’s capacity rose by 2.4 per cent, Middle Eastern capacity rose by 9.1 per cent , capacity in North America grew by 0.2 per cent, whereas in Asia-Pacific region capacity did outpace volume growth rising by 6.5 per cent. There are other factors which do have an impact like political stability, holiday season festivals and natural calamities, etc. It could affect the region impacted but could lead to an increase in aid Government’s initiative The government can help increase the capacity of airports in Tier-II and Tier-III cities and provide the latest technology and infrastructure which would simplify the processes. Technologies like electronic data interchange (EDI) can help ease the paper work and speed up the transaction process. Other factor which also needs attention is improving the cargo handling facilities at the airports.


To look forward Infrastructure is the enabler which will act as a driver for growth in air cargo. The development in infrastructure, planning and distribution can prevent many bottlenecks faced by the domestic air cargo industry in India. Growth in the volume would also attract larger investments. Increase in investments will increase the demand for air cargo attracting many more new players and facilitating faster growth in the industry.

According to the International Air Transport Association, the air cargo market grew 4.1 per cent year-over-year in the first half of 2014, as capacity rose by 3.6 percent, in the first half of 2014.

High value products like pharmaceuticals always tend to look at air as their primary mode of transportation.

There are plans by many airlines to create full-fledged cargo operations and it is expected that these cargo carriers will also move to Tier-II and Tier-III cities of the country.

Plans are on by the logistics companies to acquire their own aircrafts which boost the aviation logistics. As the demand for air cargo continues to grow, it will attract many more new players facilitating faster growth.

Now-a-days many air freight companies give the opportunity to track goods using web-based technology, which means one can follow the status of the cargo from departure to arrival.

Logistics companies are planning to acquire their own aircrafts. All these augur well for aviation logistics as the demand for air cargo continues to grow steadily.

Madan Sharma, National Manager – Air Freight, JAS Forwarding Worldwide Pvt. Ltd

“The latest trend of the air freight market is weak and unhealthy.”

At the center of today’s transport challenges are oil prices. Freight movement in most modes remains largely dependent on ever-more expensive and finite fossil fuels, primarily diesel fuel. 2016 - india aircargo handbook 27


nfrastructure 28 india aircargo handbook - 2016


2016 - india aircargo handbook 29


The new wave of Infrastructure Development

30 india aircargo handbook - 2016


The Indian Aviation Industry is all ready for an unprecedented growth in terms of infrastructure developments and connectivity. In the next ten years, at least 50 additional airports will be functionalised. Presently, there are 450 airports and airstrips, which are spread across the length and breadth of the country. However, merely around 125 of these are operational, while the rest of them remain unused for one or the other reason. Meanwhile, the government is preparing an action plan to revive 160 airports and airstrips, each of them costing about `50-100 crore. Presenting the Budget for 2016-17, Finance Minister Arun Jaitley said that the government is drawing up an action plan for revival of unserved and underserved airports. “There are about 160 airports and air strips with state governments which can be revived at an indicative cost of `50 crore to `100 crore each,” Jaitley said. “We will partner with the state governments to develop some of these airports for regional connectivity. Similarly, ten of the 25 non-functional air strips with the Airports Authority of India will also be developed,” he added. The draft policy has mooted various measures to boost regional connectivity including setting up of no-frills airports and providing viability gap funding for airlines. Among others, the draft policy has proposed that there would be no service tax on tickets under the Regional Connectivity Scheme (RCS) apart from service tax exemption for scheduled commuter airlines taking jet fuel from RCS airports.

New model for development of airports: The government is considering a new model for development of airports wherein Airports Au-

thority of India retains the complete ownership of an airport but privatises most of the services, a senior civil aviation ministry official said. AAI currently owns and runs majority of the airports in the country. But the state-owned entity is a minority equity partner with private companies in Delhi and Mumbai international airports. “In our country, development of airports will be a mixture. Everything to be privatised will be a wrong thing, everything to be nationalised will also be a wrong thing. Public sector has a place, private sector has a place. Now there are other variations also which the government is thinking. Is it not possible for the Airports Authority of India to own a place and privatise services, and have a revenue share? We are working on such a model,” the official said. The National Civil Aviation Policy, 2016 mentioned the possibility of the AAI giving out operations and maintenance for a cluster of existing or new airports. Out of 125 airports of AAI, about 95 are operational of which 71 have scheduled commercial operations. Delhi and Mumbai airports, which are majorly owned by private companies GMR and GVK, respectively, and in which AAI is an equity partner, are currently a major source of revenues for the state-owned entity. AAI owns 26 per cent stake each in Delhi International Airport Ltd and Mumbai International Airport Ltd. The new development model being considered will ensure that the AAI remains the sole or majority owner of the airport to be modernised with most services being outsourced to private firms. The aviation ministry is planning to revive 50 non-operational airports of AAI in the next three years at an indicative cost of `50-100 crore each. Sources said the new model may be tried at some of these 50 airports which are being revived. The government expects this approach to

2016 - india aircargo handbook 31


boost AAI’s revenues as well. AAI expects its total revenue of `9,545 crore in 2016-17 (Budget Estimates or BE) as against `9,701 crore of revised estimates or RE in 2015-16, according to ministry sources. Its profit after tax is projected at `1,128 crore BE 2016-17, sharply down from `1,746 crore RE in 2015-16, the sources added. The authority’s expenditure is set to rise to `7,987 crore BE in 2016-17 from `7,195 crore RE in 2015-16.

al from the Ministry of Civil Aviation and expects to get other approvals by 2016. Bids will be invited from private companies to develop the airport. The Dholera airport, to be built in about 1,426 hectares of land at an initial investment of `10 billion will have two runways, hotels and convention centres, according to Chavda.

The much debated airstrip expansion:

Many aviation industry watchers are sceptical about the civil aviation ministry’s plans to build 200-odd more airports across the country in the coming two decades. Aviation experts point to the fact that most of the existing airports are loss-making and thus are financially non-viable. They question the wisdom behind adding to this roster of non-performing airports. While certain elements in the airline industry blame the government’s poor planning and execution for the plight of the existing airports, others are hopeful that the government will first try to turn around its loss-making airports before building new ones. A cursory look at the latest balance sheet released by AAI reveals that most of the airports are in the red. For example, airports in the Western Indian region (except for Goa, Mumbai, and Pune) are loss-making ones. These include airports at Akola, Kandla, Aurangabad, Bhavnagar, Bhopal, Bhuj, Diu, Gondia, Indore, Jabalpur, Jamnagar, Keshod, Kolhapur, Porbandar, Rajkot, Songarh,

The AAI has recently confirmed that the proposed extension of the Juhu airstrip on Juhu beach will be undertaken. This came amidst several protests that has delayed the project for a considerable period of time. The extension of the runway is aimed at better services for private operators at the Juhu aerodrome. The phase-I of the project also includes night landing facilities for aircraft, augmentation of dispersal area, making a terminal building and development of an aviation museum. Among these, the airport has already received a green signal for allowing night landing for aircraft on the Juhu aerodrome premises. However, activists have contended that the Juhu aerodrome’s expansion on the beach would be difficult owing to ownership of the land. “In the copy of the draft Development Plan, it is clearly mentioned that the beach is not a property owned by the AAI. We have also filed an RTI to confirm the same. The beach is the only open space left for residents around Juhu, and we fear the extension of runway will endanger the same,” said Godfrey Pimenta, an activist.

Tapping the Middle East: The government is planning to build a new international airport in the western state of Gujarat, as Asia’s third-largest economy seeks to tap a share of the booming air traffic in the Middle Eastern hubs. Amit Chavda, the General Manager for Dholera International Airport Co had mentioned that the new airport in Dholera, about 100 kilometers (62 miles) from Ahmedabad, will be capable of handling Airbus Group NV A380 superjumbos. “The new airport will lure foreign airlines by offering them an alternative hub to Dubai, Abu Dhabi and other Middle Eastern airports,” Chavda added. “A flight from London to Sydney can save fuel for more than 300 kilometers by using Dholera as a hub instead of Dubai,” he said. “In five years, Dubai airport will be so busy and so difficult to get into, that airlines would like to rather route their flights via Dholera,” Chavda said. Chavda informed that the Dholera airport, for which the Japan International Cooperation Agency is preparing a project survey, has initial approv-

32 india aircargo handbook - 2016

Skepticism:


Soplapur, Surat, Vadodara, Ahmedabad, and Juhu. Commenting on the issue, Amber Dubey, partner and India head of aerospace and defense at global consultancy KPMG, said, “It’s difficult to predict the (optimum) number of new airports since the projected increase in traffic may be concentrated around the top 12-15 old airports and they may go for airport capacity expansion. New airports will require significant government funding for survival. A rough estimate would be around 20-30 new greenfield airports by 2025.” He also said, “We need new airports in places of economic, tourist and strategic interest.” These could be places close to mines, ports, special economic zones, industrial clusters or the country’s borders etc. They need to be chosen carefully since they may be non-viable for several years, before their hinterland economy grows and traffic picks up. These airports should be nofrills or low-frills airports in the public-private partnership mode. Their revenue shortfall should be compensated for, by way of the Essential Air Services Fund (EASF). The fund should be created through a 1-2 per cent cess on all air tickets sold in India. Explaining the reason for the poor performance of Indian airports, Devesh Agarwal, an aviation blogger and analyst, said, “In India, most of the civil aviation related decisions and polices are taken on ad-hoc basis in absence of a comprehensive civil aviation policy.” He added that he had no doubt that more airports are needed, but that the government’s present plan of having 200-odd airports is imprudent. Agarwal further blamed the wrong policies adopted by the government for poor financial health of airports in India. He was referring to the policy in which the Central Government is the major funder of an airport project, with the state or city concerned, having negligible or no investment in the project. “In the US, the reverse is true, because of which the local citizens of the city have a stake in deciding the fate of the proposed airport,” he added.

There are about 160 airports and air strips with state governments which can be revived at an indicative cost of `50 crore to `100 crore each.

Arun Jaitley


Towards an Intrinsic Network

Enhancement of No Frills Airport

34 india aircargo handbook - 2016


Expectations behind No-Frills Airports A large number of people residing in smaller towns in the country have no air connectivity. To cater to the needs of the people, the new government appears to be very enthusiastic in reviving the aviation sector. With the aim to provide better air connectivity in underserved areas of the country and also to bring down the cost of flying, the Government of India is planning to boost rudimentary airports in the country. Union Civil Aviation Minister Ashok Gajapathi Raju has recently announced to set up no-frills airports in five cities, namely-Tezu (Arunachal Pradesh); Hubli and Belgaum (Karnataka); Kishangarh (Rajasthan) and Jharsuguda (Odisha) in the current fiscal year. The Airports Authority of India (AAI) has developed a model for these no-frills airports, which will provide the basic and essential services needed to operationalise the airport, though they have said that the safety and security will not be compromised in any way.

Why No-Frills Airports in Tier III cities? The upward trend of the Indian Civil Aviation sector is to enhance the air connectivity through no-frill airports. These budget airports will not only boost the economic growth but also flourish the aviation and tourism activities in particular. This will also further facilitate availability of infrastructure in the airports bringing a synergy with the airport operation. Hence, it is for this purpose that the Government of India is focusing on the development of airport infrastructure in Tier-II and Tier-III cities. Apart from these five no-frill airports, the government plans to develop 50 low-cost airports in smaller cities across the country to improve regional connectivity.

Upcoming No-Frills Airports in the current fiscal year CITY Tezu Hubli Belgaum Kishangarh Jharsuguda

STATE Arunachal Pradesh Karnataka Karnataka Rajasthan Odisha

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Cutoff in these airports These airports which will be located in small towns will differ from the swanky airports in Delhi and Mumbai. These airports will lack • Grandiose building • Arrival lounges • Conveyor belts • Food marts • Phone-charging kiosks • Shopping areas • Only the security-hold areas will be air-conditioned • No luggage scanning X-ray machines, luggage will be manually checked in • Only one Air Traffic Control (ATC) tower will cater to a number of such airports. • The security of these airports will be taken care of by the police personnel from the respective states • Solar energy will be harnessed to meet airport’s power needs. • These airports will have airstrips long enough to handle turboprops like ATR and Q-400

Small budget The AAI has planned to keep the cost of building and operation of these airports to a minimum. The cost of these airports with such initiatives is expected to be very low with an estimation of `50-80 crore for every airport. These airports will be built in the form of a module, which means a block can be added if there is an increase in the demand.

Advantage of No-Frills Airports The positive traits of having such low-cost airports is that • These airports will be relatively uncongested, free from ground and air traffic control delays, which will result in the increase of the productivity and lower the operational price. • It will increase the air connectivity to Tier-II and Tier-III cities making these cities directly accessible.

36 india aircargo handbook - 2016

ost c w of lo towns p u ing n small boost t t e S i orts rovide a ment . p r i a op ove s l m a will e cargo to th

To enhance air connectivity through no-frills airports, Government of India plans to develop airport infrastructure in Tier-III cities.


• These airports will have direct accessibility, without passing through the major hubs like Delhi, Mumbai and Bangalore. • These airports would also help boost lower ticket rates resulting in higher air passenger volume, due to lower infrastructure and operational costs.

Giving boost to the air cargo Union Civil Aviation Minister Ashok Gajapathi No-frills airports will Raju recently informed the media that in order to increase the air connecboost to the air cargo and MRO (Maintenance, Repair, Overhaul) sectors, the ministry was tivity to Tier-II and Tier-III consulting stakeholders and experts including airlines and airport operators to finalise policy cities making these cities guidelines and take other measures like tax condirectly accessible. cessions and regulatory steps in this regard. The government is also trying to formulate a new policy for connectivity in remote and regional areas and will be providing various concessions and incentives for the airlines flying to these destinations. It is a conscious effort made to serve routes to unserved and underserved airports. The government has also proposed to create a framework in order to enable synergy between scheduled airlines, regional carriers and non-scheduled airlines for better breach and connectivity. In order to facilitate cargo transportation, off-airport facilities were being created to allow export and import of goods, away from the cargo terminals. This kind of positive policy will also go a long way in making sure that the airports in distant areas do not turn defunct.

Stumbling Blocks

Delhi & Mumbai

Though the initiative has been taken by the government to improve connectivity in the country through these proposed no-frills airports in Tier-II and Tier-III cities, but these grand plans may pose a few problems. • These airports may cost low but since some of the no-frills airports are to be built in interiors of the city, which are Naxal-affected areas, there might arise security issues. • There is a danger of obstruction from cattle or stray dogs, who may

2016 - india aircargo handbook 37


In order to boost the air cargo and MRO (Maintenance, Repair, Overhaul) sectors, the Ministry of Civil Aviation was consulting stakeholders and experts including airlines and airport operators to finalise policy guidelines and take other measures like tax concessions and regulatory steps in this regard.

suddenly appear on the runway when a flight is scheduled to arrive. • Though, a note prepared by the Ministry of Civil Aviation speaks of the state government’s responsibility towards the security and land allocation for such airport projects. Some more thought needs to be put into such airports, with respect to consultation with the respective state governments. In fact the success of no-frills airport model depends mainly on the largess of the state government. The construction of such airports depends on the free land provided by the state. All charges for electricity, water, property tax, etc. have to be put aside for the first five years. The airlines which agree to operate from such airports have to share the cost which includes cost of ground handling with the airport operators. Now the question is that will such a model enthuse developers to come forward for such airports?

The road ahead Setting up of low-cost airports in small towns will also give a boost to the cargo movement. The traders earlier had to solely depend on road and rail cargo, but with these airports, business will look easy and quick to the traders. These airports will also pave way for the tourism industry in such small cities. Direct and easy connectivity to these remote areas will help in the growth of communication thus facilitating the movement of cargo from one destination to another. As a result, it will help in improving the economic condition of these regions.

38 india aircargo handbook - 2016


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Channeling the focus on Soft Infrastructure

40 india aircargo handbook - 2016


Infrastructure development with strategic planning and manpower development can prevent many hurdles faced by domestic air cargo industry. In the race to build infrastructure on the ground, India is restrained by lack of talent and capacity building to execute the plans laid out by the government and authorities. This needs to change soon, and for this, focus on soft infrastructure issues can only be the way forward in Indian aviation

2016 - india aircargo handbook 41


Vipan Jain, Regional Manager, Logistics, South Asia & Middle East, Lufthansa Cargo AG

Export dwell time at Indian stations is approximately 40 hrs and flying time in air is about ten hrs. On the other side, import dwell time is nearly 100 hrs. So, most of the times, cargo stays on ground which is purely driven by infrastructure and soft infrastructure. During this period, on ground everyone is keen to know the status of cargo if it is with the handling agent or under customs clearance or in air; so, the efficiency in soft infrastructure is useful to provide latest up-to-date information related to cargo handling.

a

b

A strong and dynamic aviation

The aviation logistics in the

logistics network provides a fil-

country is troubled with nu-

lip to EXIM trade. Opportunities in the Indian air cargo market are phenomenal. An average of four

merous bottlenecks. Inadequate infrastructure is one of

per cent growth in airfreight is pro-

the major problems faced by

jected for the coming five years.

the sector.

42 india aircargo handbook - 2016

c India’s air traffic is highly concentrated at a few airports with most of the tier II and tier III cities being ignored or having negligible facilities. Another major issue is the poor cargo handling facilities at major airports leading to high dwell times.


Steven Verhasselt, VP Commercial, Liege Airport, Lufthansa Cargo AG

Connectivity is the key, as the airfreight business is not an integrated chain. The bottleneck, with the highest risk of making mistakes, is at any transfer point of cargo (road-air, air-air, air-road) or documentation.

d

The processing of the cargo consists of two parts: physical flow of cargo, unloading pallets, breakdown, physical movement and delivery, which is determined by infrastructure and manpower, whereas, the documentation flow depends on the soft infrastructure, and the way information is shared and handled by all parties involved in the process (shipper, forwarder, handler, airline, customs, etc.). The physical flow and documentation flow together determine the speed of delivery, and the soft infrastructure to integrate all, is therefore, becoming ever more important.

e

Mounting regulation is challenging the ability of stakeholders in aviation logistics to operate efficiently. The industry standards can be developed by utilising the trained pool of technicians and engineers to create opportunities for manufacturing, MRO, cargo, and other allied activities. Airline industry should be viewed as a tool of economic growth and job creation.

f

There is room for improvement throughout the industry, in India as in any other part of the world. Soft infrastructure must precede hard infrastructure; only then, the required development can happen.

