The future strategies and investments of AAI are focussed on creating cargo hubs and cargo villages. This reflects the change in the thinking of the government towards the air freight segment in India. PPP has also been initiated for cargo services, which will add to the benefits of automation and mechanisation. VK MONGA, EXECUTIVE DIRECTOR-OPERATIONS, AIRPORTS AUTHORITY OF INDIA per cent of the GDP whereas it comes to around 8 per cent in US. Therefore, there is a significant scope for curbing logistics cost, and this need to be addressed as we scale up cargo operations. While we address the investments in this sector, there has to be a major focus on reduction of logistics cost. And technology can play an important role in this.” The latest automation trend in this sector has been the introduction of ‘e-freight initiative’ announced by International Air Transport Association (IATA). It provides a clear indication of a significant shift of the global air cargo industry towards electronic documentation to become paperless in its operations. However, this scheme is yet to gain pace in India, as currently most of the technology used for air cargo today exists in isolation. “As major investments have come in for only the leading 3-4 trade airports for adoption of technology and automation, the new funds should be used for upgrading alternative airports such as Pune that have the potential to support significant air cargo traffic,” says Pathak. With the active participation of technology providers including global players for upgrading automation benchmarks in air freight, it is due for potential gains from the new wave of investments in the air cargo segment in India.
PPP FOR PROGRESS There have been progressive improvements in the air cargo industry over the years, and with the government adopting a pro-active approach towards inclusion of private players in aviation development, PPP models have been the way forward for ensuring success and timely completion of projects. However, the regulatory authorities such as Customs have changed their approach to suit the needs of the industry and help them compete with the global counterparts. “As far as cargo is concerned, it is an open sky policy for operating cargo freighters. But, when it comes to investment in airlines, whether
and benefits such as faster and hassle-free movement of cargo, air freight segment is poised to fly high. There is a direct co-relation between air cargo traffic and the economic growth rate for any country-including India. Comments Pathak, “India’s GDP growth and the way the manufacturing sector has performed in the recent months have resulted in a parallel rise in the air cargo traffic. However, the overall air cargo growth could have been spectacular, if the infrastructure at the airports was up-to-date and better in its overall service delivery.” There has been a growing recognition of the potential losses incurred due to gaps in the overall air cargo ecosystem in India and investments to enhance efficiencies have already begun. “The sector now needs collaborations with ground-handling service providers
cargo or passenger airline, FDI through another airline-related entity is restricted to less than 40 per cent. For cargo, I feel the government should remove the FDI cap and allow free investment. Similarly in cargo handling also, there is an FDI cap of 74 per cent,” says Radharamanan Panicker, CEO, Cargo Service Centre. With the high cost of air transport, the delay costs of idling and congestion at the airport cause heavy losses for the companies. Government policies: A trigger for civil Many-a-time, the major aviation sector reasons for delay include lack of landing space for • Open sky policy and the policy of license to the carrier, technology new scheduled operators glitches, or inadequate • Liberal bilateral relations and bilateral cargo handling equipment agreements available at the airports. • Liberal permission for acquisition of new The government has aircraft thus included the critical cargo services for • Domestic carriers, including private operators private participation to are permitted to operate in international bring in efficiencies in sectors including UK and the US overall cargo-handling • Private investment is encouraged in both airline at the airports. “New and airport infrastructure development. warehouse infrastructure Source: Planning Commission, Government of India with better process and handling systems are must and freight forwarders to benefit the endat most Indian airports such as Mumbai users in the overall operations framework and Delhi, which handle approximately 60 of the logistics industry,” suggests Monga. per cent of the total India cargo. Already These investments come at an apt time Delhi airport has appointed two freight when the air cargo traffic is gaining handlers, who will together spend more volumes across the Asia-Pacific region. than Rs 500 crore in new infrastructure “Our main focus should be the overall development. Similar investment is also reduction of logistics cost to make India likely to happen in Mumbai airport for competitive in the global market. This is cargo warehouse development,” informs more important as global manufacturing Panicker. With many global players and retail companies are eyeing India entering Indian air cargo operations under as a potential market and the new the revised FDI norms, the government modernisation initiatives indicate that we now needs to address the missing links are moving in the right direction,” avers in the air freight ecosystem across various George. Faster delivery, better security, airports in India. and lesser packaging time remain some PROFIT OUTLOOK of the leading drivers for the air cargo Air remains the preferred mode of sector in the logistics industry. The new transport for high-value and temperaturegovernment and private ventures in this sensitive goods. With huge infrastructure sector surely indicate that ‘sky is the limit’ investments & active private participation, for future growth prospects in India.
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