2016 - india aircargo handbook 43


Policies 44 india aircargo handbook - 2016


Smart Connectivity In The Air

46 india aircargo handbook - 2016


Over the last few years, with a rise in demand for rapid delivery of changing business models, the demand for dedicated air freighters has increased significantly all over the world. But in India, apart from a select few, no Indian operator offers a dedicated freighter service

Bellies vs. Freighters

Factors affecting Dedicated Freighters

Indian flag airlines have always focussed on carrying passengers over cargo. This only shows the poor patronage for cargo. Strong passenger demand among airlines works against a dedicated cargo service. If the concerns of airport infrastructure and cost is mitigated with the implementation of the government’s vision, India can witness a strong growth.

The demand for cargo space increases only on particular occasions. Poor volumes are the main reason for not having dedicated freighters in India.

Red Tapeism

There are several other issues such as volatility in year-round demand/adequate air cargo (both onward and return routes), gaps in cost-effective infrastructure and regulatory issues pertaining to taxes, duties and levies, etc.

The emphasis placed by the new government in India on development and good governance has created a new opportunity to reinvigorate bilateral ties and enhance cooperation. While the government has always encouraged exports, the implementation on the ground has always been a concern due to the various barriers and hurdles faced by the trade. The airport infrastructure with its space constraints, cost, multiple agencies and lack of world class freighter handling may also be the reason for the potential remaining untapped.

Air freight values differ from country to country, season to season and from product to product.

Lack of infrastructure, absence of dedicated cargo facilities at airports, and negligible presence of dedicated freighters in the domestic market are just some of the impediments to growth in the Indian air freight market scenario.

Cargo Handling Airlines, air cargo terminal operators, ground handling service providers, integrated express service providers, forwarders, domestic cargo transport


Keku Bomi Gazder, Former Regional Director Cargo, Indian Sub-Continent, Saudi Arabian Airlines Cargo

True that the modern long range passenger flights have a substantial belly

capacity available, however, the importance of freighters on certain routes and for certain commodities cannot be undervalued.

service providers and custom house agents are the key players in the entire air cargo supply chain. Thus, the air cargo industry presents a wide variety of service providers coming together to move goods both domestically and internationally with a single-minded purpose of faster and efficient delivery. For some routes, it might be feasible to carry specialised cargo. Such decisions depend on a combination of factors such as: Route-wise cargo volumes Ease and cost effectiveness of handling the specified commodity at originating and destination airports Availability of alternate modes of transport relative to time sensitivity Regulatory framework, including those that might pertain to the specific commodity covering aspects such as tax duties, safety and other compliance aspects.

48 india aircargo handbook - 2016


Sea Changes in the aviation Sector

What should we expect?

India is the world’s ninth largest civil aviation industry and is on a high growth trajectory, aiming to become the third largest aviation market by 2020 and the largest by 2030. The Indian Civil Aviation industry is changing rapidly with inclusion of low-cost carriers (LCC), Foreign Direct Investment (FDI) in domestic airlines, growing emphasis on regional connectivity, modernisation of airports and capacity increase with launch of new airlines and airports. How ready are Indian airports in terms of infrastructure and investments with strong expectations for growth in the coming times?

50 india aircargo handbook - 2016


Satyendra Kumar Senior Associate, EY (Ernst & Young)

We believe that India is underprepared to amicably handle this situation and

create the required airport infrastructure in a timely manner. Airport infrastructure

cannot be developed overnight hence a detailed master plan on airport development for at least the next two decades is the need of the hour. • Traffic at Indian Airports has grown impressively in recent times, by an impressive 11 per cent in FY 2014-15 to 2.52 MMTPA. But, that is just the tip of the iceberg. The real growth was in the domestic air cargo sector which grew a whopping 18 per cent to 0.99 MMTPA, back during the e-commerce boom in India. • Strong economic growth, improving purchasing power, lower fuel prices and reform initiatives by the government will drive the growth of air traffic in India. India’s rising aircraft fleet also adds to the belly cargo capacity and is expected to push cargo charges down and volumes upwards.

Investment and Infrastructure: Key to Development of Airports • Airport infrastructure is a part of economic development of the country. The airport infrastructure market is highly competitive, but has lot of growth opportunities in India as it is set to have developed infrastructure in the next ten years and the private sector is being encouraged to become actively involved in the construction of airports through different PPP models, with substantial state support in terms of financing, concessional land allotment, tax holidays and other incentives. • The government has already identified 50 airports in tier-II and tier-III cities to improve regional connectivity. In tune with this, Airport Authority of India (AAI) has come up with a low cost model to back the government’s proposition, helping smooth and easy transport of both passengers and cargo, and for the development of airport infrastructure and easing of the financial constraints. • Additionally, foreign investments have also been encouraged to a large extent in India as per the new civil aviation policy. The government allows 100 per cent FDI via automatic route for the green field airports and allows 49 per cent FDI in aviation sector majorly deployed in expanding aircraft fleet, developing aircraft manufacturing, maintenance of facilities in India

Source: CAPA Research

2016 - india aircargo handbook 51


J S Balhara Director, Guwahati Airport

It is anticipated that GST will result in consolidation of warehousing alongside facilitating seamless inter-state flow of goods. GST is also expected to provide an opportunity to dismantle various check posts, thus bringing about a substantial reduction in logistics costs and having other open sky policies in place. • The Government of India is supporting aviation industry by bringing in much anticipated reforms in the sector through the National Civil Aviation Policy (NCAP 2015). The biggest boost in NCAP 2015 is that air cargo will be accorded ‘infrastructure’ if co-located with an airport and will be eligible for Sec 80IA benefits. This will help the industry get priority lending at lower rates and exemption from corporate tax for ten years. • The government should consider not restricting the benefits of facilities located at the airport since the idea is to de-congest the airport and promote off-airport cargo processing. • The government has commenced 24x7 customs operations at several airports. However, it has not been utilised optimally by industry. The Air Cargo Logistics Promotion Board (ACLPB) plans to work closely with industry and propose action steps to spread out cargo handling round the clock. • Developing new infrastructure and modernisation of the existing infrastructure is the prime focus of the government to improve the quality of customer service experience. The infrastructure thus developed needs to be complemented with world class airport service providers not only at major airports, but at tier-II and tier-III city’s airports as well. Improved air cargo infrastructure and better domestic and international air connectivity will give further boost to the cargo trade.

Government’s Proposal in Establishing New Airports • The government has proposed to set up new airports, five no frill airports and 50 low cost airports in tier-II and tier-III cities. But, till date nothing has been executed at the ground level. Airport development in tier-II and tier-III cities is critical to enhance connectivity and to integrate hinterland to mainland India. The development of these airports may also help airlines to deploy access capacity on certain profitable routes among tier II and tier III cities. • The low cost airport infrastructure approach could be a way to develop such airports. However, airport development should be done on the basis of economic and technical feasibility of the project rather than driven by any political motives. In the recent past, few airports developed in tier-II and tier-III cities

52 india aircargo handbook - 2016


Mike Chew CEO, AISATS

Airport infrastructure is a part of economic development of the country. The airport infrastructure market is highly competitive, but has lot of growth opportunities in India, as it is set to have developed infrastructure in the next ten years and the private sector is being encouraged to become actively involved in the construction of airports through different PPP models. were not economically feasible but were built solely on political motives and today they are running in losses and some of them even do not have scheduled operations. For airport development in tier-II and tier-III cities a consultative approach where inputs from airlines—whether they would like to fly to the particular place— are sought before developing such infrastructure, which proves to be useful. • Regional connectivity is the central theme of the National Civil Aviation Policy (NCAP 2015). Improved regional connectivity is dependent on operationalisation of non-functional regional airports and development of new regional airports. This will get a major push now with development of No Frills Airports (NFA) and direct subsidy to airlines operating at the NFA under the proposed Regional Connectivity Scheme (RCS).

Role of PPP for Development of Airports • The government has recently shelved a proposal to develop and improve efficiency at four airports at Chennai, Kolkata, Jaipur and Ahmedabad on Public-Private-Partnership (PPP) basis. PPP has transformed quality and efficiency of airport infrastructure in the country in a relatively short span of time. PPP airports like Delhi, Mumbai, Hyderabad and Bengaluru today rank among the best in their categories. • The PPP mode of airport development is a global phenomenon now. India opened up airport sector for private participation through PPP mode in 2005 and since then five airports are operating under this mode. Though, Cochin airport was the first airport to become privatised but is a unique case than any other private airports in India. • After privatisation, a remarkable improvement in passenger experiences at the

1. By 2025, passenger traffic and freight traffic is likely to increase threefold and twofolds respectively. 2. India is expected to be the third largest civil aviation market in the world by 2020 after United States and China 3. PPP airports like Delhi, Mumbai, Hyderabad and Bengaluru today rank among the best in their categories, though there has been public criticism about the high charges. 4. MoCA will continue to encourage development of airports by the State Government or the private sector or in PPP mode. 5. The government has commenced 24x7 Customs operations at several airports. However, it has not been utilised optimally by industry. The Air Cargo Logistics Promotion Board (ACLPB) plans to work closely with industry and propose action steps to spread out cargo handling round the clock. 2016 - india aircargo handbook 53


Amber Dubey Partner and Head-Aerospace and Defence, KPMG India

Engaging world-class airport companies to operate the existing airports will bring in global best practices, greater competition, higher non-aeronautical revenues and ultimately lower cost per passenger. airports has been observed. Aesthetically few airports have been able to uplift the mood of passengers. • The government has put the PPP program at MAA, CCU, JAI and AMD in abeyance for the time being. The government should reconsider the decision and open these airports for PPP, with the tariff regulator AERA keeping a close check on the user charges.Therefore, PPP plays a vital role in the enhancement of the airports and if more of such initiatives are taken up in all the airports, better days are ensured for the airports.

GST - A Boost for Air Cargo Industry • It is expected that the proposed Goods and Service Tax (GST) will cause substantial reduction in logistics costs and consolidation of warehousing facilities. Now, the existent inefficient logistics network with smaller warehouses have been created to save State taxes, that have resulted in higher cost and increased inventory level. • It is anticipated that GST will result in consolidation of warehousing alongside facilitating seamless inter-state flow of goods. GST is also expected to provide an opportunity to dismantle various check posts, thus bringing about a substantial reduction in logistics costs. • Despite faster growth, transport and logistics sector is burdened with high logistics cost of 13-14 per cent of the value of goods. In other developed or developing economies, these costs stand at 6-8 per cent of the value of goods. • In a direct cost comparison with China, India’s average cost to export or import one container is around 72 per cent higher, in higher transit time. The overall tax on the supply of indigenous goods is around 29.37 per cent.With the implementation of GST, the revenue neutral rate will be much lower than the present tax rates on goods. This will lead to a lower tax burden for consumers, thereby facilitating a consumption-led growth. The envisaged future growth in cargo traffic and development of airports requires significant investments in terms of construction of new airports, expansion and modernisation of existing airports and cargo terminals, improvement in connecting infrastructure and better airspace management. While several new projects are in various stages of conceptualisation, development and completion, additional investments in infrastructure would be required to cater to the growing demand and for sure will bring ‘Acche din’ for the Indian airports.

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Prime Minister Narendra Modi’s

Civil Aviation Policy 2016

The Potential Gamechanger

government kicked off the first of a much-awaited series of reforms that experts and airlines say will fix regulatory imbalances and hopefully construct a level-playing field that will lead to greater overall industry profitability. Here we delve inside the key aspects of Civil Aviation Policy 2016 and all that is there in store for the air cargo industry

56 india aircargo handbook - 2016


I

n a major reform that can smooth out bottlenecks in the aviation sector, the cabinet on June 15, 2016 approved the much-awaited National Civil Aviation Policy that seeks to strengthen regional connectivity and spur growth. This is the first time since independence that an integrated Civil Aviation Policy has been brought out by the Ministry. While releasing the National Civil Aviation Policy, the Minister of Civil Aviation P Ashok Gajapathi Raju said that the centre-piece of the policy is to make regional air connectivity a reality. The policy aims to take flying to the masses by making it affordable and convenient, establish an integrated eco-system which will lead to significant growth of the civil aviation sector to promote tourism, employment and balanced regional growth, enhance regional connectivity through fiscal support and infrastructure development and enhance ease of doing business through deregulation, simplified procedures and e-governance. Prime Minister Narendra Modi said, “The Civil Aviation Policy approved by the cabinet will transform the sector and greatly benefit passengers. Civil Aviation Policy gives an impetus to affordability, regional connectivity, safety, infrastructure, which is vital for transforming India.” The Civil Aviation Policy is aimed at making India the third largest civil aviation market by 2022. The new policy opens up the skies to greater competition. The government scrapped an almost-decade-old restriction that cramped new airlines from flying internationally. So, to bring down operation costs, the new Civil Aviation Policy allows domestic airlines to undertake ground handling by themselves and also deployment of private security staff for non-core security duties at airports. The existing ground handling policy is being replaced with a new framework to ensure fair competition. The airport operator has been advised to have maximum three ground handling companies including Air India’s subsidiary/JV at all major airports as defined in AERA Act 2008. At non-major airports, the airport operator has to decide on the number of ground handling agencies, based on the traffic output, airside and terminal building capacity. All domestic scheduled airline operators including helicopter operators will be free to carry out self-handling with their permanent employees on their payroll at all airports. Hiring of employees through manpower supplier will not be permitted.

ing to the y fl e k a t d y aims to rdable an o f f The polic a t i g n ated y maki masses b establish an integr t, l l l e a d to i convenien w h c i h em w e co - s y s t th of the w o r g t n signific a sector. n o i t a i v a civil

SALIENT FEATURES OF POLICY 1. Scrapping 5/20 Rule

As per the erstwhile rule created in 2004 (which was known as the 5/20 Rule), a domestic airline in India was allowed to fly on international routes only after flying for five years to domestic destinations and operating at least 20 aircraft. This rule was always a bone for contention, as domestic airlines would allege that it left them at a competitive disadvantage as compared to their peers internationally, as none of the other countries had similar regulations and their airlines would corner the market during those five years. Under the new policy, the government has scrapped the 5/20 Rule and now, any domestic airline can fly overseas provided they deploy 20 planes or 20 per cent of

their total capacity for domestic operations. The irrational and anti-competition 5/20 rule has been replaced with 0/20. Now new companies no longer have to wait for five years to operate on international routes. 2. Ground Handling Policy

The existing ground handling policy is being replaced with a new framework to ensure fair competition. Under the new policy, domestic airlines will be permitted self ground-handling at all airports to ensure competition and efficiency, as well as lead to cost savings for the airlines. The airport operator will ensure that there will be three Ground Handling Agencies (GHA) including Air India’s subsidiary/JV at all major airports as defined in AERA Act 2008. At non-major airports, the airport operator shall decide on the number of ground han-

2016 - india aircargo handbook 57


dling agencies, based on the traffic output, airside and terminal building capacity. All domestic scheduled airline operators including helicopter operators will be free to carry out self-handling at all airports. Hiring of employees through manpower supplier will not be permitted. By allowing the airlines to handle ground handling themselves may lead to cost savings for the airlines, but there are some concerns regarding safety and security of personal belongings of the passengers. Accordingly, it might be prudent for the government to quantify standards and benchmark costs for ground handling such that safety and security may not be compromised.

Delhi, on a reciprocal basis. This implies that airlines from Europe and/or the SAARC countries will have unlimited access in terms of the number of flights and seats, to Indian airports, leading to increased flight frequencies with these countries.

3. Under the current arrangement, India has an open

5. Airport PPP/AAI

sky policy with the US, but only a ‘near’ open sky policy with the UK, with restrictions on the frequency of flights operating between UK, Delhi and Mumbai. Under the new policy, India is set to get an open-sky policy for countries beyond the 5,000 km radius from

Under the new policy, development of Greenfield and Brownfield airports by the state governments, private sector and/or in Public-Private-Partnership (PPP) mode will be encouraged. Additionally, there is a proposal for the development of four heliports

58 india aircargo handbook - 2016

4. Aviation Security, Immigration and Customs

Ministry of Civil Aviation will develop ‘Service Delivery Modules’ for aviation security, immigration, customs, quarantine officers, etc in consultation with respective ministries/departments. The new policy would allow Indian carriers to provide security services to other domestic airlines subject to approval of BCAS. Moreover the private security agencies would be used at airports for non-core security functions.

and for the provision of helicopter emergency medical services. 6. Regional Connectivity Scheme

The regional connectivity scheme under new policy will connect India’s remote unconnected regions, which in turn will boost tourism, create jobs and stimulate the economy in tier two and tier three cities. The policy also proposes revival of un-served or under-served aerodromes and airstrips. The policy also puts the onus on state governments to reduce VAT on Aviation Turbine Fuel (ATF) to one per cent or less if the state governments wish to extend the RCS scheme to airstrips within their states. The following framework is expected to ensure growth of air cargo business: a) The Air Cargo Logistics Promotion Board (ACLPB) has been constituted to promote growth in air cargo by way of cost reduction, efficiency improvement and better inter-ministerial coordina-


tion. The Board and the industry will submit a detailed action plan after stakeholder consultation, with the objective of reducing dwell time of air cargo from ‘aircraft to truck’ to below 48 hours by December 31, 2016 and to 24 hours by December 31, 2017 by reduction in free time and other measures. b) ACLPB will develop non-legal and indicative Service Delivery Modules after extensive consultations with stakeholders for all elements of the air cargo express cargo value chain such as – airlines, airports, terminal operators, Customs House Agents (CHA), freight forwarders, and government agencies like Customs, CISF, quarantine officers etc. c) The space allocated for cargo on the air-side and city side at most Indian airports is inadequate. ACLPB will recommend norms for space allocation for air-cargo, including express cargo for all Greenfield airports. d) The government will endeavour that all relevant central government authorities are available through a single window at the cargo terminals. These include Customs, wildlife clearance, Drug Controller, Plant and Animal Quarantine, FSSAI, Archaeological Survey of India, DGCI etc. e) The government has commenced 24x7 Customs Operations at several airports. However, it has not been utilised optimally by industry. ACLPB will work closely with industry and propose action steps to spread out cargo handling round the clock including provision of adequate manpower. f) ACLPB will promote global goods practices like Free-Trade Warehousing Zones (FTWZ), Air Freight Stations, Bonded Trucking, and Dedicated Cargo Airports. g) Airport operators will be encouraged to provide space for at least a ten year lease to operators of express cargo freighters who may then develop dedicated infrastructure to improve their operational efficiency.

CONCLUSION The new policy certainly seems to have pushed the right buttons in terms of its objectives of making flying affordable, safe and convenient; looking to promote balanced regional growth, tourism and infrastructure. The policy gives the aviation sector a clear direction to ramp up their operations in India and grow business in the domestic and international segment. It will attract more players and will help take flying to the masses at low cost. It will also boost sub sectors of aviation industry. India is on the track of becoming one of the top most civil aviation markets in the world, and the new policy certainly seems to have the right intention, vision and planning. Hence, the new policy is a significant step towards ensuring the interests of all stakeholders.

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Make in India

Catalyst for Indian Air Cargo

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Indian aviation sector has grown remarkably in the last decade with robust ‘take-off’ in passenger and cargo traffic. World leaders, manufacturers, tourism boards, airlines, global businesses and shippers—all are looking forward to developments in the sector. If we can figure out a common purpose and platform for all stakeholders, foreseeing a bright future will be possible. ‘Make in India’, one of the flagship campaigns by the Government of India, has literally become the ‘word-ofthe-mouth’ and is gaining momentum in every nook and corner of the economic circle

• Complementing a noticeable growth in passenger traffic, the air cargo industry is also growing in leaps and bounds. According to a report by the Airports Authority of India, passenger throughput grew to 159 million (FY 13) and cargo throughput to 2.19 million tons (FY 13), thereby registering an impressive growth of 13 per cent and ten per cent Compound Annual Growth (CAGR) respectively over the period FY 2003-2013. • The Make in India initiative of the Hon’ble Prime Mister is a key ingredient of the Union Government’s plan to revive business sentiments in our country. The Government has therefore rightly identified the need to boost the manufacturing sector, which is the main revenue earner in the developed economies globally. • Out of the 25 sectors identified under the Make in India programme, aviation is one of the selected industries. This initiative of our govern-

ment is to encourage MNCs as well as domestic companies to manufacture their products in India. With this kind of initiative which is going to boost the business activity in India to fulfill global needs, air cargo industry will have to be ready to play its role, so as to confront the changing dynamics of the market. • The success of India depends greatly on its effective utilisation of facilities, re-structured regulations, rationalised charges, procedures, simplified process-driven systems through greater automation. The air cargo industry will benefit substantially from this initiative in the

2016 - india aircargo handbook 61


India will lose out in the e-commerce race for quality consciousness if Supply Chain Management is not improved.

Make in India movement will help: o Starting a new business: Ease in getting approvals and clearances. o Land and water to support manufacturing: Acquisition process to be simple and effective o Credit Availability o Taxation: Fair approach by GOI o Contract enforcement: Clear process of filing and servicing of disputes o Supporting infrastructure: Air, roads, rail, ports, etc. o Skilled workforce for manufacturing, warehousing, transportation, etc.

Out of the 25 sectors identified under the Make in India programme, aviation is one of the selected industries. This initiative of our government is to encourage MNCs as well as domestic companies to manufacture their products in India. With this kind of initiative which is going to boost the business activity in India to fulfill global needs, air cargo industry will have to be ready to play its role, so as to confront the changing dynamics of the market.”

‘Make in India’ is the new national programme to develop the economic growth of the country by enhancing and improving the infrastructure, boosting manufacturing, easing business through de-licensing and deregulation and lastly opening up Foreign Direct Investment (FDI) in construction, railways and defence. It is designed to transform India into a global manufacturing hub.” Huseyin Ceyhan, Director, turkish airlines

Prediman K Koul, Country Head–Air freight & marketing, Jeena & Company

coming years with the implementation of Make in India. • Make in India aims at high quality standards and minimising the impact on the environment. This initiative is going to attract foreign capital, technological investment, create scale of manufacturing and skill development in India. • The framework of Make in India is designed to not only attract overseas companies to set up shops in India, but also encourage domestic companies to increase production within the country. In fact the thrust on producing products that meet high quality standards, which can also be exported is an apt example for the global development.

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Local Becomes Global: The Transformation • Over the years, foreign players have showed significant interest in the Indian aviation market. Several international carriers like Qatar Airways, Lufthansa Cargo, Turkish Airlines, Etihad Airways, Singapore Airlines Cargo, etc. have already started their Indian operations many years back and have been operating successfully. Some of the airlines have even launched dedicated freighters also for transporting goods to and from India like pharmaceutical, perishable, textile, apparel, equipment etc. • Indian government is planning to have 250 operational airports by 2030 which will be a big boost to both domestic and international passenger and cargo sector. After the launch of Make in India, India has emerged in


2015 as a top destination globally for FDI, surpassing China and USA. Under this initiative, 100 per cent FDI is allowed for greenfield airports and 74 per cent for existing airports (which can be extended to 100 per cent under Government approval). • Promotion of air cargo is a key objective of government, given its importance from Make in India, e-commerce development and export’s perspective. Air cargo will be given the ‘infrastructure’ status if co-located with an airport and will be eligible for benefits under Sec 801 A. • The Air Cargo Logistics Promotion Board has been constituted to promote growth. Keeping in view the push for infrastructure development, participation of foreign investment, need for more airports, aircrafts, it is very clear that India is not only a big market but also a huge opportunity for investments.

Transx Hauliers Global Logistics The Government has rightly identified the need to boost the manufacturing sector, which is the main revenue earner in the developed economies globally.

International Freight Forwarders & Custom Clearing

SERVICES: Ocean Freight | Air Freight | Custom Clearance | Project Cargo | Used Container | Break Bulk / Chartering

Hemant Bhatia, President, ACAAI

Challenges and Opportunities The major challenges faced by the aviation industry in India are: • Very often, we can see volatility in fuel prices combined with highest tax on aviation turbine fuel • High rate of foreign exchange is a matter of concern • Perishable and cold supply chains face a 20 per cent spoilage rate on average due to inefficiencies in domestic freight infrastructure • Frequent power outages impact manufacturing schedules and costs • The import process remains complicated and non-standardized, causing higher than normal inventory requirements • Indian bureaucracy poses a challenge as the policies and processes are complex and confusing

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• Airports often face congestion problems which hinders smooth movement of cargo However, from an over-regulated and under-managed sector, the aviation industry in India has now transformed to a more open, liberal and investment-friendly one. Some major factors contributing to this are: • Higher household incomes • Entry of low-cost carriers (LCC) • FDI in domestic airlines • Increased tourist inflow and cargo penetration • Cutting-edge information technology (IT) interventions • Focus on regional connectivity • Rise in the number of modern airports and cargo terminals

Manufacturing accounts for only 15 per cent of India’s GDP, which is low compared to other developing South East Asian nations. The Indian Government wants to raise that share to 25 per cent by 2022 and is committed to transform India into a global manufacturing destination. The identified sectors for growth which include automotive, aviation, electronics, textiles etc., among others will have a huge positive impact on the growth prospects of the India air cargo industry. Harpreet Singh, Director- Sales & Marketing, TNT India

Conclusion Make in India initiative is truly providing the necessary boost to infrastructure and MRO (maintenance, repair and overhaul) facilities. Before the initiative was launched, foreign equity caps in various sectors had been relaxed. Most of the applications for licenses were made available online and validity of licenses was increased to three years. Various other norms and procedures were also relaxed. It would not be an exaggeration to say that the Indian aviation sector is going through a stage of complete metamorphosis, riding on the success of infrastructure development due to Make in India. The proactive policy regime by the government has begun to bear fruit.

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PM Narendra Modi came along with the campaign Make in India; Digital India that is what everyone is talking about. With the campaign there will be robust economy growth which will give rise to the ‘n’ number of job opportunities in India. I am very optimistic about it. It will give rise to the domestic business as well.” Akash Bansal, Head Logistics, Om Logistics Ltd

In the last five years there have been significant investments by large and small domestic companies that have entered this industry. However, the FDI inflow has been very low (at about USD 4 million). The government needs to review the 26 per cent cap on FDI as well as streamline the various polices to promote greater investment. The complex and multi-tiered tax structure in India makes domestic manufacturing uncompetitive and directly works against the Make in India policy of the government. The government needs to review policies that will enable creation of MSME clusters with quality infrastructure and building capabilities.


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E-Air Waybills: Cutting Out Paper Trail In present day e-environment, Indian air cargo industry still relies heavily on paper documentation for the exchange of information. Developed collaboratively with industry stakeholders, the e-Air Waybill (e-AWB) initiative removes the requirement for a paper Air Waybill (AWB) and is a big stride towards electronic data interchange. E-Booking and e-billing is gradually gaining momentum with strong initiatives from IATA

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• An Air Waybill (AWB) or air consignment note is a receipt issued by an international airline as an evidence of the contract of carriage of goods. The term e-Air Waybill is used to describe the interchange of electronic data (EDI) messages, in lieu of a paper Air Waybill. • As the air cargo sector strives each day to move towards electronic freight, e-AWBs replace the paperwork with messages that can be transmitted electronically. • Agents all over the world are now using their own in-house computer systems to issue airlines’ and freight forwarders’ Air Waybills, which cover transport of cargo from airport to airport in an eco-friendly manner. • IATA cargo agents usually hold air waybills of several carriers. By accepting a shipment, an IATA cargo agent is acting on behalf of the carrier whose air waybill is issued.

An e-Air Waybill is a non-negotiable transport document issued by a carrier either directly or through its authorised agent. The Air Waybill serves in several ways: • • • •

Contract of carriage Evidence of receipt of goods Freight bill Certificate of insurance

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• Customs declaration

Steps to implement e-awb

There are two types of AWB agreement- 1.Multilateral and 2. Bilateral

Parvinder Singh Managing Director, Hans Infomatic Pvt Ltd

Most of the players in Indian air cargo have adopted IT in their operations and accounting systems, but hardly anybody has initiated the adoption of paperless operations. There are a few crucial factors for this kind of discrepancy.

Bilateral agreement is between an IATA agent and the airline whose paper AWB has been used to transport goods. The carriage contract is printed on the backside of AWB. But in the case of e-AWBs, there cannot be any contract of carriage travelling with data. To overcome this legal hurdle, IATA devised a multilateral agreement whereby an IATA agent signs this agreement which in turn is binding on all airlines with a single piece of agreement and hence contract of carriage comes into play whenever an e-AWB is.

Current Scenario • Electronic messages exist since the 80’s, but unfortunately the Indian air cargo industry still relies a lot on paper and human intervention. • For many forwarders who do not have the capability to send EDI messages to carriers, a web-based solution is an option. At the same time Indian forwarders are losing market share in their home territory due to intense competition from global players, as the international forwarders all have sophisticated IT systems. • E-freight helps to achieve discipline around the clock, build process

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Source: www.incargonews.com

efficiencies and ultimately helps forwarders and cargo stakeholders. Offering green services to the customers by curtailing paperwork and extensively using e-communication helps to reduce the carbon footprint and provides credibility to the air freight industry. • Engaging all business partners is a key challenge for the successful implementation of e-AWB policy. • With the process of electronic booking and e-Airway bill, the need for multiple contact points with human intervention is eliminated and the inherent errors


G N I V SER LENCE EL C X E H T I T W N E ITM M COM

Source: http://www.aircargonews.net

creeping in with these multiple contact points are eliminated. • E-AWB removes the requirement for a paper Air Waybill, simplifying the air freight supply chain process. With the e-AWBs, there is no longer a need to print, handle or archive the paper bill.

Indian government and associations are pushing the issue of e-freight to achieve a higher level of transparency with respect to foreign trade activities. Here are some other aspects, which makes e-AWB a significant feature: • E-Bills provide a better service to the customer and speed up the handling process • These support regulators’ and customs authorities’ demand for advance electronic information

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For Further Details Please Contact Though the execution of the application of the e-AWB implies improvement in the speed and security of the air freight shipments, a lot needs to be done towards 100 per cent implementation of e-AWB, thus facilitating total efficiency and accuracy in the system.

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Together We Can 72 india aircargo handbook - 2016


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Ground Handlers: Making it Possible Ground handling addresses the numerous service requirements of an airliner from the time it arrives at the airport terminal gate till it departs on the next flight. Ground Handling has always been considered the ‘bottom feeder’ of air transport. However, it must be kept in mind that professional ground handling is not a matter of chance and a lot of attention needs to be given on this front, which in turn will help to reduce turnaround times for air cargo

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|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| Prem Bajaj,

Chairman & MD, Bhadra International (India) Ltd

One of the most common concerns in the developing world is the long dwell time for air

cargo. To improve efficiency, cargo handlers at air cargo terminals should ensure efficient, timely and secure handling of the cargo. The global airport ground handling business is now estimated to be worth over USD 80 billion per annum and this segment is showing signs of positive growth in India. However, the segment has unique issues and the right cards need to be played.

Ground handling services begin with unloading. It is the key to success in air cargo operations and can be achieved only by adopting secure, timely and efficient ground handling practices and using specialised equipment.

The main issues or agendas in ground handling that lead to quality and consistency are compliance to safety standards, professionalism and operational excellence.

2016 - india aircargo handbook 75


||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| Murali Ramachandran, CEO India, Celebi Aviation Holding Inc

Given that the airlines’ key priorities are aircraft safety and aircraft utilisation, we as a ground handler have to deliver our part in ensuring this. Turnaround time plays an important part in ensuring on-time performance. If a flight is running late, we try and give back time through our processes on ground.

Thirty five per cent of the world trade by value is transported by air. It is vital to implement best international business practices including just-in-time inventory management. As a result, cargo terminals have become essential links in air transportation chains.

76 india aircargo handbook - 2016

IT is the key to success in air cargo operations and could be achieved only by adopting secure, timely and efficient ground handling practices.

Ground handlers become very critical in achieving turnaround efficiencies. For accurate and efficient loading and unloading of cargo from an aircraft, the ground handling agency needs to be equipped with state-of-the-art handling equipment matching the aircraft configurations coupled with a well-trained workforce and clearly defied procedures for each and every activity involved in the complete chain of cargo handling


| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| Loading and Offloading The work begins from the moment an aircraft lands. A ground handling staff signals to the pilot with paddles in both hands and guides the aircraft to the location where it should stop. After arrival, cargo is offloaded, and then the cargo of the next flight is loaded. Cargo is offloaded carefully according to an instruction sheet based on the Load Plan so as to prevent the aircraft from losing its balance in the fore and rear due to the positions of cargo in the cargo compartment. A supervisor (also known as Load Master) watches carefully so that handling is achieved according to the plan. Even while the aircraft is parked, many ground handling personnel work hard night and day to ensure the safety of the passengers and the aircraft. The ground handler moves the incoming cargo and hands it over to the Cargo Terminal Operator (CTO). Similarly, the outbound cargo is taken from the CTO; it is then shifted and loaded on the aircraft by the ground handler. A different team of CTOs work in the cargo terminal for security, safety and smooth movement of cargo within the cargo terminal, for receipt of outbound cargo and speedy clearance and delivery of inbound cargo.

2016 - india aircargo handbook 77


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Filling the

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n countless modern day workplaces, where employees are deployed to work in challenging environments (like transportation and logistics, warehouses, oil and gas, public safety and defence), an average laptop or PC available in the market will not suffice the need for a product that can withstand the extreme conditions and at the same time, provide unparalleled reliability. Most of the personal use computers are designed for use at optimum temperature levels and are prone to break down if the levels exceed. Probably, this was the idea behind the inception of the Panasonic Toughbook. The rugged Panasonic Toughbook range of mobile PCs and tablets are designed to work in a failsafe manner even when subjected to extreme conditions. Every Toughbook is put through a series of rigorous test to overcome challenges like extreme temperature, vibration, water, dust, shock, drop and impact. And that’s not all. They are equipped with technology that’s uniquely designed to overcome the access barriers encountered by countless professionals every day. Each Toughbook comes packed with a host of functionalities like GPS, Smartcard reader, Barcode reader, Bluetooth, etc. They are literally built to perform where other technology fails. Owing to varied needs and preferences, Toughbook range of mobile PCs and tablets are placed in three segments: fully rugged, semi rugged and business rugged.

The new Panasonic Toughbook CF-20 is the latest inclusion to its family of fully rugged devices, and can be easily detached to become a 10.1 inch tablet. It comes equipped with Windows 10 Pro, and is powered by 6th generation 1.1GHz Intel Core m5-6Y57 vPro processor (up to 2.8GHz with Turbo Boost) with Intel HD Graphics 515, and comes with a 128GB SSD (up to 512GB), and 8GB of RAM and an optional bridge battery that allows hot swap battery replacement for continuous use. Additionally, it sports a glove-enabled 10.1-inch full-HD touchscreen and purpose-built Vehicle Mount and Desktop Port Replicator, armed to meet all mobile computing needs at extreme conditions.

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Freight Forwarders Moving Cargo and Beyond The freight forwarder’s job is not an easy task as it used to be; simply moving cargo on time from point A to point B. However, there is an immense scope. In today’s fast-moving business environment, many shippers rely on forwarders as key building blocks in creating and implementing a logistics programme pertaining to their ‘special’ demands, thereby creating a bottleneck competition for the forwarders to meet the challenges 2016 - india aircargo handbook 79


Bharat Thakkar Co-founder and JMD, Zeus Air Services Pvt Ltd

In changing times, it is survival of the fittest with innovation and therefore an integrated approach is the only way forward. For a start, my understanding is that unless an airfreight fo r w a rd e r, a i r l i n e a n d airpor t work in tandem, the forwarder will become re d u n d a nt ; u n l e s s w e meet the challenges of ecommerce, Amazon, Foxon and Uber will take over the space between forwarder and airlines. The one offering the last mile will be the winner. 80 india aircargo handbook - 2016

Diversification of Business • Freight plays an important role in the economy of a country, more so in a developing one such as India. As international trade increases, freight forwarding in India received the well-deserved impetus to grow further. Due to the robust and steady economic growth of India, the freight forwarding sector has witnessed a significant growth over the last decade. Aided by the development of infrastructure in India, freight forwarding companies, whether domestic or foreign, have become extremely competitive and provide quality service to their clients. • Freight in India has grown by leaps and bounds. The freight transportation is expected to reach over 900 billion tonnes by 2020 which will be carried by 8 million commercial vehicles on the road. Most Preferred Mode of Freight Transport • Air and sea freight together contribute maximum to the market in terms of value. However, volume-wise they carry the minimum freight. Further, inland water transportation has tremendous scope in the domestic market. An overall comparative analysis of the domestic transport sector highlights the modal composition in freight movement, with road being the dominant mode of transport and indicates the advantages of coastal shipping and inland water transport. Global comparison of the same highlights that the Indian transportation sector has tremendous scope to improvise, invest and improve, in order to exploit the potentials of the freight market. • About 70-80 per cent of freight is transported via roads; only a small percentage is transported by railways. The immense potential of growth of freight in India has prompted the government to plan better transportation facilities. Air Cargo Dominant Mode The air cargo sector continues to demonstrate a consistent rapid growth compared to rail, sea and road freight. Today, the customer expects delivery on the same day the cargo is offloaded from a ship or aircraft. They are looking for scheduled hinterland connectivity from ports and airports matching with the arrival time of a vessel or aircraft. Time being a critical factor; customers demand IT-enabled real time information systems. Freight forwarders have to match the best global standards to retain their business in India.

G S Chawla MD, Ocean King Shipping Services Pvt Ltd

Bonded warehousing is the need of the hour because

what

the

industry largely lacks is an organised and systematic privately managed bonded warehouses offering top class services at par with develop e d nations like systematic congestion-free 24/7 vehicle entry, bar coded inventory management, etc.


Ever growing customer-needs is the major reason which leads to demand-supply gap. Air cargo is bound to carry only those loads which are absolutely vital in reaching customer hands, and with the way demanding customer-trends are changing every day; supply has to be fulfilled immediately via air freight.

Suraj Agrawal MD, Monopoly Carriers & Cargo Pvt Ltd

Growth in warehousing and growth for freight companies • The Indian freight market is rapidly being aided by improved warehousing infrastructure and growth in containerised cargo, resulting in robust freight network. It is talked about that freight companies will benefit from the rapid growth in warehousing infrastructure in the country. • Bonded warehousing is the top most priority at this hour, because what the industry largely lacks is an

We have to agree that road infrastructure in India has improved a lot on other side with improved technology; sur fac e transp or t ation timing has also improved, as this is the cheapest mode client and operator are focussing more on this mode of transportation.

82 india aircargo handbook - 2016

organised and systematic privately managed bonded warehousing system, offering top class services at par with developed nations like systematic congestion-free 24/7 vehicle entry, bar coded inventory management, etc. • All are eagerly waiting for GST to be implemented and it is assumed that after its implementation, distribution systems will change in India. It will be too early to say what the impact of this on logistic industry will be. • Warehousing is the backbone of the logistics industry and it needs to be organised. Unless one offers this service, be it owned or rented, customers will go away. At this point of time, integration is the mantra, the one-stop-shop solution. Government’s initiatives Government is also taking various initiatives such as the FDI regime to sectors pertaining to the freight forwarding industry, development of the dedicated freight corridor, shift to GST tax regime, etc. The cur-


rent market is largely mulled by rising freight costs due to volatile fuel prices, lack of skilled manpower and infrastructural bottlenecks. However, a surge of government initiatives in the form of National Highways Development Project (NHDP), Special Accelerated Road Development Program in North East (SARDP-NE) and Left Wing Extremism (LWE) in the road sector, development of Dedicated Freight Corridor of Indian Railways, port sector initiatives and shift to GST regime are providing the necessary impetus to the freight industry. Emergence of EDI platform, UPLIFT - universal platform for logistics & integrated freight transport and 4S eTrans built on J2EE platform are some recent technology trends in the freight industry. • Information Technology is one of the most powerful enablers at the disposal of freight forwarders. It changed and continues to change the way freight forwarders operate. • Freight forwarding industry leveraged Information Technology for improving experience of their customers, handling more shipments with same size of team, reducing shipment handling cycle and communication lead time, supporting expansion of business. • Focus on emerging trade lines and diversifying business portfolio to multiple logistics segments are the key strategies to expect a sustainable growth trajectory in the sector.

Sanjay Goel CEO, Bolloré Logistics

“There’s a lack of world-class logistics infrastructure and the transportation system of ports, trucks and ships are old and inefficient. Still, 60 per cent of Indian sea freight cargo is being handled by JNPT. Low penetration of technology, operations performed manually and no industry status for logistics services, are some of the major challenges for Indian freight forwarding industry which must be picked up as soon as possible. 2016 - india aircargo handbook 83


Custom

Bonded

Trucking

has

been

benefitting the Indian logistics industry

Bonded Trucking

Rough Roads Ahead

in many ways for the last 15 years. Bonded trucks carry cargo in remote areas where airlines cannot operate. All types of cargoperishables, machinery, equipment, apparel, dangerous goods, etc., are transported via bonded trucks

from air freight stations (AFS) to the final destination (warehouses/customers)

84 india aircargo handbook - 2016


R

Satisfying Customers' Freight Needs

OCEAN & AIR FREIGHT, CUSTOM BROKERAGE, INTERMODAL & RAIL, SUPPLY CHAIN CONSULTING SERVICES, 3PL, PROJECT LOGISTICS, WAREHOUSING CORPORATE OFFICE: C . H . R O B I NSO N WO R LDWI DE F R E I GH T I NDI A P V T . L T D . SBL House, No . 5 4 /2 8 , Fi rst Fl o o r, M o n t i e t h R o ad , E g m o r e, C h en n a i-6 0 0 0 0 8 . Tel: +91-4 4 - 3 9 6 0 4 4 1 1 F a x: + 9 1 - 4 4 - 3 9 6 0 4 4 6 0 We b: w w w . c h r o bin s o n . c o m BRANCHES: A H M E D A B A D | B A NG A L ORE | C HENNAI | C OC HIN | D ELHI | HYD ERAB AD | KOLK ATA | MUM BAI PUN E | TUTICORIN | JAIPUR |

K ANP UR | IND ORE | V AD OD ARA | MUND RA | C OIMB ATORE | LUDHIAN A


Reshma Zaheer COO, TT Aviation

Currently, there are approximately 15 airports from which bonded trucking activity is happen-

ing. The more airports open up, the more options we will have to offer the logistics community near their factories or in the same state.

01 Though the industry has a sufficient number of bonded trucks with huge capacities to carry the cargo as quickly as possible, there are a few hindrances which need to be addressed for smoother and faster cargo transportation.

86 india aircargo handbook - 2016

02 Experts believe that due to higher dwell times, cargo lies at the AFS for many days; it leads to delays and somehow affects the relationship and rapport between end-users and customers.

03 Airports Authority of India (AAI) has, in reports, mentioned to use small, unused airports as container stations and link them to the remote areas for efficient bonded trucking logistics. It will definitely prove beneficial for manufacturers, service providers and customers.

04 Certain airports are given importance or prominence only for online carriers. At this point of time, AFS is the alternative option for bonded cargo. But, we need to have a proper setup of cargo handling equipment, manpower and customs facilities.


Dileepa B M CEO Bonded Trucking, Shreeji Transport Services Pvt Ltd

AAI is planning to utilise unused, small airports as container stations to improve the efficiency of cargo operations for bonded trucking. Once, if these smaller airports are developed, the exporter can clear the cargo at his doorstep itself. He need not depend on major airports for clearance and can get his drawback at his station itself, provided there is provision of customs clearance at those smaller airports.

05

06

07

08

Simplification of processes and speed of execution of those processes is critical. Air freight, by nature, is extremely time-sensitive. Any simplification of process which allows us to shave off processing time would go a long way in today’s competitive world. Security compliance, however, is something that cannot be compromised. All countries have stringent security requirements.

In India, as compared to the other countries, dwell time is much higher. Transporting cargo from one state to another via road or railways usually takes three to five days, whereas in other countries it is just a matter of a few hours. The problem is poor road conditions, traffic snarls, checkpoints, higher toll taxes and other unnecessary delays. Private players demand action every now and then, but nothing fruitful has come out till date.

Bonded trucks can be operated to destinations where airlines cannot operate their flights. Therefore, it is the job of the truck driver to take necessary precautions while transporting cargo from the air freight station to the warehouse in a remote area, safely and securely. From apparel, perishables, heavy lift products, machinery, to dangerous goods and odd dimension cargo, customs bonded trucks are used to carry all types of cargo.

Even though Bonded Trucking has come a long way, it still remains underutilised because of the complex policies framed by the government of India and fewer airlines operating, as compared to other countries. For transporting cargo via bonded trucks, special permissions have to be taken by the gateway customs office, which is time consuming and expensive. One truck should be allowed to carry mixed cargo for different locations. If taken seriously, it will help the industry in the coming years.

2016 - india aircargo handbook 87


Guest column

Flying high: Air cargo in India gets bigger, better By Rubal Jain, MD, Safexpress

The numbers tell a positive story, as does the increasing reliance of supply chain & logistics on air cargo

88 india aircargo handbook - 2016

The world of air cargo has come a long way since 1910, when the first cargo flight took place in the US, between Dayton and Columbus, Ohio. The plane carried a package of 200 pounds of silk for the opening of a store. Today, air cargo has emerged as a solid pillar of the industry worldwide, and has contributed significantly towards many changes that have taken place in the manufacturing industry. Thanks to the technological boom, air cargo has soared even higher in India as well. According to the International Air Transport Association (IATA), airline industry forecast for 2014-18 shows international freight volumes to increase at a CAGR of 4.1 per cent. India will be the second-fastest growing market, with a CAGR of 6.8 per cent and will add an extra 622,000 tonnes during this period. Not only has technology helped the air cargo industry become more efficient, it has also made it reliable and far more accessible than it ever was. Thus, customers can not only get real-time flight status of their cargo, but also have the facility of booking and tracking options. Even this is old news, however, what with the industry adopting electronic procedures and making entire processes nearly paperless. In terms of infrastructure, the air cargo industry has seen a metamorphosis of sorts, too. From the Wright Model B plane of 1910, the air cargo industry now uses passenger aircraft (where the baggage hold is used), combi aircraft (the cargo sits on the main deck behind the passengers’ areas, as well as side loading and in the “belly”, which is the baggage hold), and exclusive air cargo aircraft, which carries freight on the main deck, and in the “belly”. Now, airships are being considered in the Western countries, along with jumbo cargo carriers. These airships will not only be able to carry larger cargo and shipping


too, a better infrastructure will help, as will special schemes and incentives for those in the e-commerce space. With the festive season in the offing, air cargo is bound to see a surge from the e-commerce industry, as it did last year. Commerce and industry body representatives are also pushing for airport-based special economic zones in cities like Mangalore for better cargo handling and timely shipments.

Warming up to cold chains Safexpress being awarded as Best Air Cargo Logistics Company 2016 by ASSOCHAM containers, but will also be more fuel-efficient. Although it is a new concept at present, industry experts feel it will further help the supply chain & logistics industry since these airships will be able to function in ports and harbours as well.

High-speed delivery E-commerce is one of the fastest-growing sectors in India and its supply chain management relies heavily on air cargo today. The good news: things are moving in the right direction. The new domestic air cargo terminal that opened in Mumbai this June is one such instance. The 60,000-sq ft facility will mean an added capacity of 3,00,000 metric tonnes, which can be used by all carriers. Statistics reveal that the Mumbai International Airport will see a growth of seven to eight per cent in air cargo annually; of this, e-commerce is slated to make 80 per cent of the airport’s total air cargo business. However, it is also worth noting that air cargo makes for the most expensive mode of transport in logistics and although volumes may drive down the prices a bit, more needs to be done to help rationalise the cost. Here,

Like any other aspect of supply chain & logistics, infrastructure forms the core of air cargo so that correct deliveries are made at the right time, to the right place. Not just that, since

According to the International Air Transport Association (IATA), airline industry forecast for 2014-18 shows international freight volumes to increase at a compound annual growth rate (CAGR) of 4.1 per cent perishable goods form a large chunk of air cargo, quality of products is paramount and freight carriers have to be extremely careful about controlling temperatures within the aircraft. After all, studies reveal that most temperature deviations happen during the transportation

of goods. Stakeholders in the industry are working relentlessly on maintaining the quality of delivery. What is commendable is how the stakeholders in the supply chain proactively seek solutions and tackle crises in air cargo cold chains to ensure that the products are good to go. Not only does the cold supply chain in freight carriers need better infrastructure, there is also a need for better communication and collaboration among stakeholders. Sectors such as agro-food, food & hospitality, pharmaceuticals, which depend heavily on air freight, suffer from lack of segregated facilities for different types of cargo at air terminals. Industry experts have for years talked about the lack of quality infrastructure and have highlighted the importance of investments in the area. The quality of supply chain & logistics here is crucial, and smooth operations are vital for temperature-sensitive and perishable products to maintain their quality. What is needed are processes that mean fewer inspections, lesser stop-over time, quicker check-ins and, of course, better temperature control. To conclude then, it is fair to say that while a lot of ground needs to be covered in the air cargo industry in India, supply chain & logistics stakeholders can take comfort in the fact that the industry is definitely transitioning towards becoming bigger, better, and more dynamic in the years to come. With exports increasing, e-commerce industry getting extremely positive about its growth, and cold supply chains becoming more competitive, that is the only way to go.

2016 - india aircargo handbook 89


focus

T

he USP of Çelebi Delhi Cargo Terminal lies in its level of service that it offers, which is the resultant of several factors combined together, including but not limited to state-of-the-art infrastructure, advanced equipments, dedicated manpower, modern facilities, streamlined processes and customer oriented approach. Çelebi Delhi Cargo Terminal Management India Pvt Ltd was formed in November 2009 when Çelebi Aviation Holding was awarded the concession by the airport’s operator, Delhi International Airport Private Ltd (DIAL) for providing cargo handling services at New Delhi Indira Gandhi International (IGI) Airport. Since then, it has been successfully operating the Brownfield cargo terminal since last seven years with a huge clientele base of 47 international carriers, couple of domestic carriers, more than 1500 CHAs and a host of non-scheduled operators. Çelebi Delhi Cargo Terminal is an integrated cargo terminal acting as a one-stop-shop for its customers which includes export, import, domestic, perishable, pharma and express handling, all under the same roof. It boasts of world class facilities suited to various product requirements which ranges from Dedicated Export and Import Areas, Dedicated Domestic Terminal, Dedicated DG and AVI Areas, Dedicated Centre of Perishable Cargo and Dedicated GDP Pharma Logistics Centre to name a few.

Capacity Built for the Future: Since take-over, Çelebi Delhi Cargo Terminal has been successfully able to increase the capacity of the terminal by more than 90 per cent and is equipped to handle almost 1 million MT annually. This has been achieved through several advancements including but not limited to re-engineering of entire warehouse layout, introduction of six-level racking system, procedural efficiency leading to faster throughput, automation of terminal to enhance capacity through faster processes. The surplus capacity has been supplemented by advanced and unique equipments such as TLX machines with automated weight and volumetric scanners, usage of HHTs and barcode scanners to name a few. Çelebi Delhi

90 india aircargo handbook - 2016

Cargo Terminal has always believed in achieving service excellence and all its efforts are focused towards achieving 100 per cent service standards in various parameters related to cargo processing. To sum it up, Çelebi has truly been able to transform this cargo terminal into a world class facility.

Inclination towards Technlogical Advancement: Çelebi Delhi Cargo Terminal has always kept its head high in terms of technological advancements and innovative practices. Çelebi Delhi Cargo Terminal

Çelebi:

achieved the feat to become the first terminal in India to be e-Freight Compliant recognised by IATA way back in 2013. Çelebi has a robust IT infrastructure with a cargo management system supported by advanced EDI capabilities. Further adding to its capabilities, Çelebi is also in the process of implementing a world class cargo management software with advanced IT integration capabilities. To emerge as an undisputable leader in this vertical, Çelebi has come up with several enhancements that give it an unparalleled edge over its competitors.

Going Strong, Year After Year


Safety and Security:

Awards &Recognitions:

Recently, Çelebi Delhi Cargo Terminal has been awarded as the “Best Ground Handling Service Company” and “Special Cargo Handling Service Company” in the Golden Star Awards held on September 2, 2016 in Bangalore. Apart from the above, Delhi Cargo Terminal has been the recipient of several recognitions: • “Cargo Ground Handler of The Year - Region India: Winner” at Air Cargo India 2016 • “Best Cold Chain Cargo Terminal of the Year” presented by Future Supply Chain Solutions • “India Air Cargo Consolidating/Handling Logistics Company of the Year Award” in Transport & Logistics Segment presented by Frost & Sullivan in 2015. • “Best Cargo Terminal Operator” in India Cargo Awards North & East 2015 organized by DDP Publications Pvt. Ltd • “Excellent Position under Terminal Operator Category” in Innovation at its Core: SCALE (Supply Chain and Logistics Excellence) AWARDS Having established itself as a prominent cargo terminal oporganized by CII (Confederation of Indian Industry Institute erator, Çelebi Delhi Cargo Terminal has started looking beof Logistics) yond conventional products and as a result has introduced • Merit Shield in INSSAN Idea Meet 2015 for ‘Use of TLX various innovative products to benefit the trade such as: at TD Acceptance’ Çelebi Delhi Cargo Terminal has already established itself as • Import Expedited • Pet Assistance Facility a prominent brand in the cargo terminal fraternity and with Delivery • Gems and Jewellery all the positive developments that it is continuously introduc• Export Express Facility ing, Çelebi Delhi Cargo Terminal is here to stay for long and is Acceptance • Cool Dolly on the way to become one of the most mature cargo terminal • Envirotainer Stocking • Tyvek Covers operators across the globe. Station • Pharma Mini Shop

One of the major highlights of Çelebi Delhi Cargo Terminal is the air tight security environment that it is has created in the terminal. Çelebi Delhi Cargo Terminal is a RA3 certified terminal wherein its complete process including acceptance, screening and dispatch is RA3 certified. Few of the security highlights of Çelebi Delhi Cargo Terminal are: • 100 per cent CCTV coverage with more than 375CCTV cameras • 100 per cent Staff Uniform / ID / Biometric Access control • Access control search equipped with metal detectors • Extensive security manpower deployment • TSA Compliant X-Ray screening • TSA compliant Explosive Trace Detectors - Both Handheld and Desktop • Sniffer dog to search explosives

2016 - india aircargo handbook 91


focus

THE LONG PROGRESSIVE DECADE FOR BROEKMAN

Albert Hoek

Managing Director, Broekman Logistics

Rajiv Nathan

Director of Broekman Logistics India (BLI)

Marking its debut in the Indian market in 2006, the company has written exponential growth figures ever since. Hailed as an international freight forwarder and logistics service provider, the Rotterdam based Broekman Logistics, over the last decade, has managed to create a strong foothold in its core sectors in India along with carving their niche across the globe.

Today, Broekman Logistics India (BLI) is considered a complete Logistics Service Provider. Its core strength

92 india aircargo handbook - 2016

Sandeep Tyagi

VP, Marketing & Sales, Broekman Logistics India (BLI)

lies in processing and storing complex, heavy or dangerous products and transporting them through smart solutions. As a fully grown total supply chain management logistics company, BLI provides Air Freight/Ocean Freight, Custom Clearance, Warehousing and Distribution, Transportation and even domestic cargo services under one roof. BLI is capable of handling any product for any customer under a single window, from any of its offices in India. BLI handles around 1,700 tons of domestic air freight cargo per annum making it one of the few multinational companies which has its feet firmly entrenched in international as well as domestic market. BLI also handles over 3,200 tons of international air freight and over 10,250 units of TEUs. Being part of some prestigious projects in

India, BLI is highly competent to handle all kinds of special equipment for a wide range of clientele. Broekman Logistics has always believed in connecting local strengths with international standards of logistics. Broekman’s slogan – ‘Global reach with a Personal touch’ – very aptly describes the ideals and visions that the company stands for. Sandeep Tyagi, Vice President, Marketing &Sales, Broekman Logistics India (BLI) says, “Our local strength and strong base combined with the international network of our worldwide offices has resulted in a widespread global coverage, with active and enthusiastic partners in over 115 countries of the world.” Adding further, Tyagi says, “To simply put it, as a company we can proudly state that we have well


networked channels, thus making it possible for us to arrange exports from India by either air or ocean transportation to any part of the world or have arranged imports of very large volumes to anywhere within the country. I think I would like to use the Star Wars analogy here and say – ‘The Force is with Us’.” Established in the 1960s, in Rotterdam (Netherlands), Broekman Logistics has a well cemented position in Ships Agencies and Terminal Operations across the globe. Today, the company has a staff of

The Indian division – Broekman Logistics India (BLI) – is one of the fastest growing companies in India with an annual turnover of 25 million euros (2015). Even with the changing world market scenarios and upheavals in Indian business sectors and political environment, net profits for BLI has grown by a whopping 34 percent in the business year 2015-16. more than950 Full Time Employees (FTEs) working for it world-wide with an annual turnover of over 650 million euros. It has three major divisions -- Forwarding & Shipping (Air, Ocean and Multimodal Logistics Services and Shipping Agencies), Warehousing & Distribution (Parts Logistics, Special Chemicals Logistics, Assembly and Automotive) and Breakbulk Terminals (Steel Logistics, Offshore & Heavy Lift and Project Cargo) -- thus excelling in providing superior logistic solutions worldwide.

The Indian division – Broekman Logistics India (BLI) – is one of the fastest growing companies in India with an annual turnover of 25 million euros (2015). Even with the changing world market scenarios and upheavals in Indian business sectors and political environment, net profits for BLI has grown by a whopping 34 percent in the business year 2015-16. With offices in Mumbai, Delhi, Chennai, Ahmedabad, Bengaluru, Pune, Goa, Cochin, Coimbatore, Baroda, Tuticorin, and Kolkata and staff of more than 200 professionals, BLI has witnessed a three-fold growth in the last ten years, thus managing to create a firm base for itself in the industry. Albert Hoek, Managing Director of Broekman Logistics, who has been overseeing the Indian division since 2008 says,“Forwarding, logistics, warehousing and distribution including value added services have always been the core of Broekman Logistics in India. I’ll admit that it wasn’t easy to understand the differences about the various echelons of business and culture between the Dutch head office and the Indian organisation, but once those were worked out, it was a win-win situation. The Indian management team worked on incorporating the Dutch working modules effortlessly and the Dutch team continued to learn without judging the differences. This would not have been possible without BLI striving for global reach with a personal touch.” Talking about their decade long run in India with an

insight into their future plans, Hoek believes that the parent company is stated to be committed in business with India for the long term. “The ten year run has been about a pleasant road of progress with valued friendships and mutually cohesive operational environment. Full coverage is our ambition. We will strive to achieve this based on increased customer demand.” Echoing similar sentiments, Rajiv Nathan, Director of BLI says, “Our mission is to endeavor to be a fullfledged logistics partner with a global reach by creating sustainable value in the supply chain network. Our year on year double digit growth shows that we have successfully implemented this. Success of our tenyear progress is a result of having contented customers, loyal staff and a wide-shareholder base.” Presently, Broekman Logistics India has a strong fo-

cus on engineering, apparels, pharmaceutical, agricultural, automotive, chemicals (DGR – NON DGR) and plastics industries, and is further directing its attention on Cold Chain Logistics as well as energy centric businesses – which is a growing industry as predicted by industry experts. Defining the Strategic Plan - 2020 in place, Hoek says,“We are deeply committed to the long term growth we see for BLI in India. All this would only be possible with continued support from our clients who have trusted us with their business so far, and we hope that they keep doing so, for the years to come.” 2016 - india aircargo handbook 93


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Indian Airports await ‘Acche Din’

016

Clipped Wings of Dedicated Freighter

INAVIGATI HA

Bridging the Road Ahead

Warehousing: An Investment Opportunity

Ground Reality

Together We Soar

SPECIAL FEATURE

Being Materialistic

Opening the Skies for Air Charters

Perishable Goods: Thawing Roadblocks

The Smart Yard India Yearns

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SUPPLY C

Reaching for the Skies

The Last Mile’s Lasting Impact

Sweep out Pollution with Logistics Parks

Smart Warehousing,Smarter Productivity

SPECIAL FEATURE

Consolidation: Trump Card for Growth of 3PLs

Roadmap to the Future

Cold Shouldered ‘Gold’ Chain

E-AWB: Cutting Out the Paper Trail

Replicating International Success in India

30-11-2015 11:46:18

Indian Ports Seek Betterment, Sustainability

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Inland Shipping:

In Search of the Lighthouse

Indian Logistics

PFT: A FILLIP

Domestic

EFFECTIVE LOGISTICS

Reaching for the Skies

Air Cargo

In Changing Times

Budget 2016: Great Expectations

Air Freight Market Spine 7 mm

content page nov-14.indd 6

Keeping it grounded

Upcoming airports in India

Technology in air cargo industry

Expectations behind no-frills airports

11/6/2014 6:47:03 PM

AEO: Securing the Supply Chain

Bonded Trucking: Rough Roads Ahead?

Pharma Logistics: One Mistake Can be Fatal

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Secure the Cargo: Pack it, Lash it

Pharma Warehousing: Smart Storage, Smarter Productivity 28-08-2015 19:43:30

Efficient Reefer Transportation: Key for Cold Chain Logistics

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High Logistics Cost: A Hindrance to India’s Growth Story

Floor it Perfect

05-06-2015 11:42:20


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Circulation Break Up Logis�cs Service Providers / Freight Forwarders / Agents ................. Exporters / Importers / Buying Houses ............................................. Enterprise Shippers i.e. End Users ..................................................... Government Authori�es .................................................................... Logis�cs Parks/Warehousing Companies .......................................... Interna�onal ......................................................................................

15000 6000 5000 250 1000 250

The regular circulation is supplemented with around distributed at various logistics industry events.

Airports .................................... Seaports ................................... Airlines ..................................... Shipping Lines .......................... Allied/Vendors ......................... Total .........................................

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focus

Services that encompass all the elements of SCM

O

m Logistics Limited, since its days of inception in the early 1980s, has always sought for perfection in the world of logistics. The in-depth knowledge and expertise have always kept us ahead in the field and have helped us grow to become a business conglomerate in the subsequent years. Our efforts have made us one of the pioneers in the Indian logistics scenario, and helped us serve our clientele with a bouquet of services tailored for their diverse needs. And as the years passed, we have had served a plethora of clients- both in the domestic and international sphere. Pertaining to all these factors and many more, today we stand tall by being India’s only leading multi-modal logistics company with single-window integrated logistics services covering all of the elements of supply chain management. This success could be accredited to the various service providers under the conglomerate who work day in and day out and have become masters in their specialised area of service. They are the major building blocks of our company and it is their dedication towards their work that has helped us to be

96 india 2016 aircargo Akash Bansal, Headhandbook Logistics, -Om Logistics Ltd

whoever we are today. We have set high standards for 3PLs in the country by providing unparalleled services on varied fronts. This has been possible due to our focus on inbound cargo for OEMs, in addition to permutations and combinations of Just in Time and Direct Online Deliveries. Today, we offer various kinds of services ranging from residential & commercial / factory relocation, home shifting services, international and domestic air cargo, sea cargo, train cargo, surface transport, packaging solutions and many other value added services to meet the specific needs of each customer. Here we discuss the various core services that we have on offer: 1. Air Cargo: The air cargo industry in India is growing at a tremendous speed and is expected to become the largest in the world in the years to come. Firmly believing in the growth of air logistics in India, we provide unmatched services to our clients. We are the leader in generating air cargo traffic and can boast of extensive pan India coverage, providing doorto-door and airport-to-airport shipment services. This holds true for priority cargo, or cargo that have time constraints attached with it. Our air freight services can meet most time-in-transit needs, from urgent deliveries to more routine domestic air freight


Key Capabilities • 450+ branch office locations with over 200 inter connected associates • 1500+ delivery locations on PAN India basis • About 3500 + fully contained and weather proof fleet covering more than 80000 + miles per day • Fleet tracing by GPS monitoring system • 24X7X365 ONLINE track and trace • Distribution through hubs and spoke • 5000 + dedicated personals working round the clock • Door to Door pickup and delivery • Multi - Modal Movement • 5000 + tonnes cargo movement per day • Committed scheduled time frames • Economical Reverse Logistics • FTL / FCL Movements • ODC Cargo Movements • 25 regional hubs with PAN India connectivity • SPD Model

shipments. The air cargo services that we offer can be categorised under the following sub-heads: • Economical Air Freight • Day-definite Air Freight • Flier Deliveries • Same day Delivery • Door-To-Door Freight Solution • Multi-modal Transport • Heavy engineering goods Air Freight • Life saving drugs and pharmaceutical Freight • Freight Aircraft Charter • Time Bound deliveries for e-commerce sector 2. Train Cargo: With a legacy of more than 20 years in train transportation, we offer pan India train cargo service / freight transport through the world’s second largest railway system, with proven credentials for efficiently handling huge bulk shipments like FMCG products, raw material and industrial finished goods. We are experienced at handling SLR & VPU or break bulk facilities for bulk goods as well as train shipment facilities to retail & small customers. We ensure a cost effective, safe, reliable & ethical service, which has secured its involvement in all the major government and private projects. 3. Surface Cargo: We are the pioneer in the door-to-door delivery domain in the country. A resolute commitment towards hassle free, on-time, 24X7 services is strictly monitored with its state-of-the-art cargo dispatch software, which allows clear and precise communication for seamless reporting procedures. This also includes competitively priced DOD services for faster realisation and returns of the product’s value. Besides touching over 1500 + destinations pan India and 450 + company owned offices, the company has a global reach of 200 countries. liberal multi-surface connectivity across air, road and rail gives the company’s customers complete one-stop-shop solution for all of their logistics needs. 4. Factory Relocation: Right from relocating one single

piece of equipment to complete factory relocation, we offer best services in the domain with peace of mind for all high-value equipment moves. Our clients are reassured by our reputation and experience of machinery shifting and material shifting across many market sectors. This includes installation, removal and relocation of all sizes of complex production and test equipment. Om Logistics Ltd has many years experience of machine moves and full site relocations for OEM and end-users in a range of industries. 5. Warehousing & Distribution: We understand the importance of warehouses and a well-maintained inventory. Pertaining to this, we have come up with strategically located state-of-the-art logistics centers, providing robust warehousing solutions, that will drive value for our clients’ businesses. With more than 15 million sq ft of warehousing space, these state-of-theart warehouses are equipped with modern material handling equipment and complete workforce for efficient logistics coordination. It thus provides dedicated and shared warehousing and distribution operations to ensure that clients can deliver their promises to customers worldwide. Our warehousing/factory shed facilities footprint reaches across 11 major cities in India. Lastly, I would like to mention about our initiative to develop a network of well-informed and knowledgeable pool of supply chain management professionals in the industry. There is a crisis for well-trained professionals in the industry and we are very much dedicated towards filling this gap by providing free education to interested candidates who want to make it big in the logistics industry. This is going to be the first of its kind course in supply chain management systems and is sure to provide an edge to the right candidates. The duration of the course will be one month, following which the deserving candidates will be placed accordingly into various departments like accounts, marketing, operations, warehousing, etc.

2016 - india aircargo handbook 97


FOCUS

Continental Carriers Group

Marking its Territory for Impex C

ontinental Carriers Group was established in 1957 by TN Vohra, regarded as one of the pioneers of the freight forwarding industry in India. Continental Carriers Pvt Ltd (CCPL), the IATA approved Freight Forwarding arm of the Group has been in business for over 59 years. Vipin Vohra took over in 2005. His two sons, Vaibhav and Viraj Vohra, have also joined the Group as the third generation of management of the Company. CCPL is an ISO 9001-2008 accredited company and has a network of branches and sales offices in New Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Bangalore, Pune, Ahmedabad, Jaipur, Agra, Moradabad, Ludhiana, Jullundur and Tirupur, and a worldwide network of agents and associates. It has been amongst the top freight forwarders in the country over the past many years. CCPL provides professionally managed services to over 5000 exporters and importers in the country and is considered as a preferred service provider. CCPL was the first freight forwarder in the country to have introduced “Garments on Hangers� concept for exports from India. The Company is an active member of ACAAI, FIATA, FFFAI and several Chambers of Commerce. Major verticals handled by the Company are Air (Exports & Imports), Ocean (Exports & Imports), Customs Brokers, Pharmaceuticals, Aerospace (including AOG), Warehousing, etc.

98 india aircargo handbook - 2016 2 CARGOCONNECT INDIA AIR CARGO HANDBOOK - 2016


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E-commerce and Air Cargo

Tying Hands Together E-commerce is primarily driving air cargo industry. The current e-commerce boom in India presents a big opportunity for the air cargo industry to exploit and boost volumes. Here we explore the impact made by e-commerce on the air freight industry. 102 india aircargo handbook - 2016


Air cargo is the most important link between domestic and international market. The rapid growth of international trade has created a global village where air transport assumes great importance in the transportation of goods. This is especially true of high yield items and perishable goods. It also helps reduce high inventory-carrying cost. Air cargo industry is a direct pointer to the prosperity of a country. 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 per cent over the next five years. India’s might in the Information Technology sector, large scale liberalisation and globalisation of trade have been instrumental in the growth of air cargo industry. Changing business models, shortened product lifecycles and demand for breakneck delivery have contributed to the rapid growth of air cargo logistics business. Providing another major boost for the Indian domestic air cargo industry is the boom of E-commerce sector in India, which is expected to further fuel demand.

E-commerce - The Vital Pillar of Air Cargo E-commerce is the thriving process of searching and selecting products and then purchasing by using a credit card or encrypted payment processing. E-commerce, in its simplest form, buying and selling products and services by businesses or consumers over the internet, has been rapidly growing and expected to grow even more. It operates in all four of the major market segments; business to business, business to consumer, consumer to consumer and consumer to business. The Indian e-retail space has witnessed a phenomenal growth in the recent years, led by a growing internet user base and financial sponsors. With India at the cusp of digital revolution, online retail is set to achieve even greater heights in the coming years. Although, the e-retailing was introduced in India by Rediff back in 1999, it only got popular with Flipkart entering the industry in 2007, with deep discount model and better customer servicing. Today, Flipkart and Snapdeal along with Amazon are the largest players in the industry, covering almost 90 per cent of the market share amongst them. E-commerce has become a major factor in changing the shape of global logistics industry. With e-commerce, an inevitable market shakeout awaits the transportation industry. The number of transportation and logistics e-commerce products prolifer-

ate daily. Due to the nature of e-commerce where customers often demand to receive their online purchases in the shortest possible time, it presents huge opportunities for the logistics industry, particularly the air cargo sector, because air freight is usually the preferred shipping option. With customer service as the top priority and differentiating factor among e-commerce players, each player is striving to service its customers faster. Thus, logistics turn out to be an important cog in the wheel for the industry, with every company trying to deal with its complexities better than their peers. E-commerce has spurred, not only new concepts and ideas within the supply chain, but also new companies are popping up to address logistical challenges resulting from the rise of e-commerce. E-commerce is also redefining the last-mile distribution, especially for postal service providers and the integrators. Freight forwarders are increasingly involved in the e-commerce supply chain process by providing e-retailers with warehousing, order processing and international freight forwarding services. There are also opportunities for logistics services providers to provide contract logistics services to e-retailers that require customized solutions for their complex supply chains.

The Supply-chain Model of E-commerce Industry Robust air cargo network with capability of faster and safer deliveries over varied locations has become the key-differentiator for the e-retailers. E-commerce industry generally follows three types of models for supply chain. • Marketplace Model This is where inventory is stored with and managed by suppliers, and packaged and shipped from the supplier base. This model has been the most efficient in terms of the delivery cost. • Inventory-led Model Where inventory is stored with e-retailers in their warehouses , and packaged and shipped from there. With this model, e-retailers have stock visibility and hence the ability to meet customer commitments. Sellers are also able to concentrate on their core business, while packaging and fulfillment is managed by e-retailers themselves. • Hybrid Model Where inventory is stored with suppliers, but packaged and shipped from the warehouses. This model is mainly used for suppliers in smaller cities who lack access to logistic companies.

2016 - india aircargo handbook 103


Air Cargo and E-commerce, an Inescapable Relation E-commerce logistics is rapidly changing while trying to keep pace with this quickly evolving e-commerce market. What is unique about e-commerce, e-retail and e-commerce logistics is that there are tremendous amount of experiments related to business models, payments and delivery methods. The e-Air Waybill (e-AWB) and electronic customs procedures which facilitates elimination of paper based documentation, promoted by IATA is a major move in connecting e-commerce with air cargo. Electronic AWB is the first step towards creating a fully paperless environment. The implementation of harmonized electronic customs procedures by countries worldwide is key to create network of routes where air cargo industry participants can benefit from an end-to-end paperless process. Removing the requirement to transport original paper documentation with the freight allows for significant cost and time savings and enhances reliability. Success in e-retail industry is based upon customer trust and speed of order fulfillment. With e-retailers on-boarding suppliers from all across the country, it becomes critical that all the components of the value chain are available at the right time and place in order to efficiently complete the flow of goods. Air cargo plays a critical link in this logistics chain by reducing delivery time and connecting suppliers with customers. Air cargo is used in both cases 1. Transfer of goods from e-retailer to customer This includes two modes of transfers, express delivery and standard delivery. Express delivery means when products are delivered within 24-48 hours of placement of order. While standard delivery is when products are delivered over a longer term. 2. Return of goods from customer to e-retailer Today, six to eight per cent of total orders are returned by customers due to a host of reasons. Air cargo is used here in cases similar to standard delivery. i.e, to transfer high ticket

104 india aircargo handbook - 2016


items especially jewellery and apparels and connect remote locations. Further, lack of storage space at the location of return origination also drives use of air shipment.

The Impact Story

In today’s ‘I want it now’ world, customers are increasingly making their decisions based on which company can deliver their requirements most quickly and reliably. To succeed in today’s global market economy, express transportation and information technology must work in unison. The e-commerce companies must be able to get the product to their customer in an express manner. E-commerce has impacted the air freight industry in three distinct ways Firstly, with e-commerce, companies can now source for low cost supplies in developing countries and sell in the buoyant market of developed countries. And for many such companies, express transportation companies are becoming their logistical backbones, particularly for transporting high value items which may be easily damaged, become obsolete or are made to order, using the just-in-time management process. Secondly, express transport companies are poised to play even bigger roles in facilitating the movement of goods in global trade. As business models change to reflect economic globalisation with increased efficiency within the supply chain, demand for time definite, reliable movement of goods will rise. And finally globalisation has resulted in greater competition and greater pressure for companies to streamline their supply chain processes to reduce cycle time, improve profits and achieve competitive advantage. It also means a greater demand for communicating detailed information quickly.

Challenges Faced The demand for air freight in the e-commerce world is high, but at the same time e-commerce requires the air cargo industry to make changes. The union of e-commerce with air freight industry faces so many challenges. • Capacity and Infrastructure Constraints One of the biggest challenges faced by e-retailers has been insufficient cargo capacity for shipments via air, which is leading to delayed deliveries in distant markets. The major reasons behind this challenge include lack of sufficient freighter jets, unpredictability of the capacity of passenger airlines and growing less priority to e-cargo. Airport capacity constraint is also an important challenge faced by the air freight world. Many airports still do not have a dedicated cargo handling terminal and lack cargo handling facilities. These airports suffer from slot issues and congestion. They also lack dedicated trucking and packing bays resulting in delays and inefficiencies. • Capability and Efficiency Capabilities are required in the system to handle this sudden surge in volumes. This capability is required at both the fronts such as; first mile and last mile delivery capacity and aviation industry capacity. Inefficiencies mean lack of automation resulting in high manual intervention, inordinate dwell times, and missing and un-traceable cargo. Lack of transparency for e-commerce players is another crucial challenge faced by the air freight industry. While e-retailers and logistic players can provide transparency at all other parts of the value chain, this transparency is lost once the shipments are handed over to the airlines in the cargo terminal. Beyond the

2016 - india aircargo handbook 105


handover and before the shipment is picked from the destination airport, there is no visibility of percentage of shipments loaded, identification of parcels loaded and time required to load all shipments and future space availability. • Connectivity at a Pan-India Level Today, 60-70 per cent of the total orders for e-retailers are from tier-II and tier-III cities. A majority of these cities do not lie within the serving radius of a fulfillment centre. India currently does not have the connectivity required for the industry and challenges are faced on three fronts such as inadequate airport facilities, lack of direct connections and lower frequency of flight on connections. • Control via regulations in use of air cargo Certain products falling under the ‘inflammatory products category’ are prohibited for transfer via air.

The Future is Bright and Shining The e-commerce sales in Asia are expected to grow higher in the future. Currently, around 42 per cent of the world’s internet users live in Asia and people using Smartphone and smart mobile devices to buy goods online is progressing day by day. So, there is no wonder that a large share of the global business to consumer e-commerce sales comes from the Asia-Pacific sector. These percentages will only go up as smart device technologies improve. While the Indian online retail story is still being written, recent studies show that Indian e-commerce is expected to spend an additional $950 million to $1.9 billion on warehousing and logistics between 2017 and 2020. The study estimates that over the next three to four years, warehousing capacity could increase by up to 12 per cent. The growth of e-commerce will also experience a boost in air cargo. As the market grows there will be an increasing demand in expanding air cargo connectivity. As per the estimate, the current share of e-commerce in India is around one percent of the total retail business and is estimated to grow seven times in the next ten years. The e-commerce battle in India is being fought on many fronts. Discounts, personalization, on-boarding sellers, and so on. But, the real race is in logistics. The winner will be the one who gives consistently better experiences to both buyers and sellers with efficient warehousing, smart inventory management, and most of all, faster delivery.

106 india aircargo handbook - 2016


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108 india aircargo handbook - 2016


Till date we see that there is not much increase in the popularity, growth and utilization of cargo air charters. India’s air cargo charter market still faces challenges due to lack of proper infrastructure at key airports as well as slots issues and congestion. Does this sector sees growth in the Indian aviation sector

Air Cargo Charter Potential to Become Better

and if so what can be done to boost its growth?

2016 - india aircargo handbook 109


Manpreet Singh Dahri, Manager Cargo and Business Development, Namaste India Aviation Pvt Ltd

Till the time government does not recognise air charter cargo market as an

essential component of aviation industry we cannot expect any exponential growth in number of trained and professional people for this industry.

India has always had the potential to become a key hub for the international air cargo market but it is still on papers and seems like a dream deferred. It is because India lacks economic reform and poor infrastructure investment has slowed down the development. However, keeping in mind India’s growing demand for cargo services, the government is currently working on constructing new cargo centres. Infrastructure Issue: Paucity of infrastructure is a major hindrance, such as warehouse storage facility, cold storage, administrative facility such as customs and technical equipments for the storage of cargo and onward upliftments at key airports hampers the day to day quick routine clearances. Flexibility of Air Charter Operations Flexibility and easy formalities of air charter operations can result in more aircraft movements making it viable for cargo air chartering in India. With the onset of open sky policy validated by the Government of India during the year 1992, the air charter movement in the territory of India both passenger and cargo aircrafts were expected to increase vastly. Some factors need to be taken care of like the prohibitive cost of landing, parking charges coupled with the high cost of Aviation Turbine Fuel (ATF) and different cost depending on the taxation structure etc which are not letting the air chartering business grow to full potential.

110 india aircargo handbook - 2016


Rishabh Birla, Managing Director, Air Shagoon Network Pvt Ltd

It is quite evident that more the sky is covered, the better is the advantage for those who have been yearning to get themselves inducted and established in far flung areas where accessibility for such kind of transportation by air in earlier terms was not possible. Whether scheduled or non-scheduled, but the crux of the hour is to reach the area and get the supply distributed. Challenges faced by Air Charter Operators in India The government does not recognise the potential of Air Cargo Charter fraternity as an essential component of aviation industry. The primary problems for the Air Cargo Charter fraternity are a) Prohibitive cost of landing, parking charges at airports b) ATF and different cost of ATF in each Indian state c) Outdated policies of Minimum Crossing Altitude (MCA) and DGCA regulations which do not reflect on the present aviation market requirements. There are challenges such as stringent customs policies towards import/export rules which ultimately result in delay as well as penalties which are not in the knowledge of both importers as well as exporters. The amount being charged towards various services by both airport operators and warehouse organisers is very much excessive which certainly demoralises the promotion of cargo services. The airlines emerge with complaints such as huge airport fee being levied and charged to them. Also. there is no certainty for an International Civil Aviation Organisation (ICAO) Certified crew to have the mandatory lay over rest in the absence of the visa restrictions being imposed. The Government of India on behalf of its Ministry must look into the above symptoms of challenges to be diagnosed favourably. Operations in Domestic Market The Air Charter Cargo market is at a very nascent stage in India and it is controlled by handful of people who have connections in corporate world and political sphere. Since this market is small so the trained or experienced people are also found in very few numbers accordingly.

2016 - india aircargo handbook 111


Directorate General of Civil Aviation’s Initiative Directorate General of Civil Aviation (DGCA) has considered allowing cargo and air charter firms to convert to scheduled operators to fly on routes not touched by existing scheduled airlines. The decision of DGCA to amend the regulations which have eased off the restrictions on minimum number of aircrafts required to qualify as scheduled airlines is a great step which will help in the growth of air charter cargo industry. How Beneficial is ‘Make in India’ Program? The entire logistics industry is optimistic about the ‘Make in India’ campaign. It is a driving growth in the logistics segment and along with e-commerce this is a segment that is set to grow quite well. Talking about the opportunities that the program brings for the air charter cargo operations, the scheduled airline operators may be big in their own space but they also have some limitations besides their capabilities. The last mile connectivity for to and from movement of goods under e-commerce and the ‘Make in India’ program will offer many opportunities of growth to Air Cargo Charter operators. Therefore, air chargo charter operations have a big scope in the Indian aviation sector but all it needs is some reformed policies and encouragement from the government and acceptance from the industry. It is the right time when Government should re-think on the policies and offer incentives to air cargo charter operators which will help this industry segment to grow and sustain itself.

112 india aircargo handbook - 2016


AEO: Securing the Supply Chain

2016 - india aircargo handbook 113


• The Authorised Economic Operator (AEO) program, now considered an important element of international trade security compliance, is an outcome of the Customs Trade Partnership against Terrorism(CTPAT) scheme which was introduced by USA Customs Border Protection (CBP) in the backdrop of the devastating terrorist attack on the World Trade Centre in the year 2000.

• In India, the Central Board of Excise and Customs (CBEC) launched the AEO program in August 2011, consist-

An Authorised Economic Operator (AEO) is a defined party involved in the international movement of goods and approved by a national customs administration as complying with WCO security standards. The AEO scheme was introduced in India by the Central Board of Excise and Customs (CBEC) in 2005, but has not gained much popularity

114 india aircargo handbook - 2016

ent with the ‘SAFE Framework’ as developed by WCO. The AEO program in India is headed by the Directorate General of Inspection (DGICCE) and managed by the Additional Director General, DGICCE.

• As international trade has evolved within the global economy, incompatible and inefficient customs procedures have been recognised as a costly constraint. Also, it has been deliberated time and again that customs must also continue to combat cross-border crime and terrorism which have grown and become more sophisticated over the years.

Manufacturer

Exporter

Forwarder

Warehouse Keeper

Customs Agent

AEO status will be recognised worldwide, with:

• Safe, secure and compliant business partners in international trade • Lower risk score in risk analysis system when profiling • Reduced data sets for entry and exit declarations

Carrier

Importer


• Benefits from simplified procedures • Reduced financial security • May find easy to qualify for select transit guarantee waiver

AEO is being increasingly adopted by customs administrations in various countries with the objective of securing the supply chain.

Is India Lagging? Most members of WCO have acceded to the ‘SAFE Framework’. However, in India, full utilisation of the AEO program is still a distant dream. In its first release for AEO certification in July 2012, Directorate General of Inspection, Government of India, awarded AEO certificates to three entities with a validity of three years. However, the validity of the certification has now been increased to five years. Since November 2012, when the government launched AEO on a full scale, there have been a total of 18 entities in India who have received the certification. Mutual Recognition The WCO’s SAFE Framework identifies Mutual Recognition as a key element to strengthen and facilitate end-to-end security of international supply chains. A Mutual Recognition Agreement is the document based on which the guidelines and certification process are mutually accepted and recognised between two countries. Therefore, it is important for the Indian government to sign MRAs with other AEO program operating countries to achieve optimum utilisation of the program. There are two different types of Mutual Recognition Agreements: A. Where one customs administration recognises the AEO status granted by another country. B. Where one customs administration recognises the customs security standards, risk assessment controls and control results of another country. Conclusion For organisations not compliant with AEO standards, this program may require additional investments. Considering the benefits of the AEO program, and its proven success stories, this additional investment appears to provide a competitive advantage in this rapidly growing global trade environment

2016 - india aircargo handbook 115


Towards the

future

116 india aircargo handbook - 2016


A handbook on Air Cargo packed with information, data, trends, projections, views/articles by senior industry professionals, columns by leading research companies in an easy read format. Hardbound, aesthetically designed with superior publishing quality. by Powered

ackaging: P t r a m S n i n Air Cargo o t n e t n o cked C

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Looking forward to the

Air Cargo Hub of the Future

118 india aircargo handbook - 2016

The air cargo market in India definitely has the potential to become an Air Cargo Hub, but inadequate infrastructure and cost inefficiency are major challenges that hinder growth. Here, we bring out facts and figures which clearly states the current position of the industry and if India is actually ready to become a full-fledged ‘Air Cargo City’


01 After Dubai, Singapore and Hong Kong, India seems to be on the verge of helping the major Indian airports transform into world-class air cargo hubs. However, becoming the world’s most important air cargo hub still remains a distant dream considering the several bottlenecks that have always been prevailing in the civil aviation industry like inadequate infrastructure, lack of skilled manpower, poor connectivity, etc.

03 Therefore, a strong and collective voice needs to be raised by the industry stakeholders in seeking support from the government authorities for removing certain existing bottlenecks, policies and regulations as well as bringing new progressive policies urgently to pave the way for a long-awaited simplified clearance procedures of EXIM trade at the gateway airports to help the Indian airports transform into worldclass air cargo hubs like Singapore, Hong Kong, Kuala Lumpur, Incheon, etc.

02 On one hand, Indian air cargo industry is witnessing several international carriers like Lufthansa Cargo, Oman Air, Cathay Pacific, etc., hovering over the Indian skies with their cargo freighters, scouring for a perfect landing to bring in and take back air cargo loads. On the other hand, consignees are complaining of heaps of potential air cargo parcels lying at the warehouses, waiting to be air-lifted and flown to their global destinations.

04 If we go by the facts, at present, India, with a GDP of about $1.87 trillion, handles just 2.5 million tons whereas countries like Hong Kong with a GDP of $230 billion handles air cargo traffic of 4.2 million tons and The United Arab Emirates (UAE) with a GDP of $252 billion sees total air freight movements of 3.10 million tons at airports.

2016 - india aircargo handbook 119


05

K S Kunwar, Director General, Air Cargo Forum India (ACFI)

Almost all the major successful airports around the world are working on cargo hub-and-spoke model. It is supported by the multimodal logistics to create faster and efficient supply chain which has changed pace of growth of air freight industry world over as well as the growth business model of airports and airlines.

120 india aircargo handbook - 2016

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 authorities need to understand that there is a significant untapped potential for air cargo in India and the government needs to realise the importance of air logistics in economic growth. The above statement has been proved by 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.

07 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 transshipment cargo, which constitutes as much as 60-70 per cent of total volumes handled by some of the leading airports, is almost negligible for Indian airports.

06 Lufthansa has already nominated India as its pharmaceutical hub and Cathay Pacific recently added a twice-a-week Boeing-747 freighter service. Also, Thai Airways and BlueDart 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 tons in a 737type aircraft and 20-25 tons in the larger 747-type aircraft.

08 Though there have been some recent developments like the government’s 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 tons by 2020, whereas the share of international cargo will be at 3.5 million tons.


Almost all the major successful airports around the world are working on cargo hub and spoke model. It is supported by the multimodal logistics to create faster and efficient supply chain which has changed the pace of growth of air freight industry world over as well as the growth business model of airports and airlines. Under this model, airlines use a hub airport to transfer traffic between destinations that may not be directly connected.

09

Hubbing traffic is mainly the transit cargo which in western countries forms a significant portion of its overall traffic. Multiple options of connectivity giving varied and quickest route options to cargo traffic, is another feature of hub airports. Such flexible connectivity option is not possible where the airlines are following point-topoint connectivity model.

10

The Hubbing model brings a large number of benefits to all the stakeholders in the air logistics trade. It improves asset utilisation by capturing diverse traffic markets, growth options for saturated Origin and Destination (O&D) markets, for airlines it offers larger connectivity and higher frequencies within a given fleet size and for the EXIM trade, it gives them more options (routes and frequencies), competitive prices and enhanced service levels.

11

Major airports in India are to be promoted as Air Cargo Hubs for overall growth and development of air cargo industry in India. These hub airports will boost air cargo growth and transform India into a major trade hub which will boost not only Indian trade but trade through India as well and benefit the Indian economy as a whole.

12

Naveen Rao, Head of Cargo, (India), Aeroflot

With Make in India, there’s still some progress happening. The PM himself is doing the ground jobs, visiting other countries, which is phenomenal but team-wise it is not happening. I can’t see progress happening for air hubs.

2016 - india aircargo handbook 121


Points to consider while framing policies and strategies on Air Cargo Hub Indian airports have geographical advantage, by being on the important international routes of US, Europe, Australia and South East Asia, to act as major transfer hubs. At the leading international hub airports, 55-60 per cent cargo out of the total airfreight handled constitutes transshipment cargo whereas in India the share of transshipment cargo constitutes only two per cent of the total air freight. The intra-Asia potential itself is a major opportunity for India to transform its major airports into a successful transshipment hub in Asia; like Dubai, Singapore and Hong Kong. Also, India is well-placed to capitalise on the opportunity to emerge as the preferred transshipment hub for our neighbouring countries i.e. Bangladesh and Sri Lanka who have sizeable international trade with Europe and US, but have very limited direct connectivity with these countries. Hub airports are to be developed as integrated multimodal hubs, so that they provide the fastest possible service levels as well as potential for growth at par with any world-class integrated cargo hub airports. Major Indian airports i.e. Delhi, Mumbai, Chennai and Kolkata may be developed as major international and domestic cargo hubs (Tier-I) in India with few sub-regional hub airports (Tier-II) i.e. Amritsar, Ahmedabad, Bangalore, Hyderabad, Cochin, Trivandrum, Kanpur, Nagpur etc. to feed the major hub airports. Air India is to be developed as a strong national carrier at par with its counterpart sister national airlines abroad to provide connectivity within and outside India and should not fall short of the density that is required for a hub.

122 india aircargo handbook - 2016


Challenges Higher dwell time of import (100hrs), export (48hrs) and transshipment cargo (48hrs) at the Indian airports is a major bottleneck which causes high transaction cost and delay, whereas the dwell time at world class airports is considerably low (6 to 12 hrs). Free period of 72 hours given by the government also causes for high dwell time as more than 35 per cent import cargo are generally cleared after 72 hours of its arrival. Rigid and outdated procedures of regulatory authorities cause unnecessary delays in the clearance process and increases transaction costs. EDI is not implemented in its true sense as there is duplication in filing papers electronically as well as in the form of hard copies. Customs working on EDI mode and a host of other government agencies working in non-EDI mode also adds up to the delay in clearance process. Cargo terminal operation is over regulated by customs in spite of an authorised custodian fully accountable for it, but without any freedom in the terminal operation.

2016 - india aircargo handbook 123


Ideal Solutions The whole airport or cargo terminal area comes under a free zone and will be considered as a foreign land. The free commercial zone is regulated by a Free Zone Authority or maybe by the airport operator. All the Cargo Terminal Operators (CTO), Freight Forwarders, Express Operators and the Customs Brokers are housed in the free zone and operate from their respective premises allotted by the free zone authority. Safety and security of the free zone area shall be that of the zone authority. All the clearance processes of international cargo (export, import and transshipment cargo) shall be done electronically through a Cargo Community System (CCS) established by the Free Zone Authority duly linked with Customs EDI System. Within free zone, freight forwarders are allowed to admit export cargo after papers are duly electronically filed with customs and transferred to the respective CTOs after the cargo is cleared by customs electronically. Airlines may uplift the export cargo and file the export manifest to customs for their information through CCS. Customs shall play its preventive role through system and sometimes conduct random and surprise checks. This will infuse faster clearance of international cargo and bring down the prevailing dwell time drastically. Processing and dispatching of transshipment cargo to its final destination shall be the responsibility of the concerned airlines that too within CCS system. This will change the existing slow processing of transshipment cargo to a bare minimum.

124 india aircargo handbook - 2016


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Raising FDI cap in Greenfield and Brownfield Airports “Future Greenfield and Brownfield airports will have cost efficient functionality with no compromise on safety and security,� echoed Government of India, this year. Here we analyse the various dimensions pertaining to the development plans for Greenfield and Brownfield airports, that aim to fix the airport infrastructure deficit and maximise Foreign Direct Investment (FDI) to the hilt. The well-intentioned policy covers 22 core sub-sectors. Affordable and accelerated regional connectivity, partial farewell to the controversial 5/20 rule, strengthening of the safety-security architecture, fast-tracking of airports (Greenfield, Brownfield and low-cost no-frills) and other infrastructure development, liberalised bilateral rights/ code sharing, transformed ground-handling, overhauling, maintenance-repair-overhaul (MRO) facilities, fast-tracking air cargo growth, new aeronautical Make-in-India, aviation manpower development and fiscal support are some of the positive aspects of the policy. The subsequent 100 per cent foreign direct investment in airlines is a timely sweetener.

126 india aircargo handbook - 2016

THEN & NOW In the past, the government policy relating to Greenfield airports was restrictive and aimed at protecting the financial viability of the existing airports. However, the spurt in traffic suggests a liberalised approach towards setting up of Greenfield airports with a view to bridge the growing deficit in airport infrastructure. The anticipated investment in airport development during the Eleventh Plan is more than `40,000 crores, both from public and private sources, including Greenfield airports. The extant FDI policy on airports permits 100 per cent FDI under automatic route in Greenfield projects and 74 per cent FDI in Brownfield Projects under automatic route. FDI beyond 74 per cent for Brownfield Projects is under government route. With a view to aid the modernisation of the existing


2014-15

4,635

5,242

4,635

OPPORTUNITIES IN THE BAG

2,466

3,117

2,934

2,897 2,220

2,007

2,054

2,117

airlines that make up 83 per cent of global air traffic, growth in India is being propelled by a comparatively strong economic backdrop as well as by a substantial increase in service frequencies.

2015-16

3,850

3,605

EQUITY INFLOWS

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 2015

Source: Department of Industrial Policy & Promotion

airports to establish a higher standard and help ease the pressure on the existing airports, it has been decided to permit 100 per cent FDI under automatic route in Brownfield airport projects. As per the present FDI policy, foreign investment up to 49 per cent is allowed under automatic route in Scheduled Air Transport Service/Domestic Scheduled Passenger Airline and regional Air Transport Service. It has now been decided to raise this limit to 100 per cent, with FDI up to 49 per cent permitted under automatic route and FDI beyond 49 per cent through government approval. For NRIs, 100 per cent FDI will continue to be allowed under automatic route. However, foreign airlines would continue to be allowed to invest in the capital of Indian companies operating scheduled and non-scheduled air-transport services up to the limit of 49 per cent of their paid up capital and subject to the laid down conditions of the existing policy. According to the International Air Transport Association (IATA), which represents some 260

I. Officials have swung into action for completing the land acquisition process for the Greenfield airport at Damavaram village of Dagadarthi Mandal of Nellore district in Andhra Pradesh by the end of March 17. More than 1,390 acres have been sanctioned for developing the airport at Dagadarthi, nearly 30 kms from Nellore city and close to the Chennai-Kolkata national highway. II. The Civil Aviation Ministry has given clearance for four Greenfield airports including the `1,378 crores international airport at Dholera in Gujarat, which is expected to reduce air traffic load at existing Ahmedabad airport. The other three Greenfield airports are proposed to be set up in Andhra Pradesh, with two of them likely to be no-frills ones.

Indian Aviation Industry: Increase in Freight Traffic: July, 2016 update • Freight traffic is expected to be five times the current level by the end of the next two decades. It is expected to be 11.4 million tonnes by 2032. • Growth in import and export in India will be the key driver for growth in freight traffic as 30 per cent of total trade is undertaken via airways.

HURDLES ON THE WAY i. West Bengal’s Greenfield airport at Andal,

near Durgapur has run into trouble following the decision of Air India to withdraw from the sector from June 17, seven months after it commenced flights from this airport to Delhi. The airport is run by Bengal Airports Projects Ltd (BAPL), an infrastructure company. In a statement the BAPL said, “The high cost of operations by Air India, makes even a lucrative market like the Durgapur-Asansol region, unsustainable. On operation of flights, it was proved beyond doubt, that the catchment area has not only enough demand but also has high purchasing power, through passenger numbers and the fare levels at which the tickets were sold.” ii. The government’s latest decision to shelve a proposal to develop and improve efficacy at four airports at Chennai, Kolkata, Jaipur and Ahmedabad on a public-private partnership (PPP) basis and instead opt for awarding operations and maintenance (O&M) contracts to only private sector entities at two airports of Jaipur and Ahmedabad is being questioned on several fronts. “We need strategic clarity regarding privatisation, for both Brownfield and Greenfield (airports), and on economic regulation as this will impact flow of capital into the sector and could determine the level of capacity available over next ten years. As things stand today, CAPA sees India heading for serious capacity challenges in the next ten years which will start manifesting in another three to five years,” said Kapil Kaul, Chief Executive Officer, CAPA. While certain sections within the Airports Authority of India (AAI) have alleged that the privatisation programme is a “real estate play” and is not in the interest of the public

2016 - india aircargo handbook 127


sector which has invested substantially (`5,100 crores) to upgrade the airports in Kolkata and Chennai, industry experts have claimed that airport operations is a commercial activity therefore leasing out airports to private sector would result in more efficient airports, greater competition, higher exploitation of the non-aeronautical assets and consequently lower airport charges per passenger. There is a very close coordination required between the air-side, terminal and the city-side. Kaul explained, “In crunch times, there could be severe coordination issues, with AAI and the private operator blaming each other. The only sufferers would be the end-users like passengers, airlines, ground-handlers and cargo operators who would keep getting squeezed between AAI and the private players. Duality of control in a highly time-sensitive airport environment wherein an incoming aircraft has to be airborne again in the shortest possible interval is a scary thought.” iii. Industry bodies have been opposing the privatisation of AAI airports, saying it would push up costs. “The airlines and the International Air Transport Association are concerned that any unnecessary private shareholding might increase the focus on

128 india aircargo handbook - 2016

profit-maximisation and as a result, increase user’s costs. The privatisation of these six AAI airports would only serve to fuel a further round of increase in the airport cost environment, adding to costs for passenger and the airlines,” the International Air Transportation Association wrote in a letter to the aviation ministry.

Civil Aviation Policy: Scheduled commercial flights to increase from 77 in 2016 to 127 by 2019; Cargo volumes to go up by four times iv. A major difference between public and private airports, with respect to the capital structure, is the presence of debt. Debt constitutes about 75-80 per cent of the total project investment in PPP airports. It is well known that the presence of debt increases the risk of bankruptcy. All things remaining the same, the risk on a PPP project which has a debt of 80 per cent at 15 per cent interest increases the project risk by 43 per cent, compared

to a fully government funded project. Since airports are strategic assets that cannot be allowed to fail, government would be forced to step in when there is a possible bankruptcy. Such bailouts of private projects at a later stage can sometimes be more expensive as compared to 100 per cent government funding of the projects. By the virtue of being new airports, Bangalore and Hyderabad airports are Greenfield projects, whereas expansion of the existing airports in Delhi and Mumbai are Brownfield projects. Three main differences could be identified between the two types of projects, the first one being the level of protection offered by the government to the investors. The government has provided an exclusivity agreement to Greenfield projects under which no other airport can function within 70,000 sq km during the concession period. New airports can come up in the case of Brownfield airports with the concessionaire getting the right of first refusal for investing in the same. The Brownfield model thus gives more options to the government for setting up future airports depending on the demand and development of the city. The second major difference pertains to the financial parameters. The invest-


B. India’s first Brownfield Airport Project under Public Private Partnership Mumbai International Airport Pvt Ltd

2.5

20% 15%

2

10%

1.5

5%

1

Freight Traffic(Million tonnes)

1.35

2.53

2.28

2.19

2.28

2.35

0

1.96

0.5

0% 1.7

A. Greenfield International Airport near Dholera The Government of India has planned for establishing Dedicated Freight Corridor (DFC) between Delhi and Mumbai. About 38 per cent of the DFC is passing through Gujarat and a corridor of 150 km on both sides of the DFC is to be developed as the Delhi Mumbai Industrial Corridor (DMIC). This includes two Investment Regions and four Industrial Areas. As envisaged by the Government of India, these nodes are to be developed as global hubs of manufacturing and commercial activities. Out of the six locations, the state has identified Ahmedabad-Dholera belt as the location for Special Investment Region (SIR). Dholera SIR is proposed to be developed in a usable area of 360 km and would be located at a distance of approximately 100 km from Ahmedabad and DFC is passing through this area. The State has worked out the strategy of development of SIR with formation of a company, legal framework, etc.

25%

1.72

KEY LOCATIONS AND SCENES

3

1.55

good characteristics, airports do not seem to be natural candidates for PPPs. If fiscal and other compulsions necessitate the need for private investment, Brownfield airports seem to be better candidates for PPPs, as opposed to Greenfield airports.

1.4

ment requirement for a Brownfield airport is more than three times than that for a Greenfield project. This is based on the experience of Brownfield airports in Mumbai and Delhi and Greenfield airports in Hyderabad and Bangalore. Since these Brownfield airports are located in the middle of the cities and the expansion capacity is much larger, the investment requirements of these Brownfield airports are also higher. The debt equity ratios are 4:1 and 3:1 for Greenfield and Brownfield projects respectively. The higher debt equity ratio on a Greenfield project makes it financially more risky. On the other hand, the revenue payout to the government from Brownfield projects looks more attractive. Apart from the upfront fee, the concessionaire would pay an annual fee equivalent to 30-35 per cent of the projected revenue for the year. In the case of Greenfield projects, the annual fee would be just four per cent of the gross revenues. Therefore, from the government’s perspective, Brownfield airports would form better candidates for PPP than Greenfield airports. Thirdly, the risk involved during project development (pre-construction phase) is higher for a Greenfield project. The longer time taken in the case of a Greenfield airport implies the prevalence of higher risk during the pre-construction phase. The government would be better equipped than the private investor to manage the risks that arise during this phase. For varied reasons such as strategic importance, monopoly, occurrence of externalities, and presence of public

-5% -10%

Growth

Source: Airports Authority of India, TechSci Research Note: FY - Indian Financial Year (April - March) *- Data is for April-September 2015

(MIAL), a joint venture between the GVK-led consortium (74 per cent) and Airports Authority of India (26 per cent), was awarded the mandate of modernising and upgrading Mumbai’s Chhatrapati Shivaji International Airport (CSIA) in February 2006. GVK currently has a shareholding of 50.3 per cent in MIAL. CSIA is one of India’s busiest airports having recorded passenger traffic of 30 million in 2012, along with cargo traffic of 6,39,000 tonnes. GVK’s vision is to transform CSIA into one of the world’s best airports that consistently delights customers, proving to be the pride of Mumbai. Ranked the third best airport worldwide in Airports Council International (ACI) and rated the Best Airport in terms of Cargo Upliftment & third Best Cargo Airport for the year 2012 at the 39th ACAAI convention, over the years, CSIA has turned into a truly global airport. In a boost to regional air connectivity in Maharashtra and Central India, the state government is planning to expand the capacity of the Nagpur airport and construct a new runway. The Maharashtra Airport Development Corporation (MADC) is a special purpose company to develop Multi-modal International Hub Airport at Nagpur (MIHAN) and aviation infrastructure in the state to provide regional air connectivity. The BAIA airport is considered among the top 20 busiest airports in

2016 - india aircargo handbook 129


the country. According to an estimate, the airport saw a movement of around 14,01,147 passengers and 13,330 aircrafts in 2014. The airport also saw handling of around 6,063 tonnes of cargo. The recent development is expected to improve its traffic handling capacity. “The existing terminal building is small. So, it will be expanded or a new one will be constructed,” the official said. “We will follow the PPP model which has been chosen for the proposed Greenfield Navi Mumbai International Airport. Since the operating income for the Nagpur airport will not be high, we will have to ensure that the non-operating income is large. It is the first time this is being done in the Brownfield model,” the official added. The state Cabinet has recently consented to swap MIHAN land with the IAF to aid the airport’s expansion. This had already been approved by the centre.

INDIAN GOVERNMENT SMILES WIDE AT THE AIRPORTS The cabinet has approved the civil aviation policy that allows development of Greenfield airports within 150 km radius of an existing Airport Authority of India (AAI) airport. However, the policy provides for suitable compensation to the state-run airport operator if its airport is not fully saturated. Recently, the Goa State Pollution Control Board (GSPCB) granted the Greenfield international airport at Mopa the consent to establish under the Air and Water Acts, with conditions. The state government had planned to open the financial bid for the airport on July 11. The five bidders are GVK, GMR, Essel Infra-Mumbai, Airports Authority of India and Voluptas Developers. The state government had issued the request for proposal (RFP) for the proposed airport at Mopa in January, seeking bids from interested companies to construct the airport. The construction of the airport at Mopa is expected to start by September 2016.

130 india aircargo handbook - 2016

In airports, the government’s focus is on improving managerial efficiency as investments have already been made to spruce up a large number of mid-level and smaller airports. “These can no longer be considered Greenfield or Brownfield projects, so the aviation ministry is considering a proposal to bring in management participation [from the private sector],” Jaitley said. The Airports Authority of India has made elaborate plans for the upgradation of cargo terminals at all the major and regional airports. The Authority will convert redundant passenger terminals at 24 airports into cargo terminals. AAI is selling the regional airport concept whereby the capital and commercial cities in the states where infrastructure is now improved, would be exploited under the regional airport concept to provide for Hub and Node types of airport operations. In this direction, AAI has decided to undertake domestic cargo handling at metro/non-metro airports in a phased manner (including by modifying the old/redundant PAX Terminals at non-metro airports) so as to improve the

existing infrastructure by introducing Common User Domestic Cargo Terminal at the airports.

Increasing Role of Private Hands The government’s initiatives towards enhancing the airport infrastructure has resulted in several private players venturing into the business of upgradation and development of air cargo terminals in India. The two major players who have been contributing towards this are Cargo Service Centre and Celebi. Cargo Service Centre (CSC) is well equipped to play a vital role in the changing dynamics of air cargo handling. And this became very clear when it won the concession from Delhi airport to design, develop, manage and operate a Greenfield air cargo terminal project at Delhi airport through a global tender. In April 2012, the centre started its cargo operations from Delhi airport with its first customer Hercules Aviation. The Greenfield cargo terminal will be implemented through a joint venture company, Delhi Cargo Service Centre with CSC owning 74 per cent stake


and DIAL owning 26 per cent. The project consists of two terminals built over a plot of 48,000 sq m and 28,500 sq m respectively. Both the terminals when completed will have an annual handling capacity of 1.25 million tonnes. The larger terminal CT2 will be built in phases the first phase is nearly completed with a capacity of 1,25,000 tonnes. When completed fully in 2017, it will be a state-of-the-art facility, with a high degree of automation, well equipped to handle all types of cargo general, perishable, express, valuable and dangerous goods as well as livestock for both international and domestic sectors under an integrated terminal concept. India is ideally positioned to stake its claim to this position because of its unique geographical location and ideal position between Asia and Europe. Working on these lines, Delhi airport, a joint venture led by GMR Group, is poised for big cargo growth despite the decline in the economy. Delhi airport has chalked out plans to transform itself into a cargo gateway of India. IGIA is projected to cross one million tonnes of cargo handling by 2017. The airport has a strong network of

51 international, eight domestic airlines and 12 freighters. Sanjiv Edward, Associate Vice President, Commercial at Delhi International Airport Limited (DIAL), said, “The refurbishment work at Brownfield Terminal has been completed, which happened in different phases, including export and import warehouses. The current capacity has been enhanced to accommodate future growth.” Even Mumbai airport has put in significant investments in import cold storage facilities over the last three years and currently provides a one-time holding capacity of 426 metric tonnes. The pharma sector in Mumbai, according to Manoj Singh, Vice President, Cargo, Mumbai airport, is a growing business. He said, “To meet this demand, MIAL is constructing a stateof-the-art perishable facility in imports with five level racking systems and one-time holding capacity of 750 metric tonnes. The upcoming facility will cater to 15 to 25 degree products and will be equipped with high level automation and temperature recording systems.”

Sector specific terminals Some of the developments are being specifically witnessed in a particular sector like pharmaceuticals. For instance, Rajiv Gandhi International Airport (RGIA) at Hyderabad which flaunts a world-class cargo terminal is beefing up cargo throughout, especially pharmaceuticals, and aims to generate more than 20 percent of its revenues from cargo. The modular integrated cargo facility at the airport is spread over 14,330 sq m with a capacity to handle 1,50,000 million tonnes annually, which is expandable. The cargo terminal at the airport has integrated cargo facility, housing both domestic and international facilities under one roof. Hemanth D P, Chief Operating Officer, GMR Hyderabad International Airport, said, “To support the growing local industry which now has strong global footprints, we as business enablers need to extend efficient temper-

ature controlled care while handling pharmaceutical products. This first-of-its-kind facility with a capability to handle 33,000 million tonnes of cargo was commissioned with truck dock to airside temperature controlled facility to maintain cool chain integrity at global standards.” The airports across the country are gradually coming out of this situation and are beefing up cargo throughput through different sectors, be it pharmaceuticals, automotive or manufacturing.

CONCLUSION India is one of the fastest growing aviation markets in the world and boasts of some world-class airports in Delhi, Bengaluru, Hyderabad and Mumbai on one hand, and hundreds of ghost airports with not a single flight on the other. Amber Dubey, partner and India head of aerospace and defence at global consultancy, KPMG, notes, “There was no rhyme or reason behind the artificial distinction between Greenfield and Brownfield airports in terms of foreign ownership. It makes competitive bidding for revival of Brownfield airports, owned by AAI, state governments or other entities far more attractive to global bidders.” However, this alone is not nearly enough for airport proliferation in India. The new civil aviation policy, the first of its kind, will propel the aviation boom, says India Ratings and Research. The policy emphasises on the concerted efforts of various agencies such as Airport Economic Regulatory Authority, AAI along with airport developers, airlines, MRO and state governments to reduce airport charges and cargo charges. Despite the huge potential available with the sector, implementation hurdles could delay the benefits to the stakeholders. Zeroing down on the right places for new airports, refurbishing existing airports and judiciously employing funds, while the existing capacity stays idle, are some of the crucial issues that need to be resolved.

2016 - india aircargo handbook 131


Insights 132 india aircargo handbook - 2016


Numbers and figures are crucial for the air cargo industry. They are essential indicators for percentage growth analysis of the industry. A forecast by the International Air Transport Association (IATA) said that India has the potential to become the third largest aviation market by 2016 and the largest aviation market by 2030. The following section proves that beyond doubt. The steady and speedy growth of Indian air cargo industry has been pictured here using figures, graphs, data and insights from industry players. It also provides an insight into the upcoming developments in the Indian aviation industry. Here we share traffic forecast, details of major works in progress in different regions of the country, development of Greenfield airports and the Greenfield cargo terminal at Delhi airport.

2016 - india aircargo handbook 133


Traffic ForecastAll Indian Airports taken together

Year

Aircraft Movements (in 000)

Freight( in 000 MT)

Int’l

Domestic

Total

Int’l

Domestic

Total

2014-15 (Base year)

345.36

1257.66

1603.02

1542.12

991.79

2533.91

Growth Rate

7.2%

10.4%

9.7%

6.0%

5.3%

5.7%

2015-16

370.25

1388.55

1758.80

1634.73

1044.58

2679.30

Growth Rate

6.4%

7.3%

7.2%

5.7%

6.9%

6.2%

2016-17

393.63

1489.40

1883.03

1726.57

1115.19

2841.76

2017-18

418.66

1598.19

2016.85

1824.50

1191.13

3015.63

2018-19

445.45

1715.60

2161.05

1929.00

1272.85

3201.85

2019-20

474.13

1842.39

2316.52

2040.60

1360.85

3401.45

2020-21

504.87

1979.38

2484.25

2159.87

1455.67

3615.54

Growth Rate

4.9%

6.0%

5.8%

4.6%

5.9%

5.2%

2021-22

529.44

2096.58

2626.02

2258.30

1540.87

3799.17

2022-23

555.32

2221.30

2776.62

2362.15

1631.65

3993.80

2023-24

582.59

2354.09

2936.68

2471.79

1728.43

4200.22

2024-25

611.33

2495.50

3106.83

2587.62

1831.64

4419.26

2025-26

641.63

2646.15

3287.78

2710.08

1941.77

4651.85

134 india aircargo handbook - 2016


Details of Major works in Progress S.No

Airport

Name of Work

Est. Cost in Crore Rupees

NORTHERN REGION 1.

Fursatganj (Uttar Pradesh)

2. 3.

New Delhi Jaipur (Rajasthan)

4. 5. 6.

Kishangarh (Rajasthan) Khajuraho (MP) Lucknow (UP)

7.

Jammu (J&K)

Constructon of National Aviation University at IGRUA, Fursatganj Indian Aviation Academy at New Delhi Extension of runway and strengthening of existing runway and associated works and re-carpeting of runway for improvement of geometric design and drainage, installation of CAT IIIB ILS Development of Kishangarh Airport (Ajmer) Construction of new Terminal Building Construction of Integrated Office Complex for AAI and DGCA officers Expansion and modification of Terminal Building

149.00 126.00 141.00

160.05 75.32 11.68 75.00

NORTH-EASTERN REGION 8.

Imphal (Manipur)

9. 10.

Guwahati (Assam) Tezu (Arunachal Pradesh)

11.

Pakyong Gangtok (Sikkim)

Expansion of apron with link taxiway to accommodate 3 A-321 & 3 ATR-72 type of aircraft Construction of Integrated Office Complex for AAI and BCAS Operationalisation / Upgradation of Tezu Airport Development of new Greenfield at Pakyong in Sikkim

11.83 13.16 96.50 606.59

2016 - india aircargo handbook 135


EASTERN REGION 12.

Ranchi (Jharkhand)

13.

Raipur (Chhattisgarh)

14.

Portblair (Andaman Island)

Construction of Technical Block and Control Tower Contruction of boundary wall at SV Airport, Raipur Work awarded on 01.09.2014 for construction of New Integrated Terminal Building at VSI Airport, Port Blair

149.00 8.20 417.23

WESTERN REGION 15.

Vadodara (Gujarat)

Construction of new Integrated Terminal Building

160.20

16.

Mumbai (Maharashtra)

Construction of Operational Office Building for AAI DGCA and BCAS

65.91

SOUTHERN REGION 17.

Trivandrum

18.

Calicut (Kerala)

19.

Hubli (Karnataka)

11.

Pakyong Gangtok (Sikkim)

136 india aircargo handbook - 2016

Extension of parallel taxi track between B & F taxi track, towards runway 32 and runway 15 beginning and taxi links including construction of isolation bay Construction of new Arrival Hall for ITB & modification of existing Development of Hubli Airport including new Terminal Building, extension and strengthening of runway, construction of taxiway, apron, isolation bay and other ancillary works. Development of new Greenfield at Pakyong in Sikkim

69.07

120.19 141.44

606.59


Development of Greenfield Airports S.No 1. 2. 3.

Airport Cochin International Airport Limited Rajiv Gandhi International Airport, Shamshabad Kempegowda International Airport, Bengaluru

State Kerala Telangana

Status Completed Completed

Karnataka

Completed

’In-Principal’ approval has been granted by Govt. of India for construction of following new Greenfield Airport Projects under New Greenfield Airport Policy: S.No 1. 2.

State Goa Karnataka

3.

Kerala

4.

Maharashtra

Name of the project Mopa Airport (International) Bijapur Airport Gulbarga Airport Hassan Airport Shimoga Airport Aranmula Airport (Pathanamthitta) (International) Kannur Airport (International) Navi Mumbai Airport (International) Shirdi Airport( International) Sindhudurg Airport

Name of the Promoters State Govt. State Govt. State Govt. State Govt. State Govt. State Govt.

‘In Principle’approval granted on 05.05.2000 25.06.2008 25.06.2008 25.06.2008 25.06.2008 04.09.2012

M/s KINFRA City & Industries Corp of Maharashtra Ltd.(CIDCO) Mahrashtra Airport Development Corp. Ltd Mahrashtra Industrial Development Corporation

19.02.2008 06.07.2007 12.05.2011 29.09.2008

2016 - india aircargo handbook 137


5.

Madhya Pradesh

Dabra Airport, Gwalior

6.

Pudducherry

Karaikal Airport (International)

7.

Uttar Pradesh

8.

West Bengal

Kushinagar Airport (International) Durgapur Airport (International)

9.

Sikkim

Pakyong (Gangtok)

M/s Gwalior Agriculture Company Ltd Karaikal Airport Private Limited State Govt. Of Uttar Pradesh M/s Bengal Aerotropolis Project Limited (BAPL) Airport Authority of India

11.12.2008 24.02.2011 21.09.2010 11.12.2008 16.10.2008

’Site Clearance‘ granted by MoCA for obtaining ’In-Principal’ approval for the following Greenfield Airports:

S.No

State

Name of the project

Name of the Promoters

1.

Arunachal Pradesh

Itanagar Airport

Airports Authority of India

‘In Principle’approval granted on 01.08.2012

2.

Andhra Pradesh

Ongol, Prakasham District

M/s Prakasham Airport Pvt. Ltd.

October,2010

3.

Gujarat

Dholera, Ahmadabad

07.05.2010

4. 5.

Jharkhand Punjab

Jamshedpur Machiwara, Ludhiana

Gujarat Infrastructure Development Board M/s TATA Steel M/s Bengal Aerotropolis Project Limited (BAPL)

138 india aircargo handbook - 2016

11.07.2011 25.02.2009


List Of Greenfield Airports under ’Preliminary Scrutiny’ by MoCA for issuing Site Clearance

S.No 1

State Gujarat

Name of the project Dwarka

Name of the Promoters M/s Srei Infrastructure Finance Ltd.

2

Haryana

Bhaini Bhairo in Rohtak District.

3 4 5

Karnataka Kerala Maharashtra

6 7 8

Rajasthan Tamil Nadu Uttar Pradeh

Bellary Annakara, Idukki Distt Khed, near Pune Bolera , Amravati Solapur (Boramani) Kot Kasim, Alwar Sriperumbudur Taj International Airport at Hirangaon

Haryana State Industrial & Infrastructure Development Corporaton State Government State Government MADC (State Govt. undertaking) MADC (State Govt. undertaking) MADC (State Govt. undertaking) DMICDC Ltd., GOI State Government State Government

2016 - india aircargo handbook 139


Case Study

The Greenfield Cargo Terminal at Delhi Airport Delhi Cargo Service Center Pvt Ltd (DCSC) won the concession from Delhi airport to design, develop, build, manage and operate a new air cargo terminal at Delhi airport. The concession was signed for a period of 25 years, effective 2009. DCSC Terminal has been developed as an integrated international and domestic multiple purpose air cargo terminal at a cost of ` 2160 million. It is being expanded and developed in a phased modular manner matching the cargo capacity demand going forward so that cost of development is commensurate with the volumes of business. Soaring 22 metres high with a double level facility, when fully completed, it will have a capacity to handle close to 850,000 metric tons of air cargo per annum. DCSC Cargo Terminal is redefining cargo handling at Indian airport. The expertise and experience of CSC team backed by a fantastic infrastructure, designed to meet the exacting standard of our airline customer will help propel Delhi airport to emerge as the air cargo hub of the country.

The Project consists of two terminals: • Main terminal built over 48,500 sq. metres plot size with city and airside access • Second terminal to be built over the smaller plot

140 india aircargo handbook - 2016

size 28,000 sq.meters Both terminals together will have the capacity of 1.2 million MT of cargo p.a (on completion of all phases). The first two phases of the main terminal have been completed (1A & 1B) having annual throughput capacity of 300,000 MT.

Concept Design Detail process planning / designing being carried out prior construction of the terminal: • Requirement Analysis Detail requirement study including peak capacity analysis being carried out by LCSG, Netherlands • Operations Process Flow Detail Process mapping/design flow for International and Domestic cargo operations • Master Plan for the Material Handling System Concept developed to a comprehensive Master Plan as designed by NACO, Netherlands, indicating the major milestones of expansion, and built-in flexibilities for potential business variations planning • Throughput Capacity Planning The overall throughput capacity planned at 15 tonnes per sqm per annum.


Case Study Type

Area

Daily Capacity

position / package Annual Handling capacity ULD pallet position

Export General Cargo

Gr.Floor 8360- sqm

514 MT

123600MT

237 ULD - No ETV 800 Euro pallets

Import General Cargo

Gr. floor- 2100 sqm Ist floor- 6500 sqm

100 MT + 300 MT

15000MT +100000 MT

100 ULD – No ETV 500 + 500 Euro pallet position

Valuable Export

Gr. floor- 20 sqm

5 MT

200 MT

Valuable Import

Gr. floor20- sqm

5 MT

200 MT

Dangerous goods

Gr. Floor 100- sqm

10 MT

1000 MT

30 Euro pallet positions

Perishable Imports

Gr. floor- 750 sqm

75 MT

18000 MT

100 Euro pallets

Perishable Exports

Gr.Floor- 1400 sqm

100 MT

35000 MT

18 ULD- No ETV 250 Euro pallet positions

Total Capacity

19,250 sqm

1,125 MT

293,000 MT

Robust Terminal Design

Processing Capabilities

• Customised pre-engineered steel structure as per Indian authority prescribed standard to withstand wind & seismic forces (Zone IV) • Overall 22m height from ground level of 227 AMSL to maximise building height for storage positions • First floor level designed for fork lift movement with overall dead load plus live load as 17 KN/sqm • 12m x 12m normal grid for the column for free movement of fork lift and cargo within the warehouse terminal. • Facility secured by means of a high perimeter wall that prevents unauthorised entry or access to any part of the terminal including cargo, etc. • Ample of space for truck manoeuvring with 38m width internal road

• An integrated terminal for domestic and international that offers a comprehensive end-to-end cargo handling service under a single roof / single agency for all types of cargo General, Perishable, Pharmaceuticals, Valuables, Dangerous Goods, Project, Live Animals and more • Pioneering two-tier design for segregated handling of import and export cargo No congestion, delays or idle time • Advanced IT & messaging capabilities – COSYS, the cargo operations system designed by SATS and implemented by NIIT 1. Integrates with Airline system and updates on a real-time basis 2. Online Processing of documents / charges for

• Fire planning and system as per NFPA (USA)

2016 - india aircargo handbook 141


Case Study

Greenfield Cargo Terminal - The future is TODAY INTEGRATED

COMPREHENSIVE

DCSC CARGO TERMINAL MODULAR

END-TO-END

• Security and surveillance with full CCTV coverage with recording facility as per the approval of Bureau of Civil Aviation Security (BCAS) More than 300 cameras already installed to cover every area from city side to air side

Additional Handling competencies

Shippers/agents 3. Integration with Customs 4. Designed to provide tailor-made e-freight compliant solutions. 5. Disaster management site for data backup • Truck docks 1. 65 free use truck docks with adjustable dock levelers and for CPC dock shelter & air curtains 2. Truck entry & exit and offloading/loading strictly controlled 3. Enough space for truck manoeuvring

142 india aircargo handbook - 2016

• Storage for built up ULD ULD storage positions available (currently)–337 nos. • Odd dimensional cargo handling Special provision to handle Odd dimensional cargo; 38m width internal road for manoeuvring, access to city side and airside • Valuable Strong Room Two strong rooms, each meant for export and import. • Dangerous Goods facility Storage area for handling & storage of dangerous goods for export and import. • Pharma zone Facility having 15 to 20 degrees, 2 to 8 degrees and sub-zero (upto -20 degrees)


India’s most comprehensive handbooks on Warehousing and Air Cargo, packed with information, data, trends, projections, views and articles by senior industry professionals, alongwith columns by leading research companies in an easy to read, hardbound and aesthetically designed format.

7 Avail 15% discount on bulk order of 5 or more copies To order your copy or advertising options, please contact

Ajeet Kumar +91-9810962016 cargoconnect@gmail.com / ajeet@surecommedia.in

Rajesh +91-9874971551 rajesh@surecommedia.in 2016 - india aircargo handbook 143


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01

Srinath Manda, Associate Director, Automotive and Transportation, Markets&Markets

02

ARVIND NAYAK, Managing Director, Nayak Aviation Sevices Pvt Ltd

03

GIAM MING TOH, Former Chief Commercial Officer, Vistara

04

Bertrand Schmoll, Chairman and CEO, ECS Group

05

G S Chawla, MD, Ocean King Shipping Services Pvt Ltd

06

Bradley D’lima, Cargo Sales Manager-India, Kenya Airways

07

Madan Sharma, National Manager – Air Freight, JAS Forwarding Worldwide Pvt Ltd


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24

28

32

22

25

29

33

23

26

30

34

08

Vipan Jain, Regional Manager, Logistics, South Asia & Middle East, Lufthansa Cargo AG

09

Steven Verhasselt, VP Commercial, Liege AirportLufthansa Cargo AG

10

Keku Bomi Gazder, Former Regional Director-Cargo Indian Sub-Continent, Saudi Arabian Airlines Cargo

11

Satyendra Kumar, Senior Associate, EY (Ernst & Young)

12

J S Balhara, Director, Guwahati Airport

13

Mike Chew, CEO, AISATS

14

Amber Dubey, Partner and Head-Aerospace and Defence, KPMG India

27

31

15

Huseyin Ceyhan, Director, Turkish Airlines

16

Prediman K Koul, Country Head–Air freight & marketing, Jeena & Company

17

Hemant Bhatia, President, ACAAI

18

Harpreet Singh, Director, Sales & Marketing, TNT India

19

Akash Bansal, Head Logistics, Om Logistics Ltd

20

Parvinder Singh, Managing Director, Hans Infomatic Pvt Ltd

21

Prem Bajaj, Chairman & MD, Bhadra International (India) Ltd

22

Murali Ramachandran, CEO India, Celebi Aviation Holding Inc

23

Bharat Thakkar, Co-founder and JMD, Zeus Air Services Pvt Ltd

24

Sanjay Goel, CEO, Bolloré Logistics

25

Reshma Zaheer, COO, TT Aviation

26

Dileepa B M, CEO Bonded Trucking, Shreeji Transport Services Pvt Ltd

27

Manpreet Singh Dahri, Manager Cargo and Business Development, Namaste India Aviation Pvt Ltd

28

Rishabh Birla, Managing Director, Air Shagoon Network Pvt Ltd

29

K S Kunwar, Director General, Air Cargo Forum India (ACFI)

30

Naveen Rao, Head of Cargo, (India), Aeroflot

31

Rubal Jain, MD, Safexpress

32

Albert Hoek, Managing Director, Broekman Logistics

33

Rajiv Nathan, Director of Broekman Logistics India (BLI)

34

Sandeep Tyagi, VP, Marketing & Sales, Broekman Logistics India (BLI)

2016 - india aircargo handbook 145


“My logisticians are a humorless lot … they know if my campaign fails, they are the first ones I will slay.” Alexander, the Great

146 india aircargo handbook - 2016


“You will not find it difficult to prove that battles, campaigns, and even wars have been won or lost primarily because of logistics.� General Dwight D. Eisenhower

2016 - india aircargo handbook 147


Awarded Material Handling Company of the Year - 2015 (At 9th ELSC Conclave)


RA3 CERTIFIED

E-FREIGHT COMPLIANT

Air Cargo Awards Best Cargo Terminal Workforce 2016 in 10th International Express Logistics and Supply Chain

ISAGO CERTIFIED

India’s first Integrated Air Cargo Terminal having Domestic, International under single roof

Fastest Growing Cargo Airport – West & South India by Cargo Talk 2016

Air Cargo Awards Indian Sub-continent’s Highly Acclaimed Emerging Cargo Airport by STAT Times, 2014 Best Cargo Airport & Terminal–ACAAI 2012 and 2013

Best Warehousing Workforce 9th Express, Supply-Chain & Logistics Awards 2015

RFS/AFS Road Feeder Service and Air Freight Station at NAG, MAA, GOI, VTZ

Middle-East/India Sub-Continent Airport of the Year & Green Award by Payload Asia, 2014

India’s First Air Cargo Terminal to provide Temp Controlled Pharma Zone to cater to Pharma Industry. Import Cargo, Export Cargo, Perishable Handling, Dangerous Goods Handling, Transhipment, Live Animals Handling, Document Services, Cargo Screening, Unaccompanied Baggage International Carriers

Domestic Carriers

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