DOMESTIC CARGO IN INDIA

IndianAgents Push Domestic Agenda

The domestic air cargo sector in India is keen to build on the growth it is experiencing. Even as new airlines begin flying —regional carrier Air Pegasus started operations in the last few months and a few more like Hyderabad-based Turbo Megha Airways and Flyeasy from Bengaluru have received the necessary permissions—India is finally receiving the connectivity it has been wanting for a long, long time. Connectivity Is King     That connectivity, according to the Domestic Air Cargo Agents Association of India (DACAAI), the apex national body of the domestic air cargo agents, will go a long way to boost cargo flow from the interiors of the country and vice-versa.      In fact, air has become a preferred mode of transport for vaccines, medicines, fruits and vegetables, high value electronics, mobile phones, couriers, and the e-commerce sector. Domestic air cargo has been growing faster than international cargo. DACAAI figures point out that domestic air cargo has been growing between 15 and 20 percent year-on-year and during 2013-14 stood at 0.8 mn mt and is 50 percent of international cargo.      That figure is expected to reach 19.7 mn mt by 2022-23 and according to air cargo stakeholders, domestic cargo will surpass international cargo by the year 2030.  Where Is The Growth?     Today, with new airlines coming in, the country will see an increase in the number of aircraft from the 525-plus to 1,000 by 2020. Along with new services, the increase in flight frequencies to Tier-II and III cities will also result in sufficient airlift capacity for domestic cargo.      For its part, the Ministry of Civil Aviation (MoCA) has been preparing to handle the growth in domestic cargo when the Airports Authority of India (AAI) announced the development of common-user domestic cargo and courier terminals in 24 airports around the country. The AAI Plan      The AAI has chalked out plans to boost the domestic cargo market by utilizing passenger terminals at regional airports that see few passengers.      AAI points out that with the Indian economy opening up, “tremendous growth” had been seen in air cargo movement at airports in the country.      “Tonnages could go up if basic cargo facilities were created in Tier-II cities that could feed gateway airports.      “Hence,” says ACCI, “the creation of common-user domestic cargo and courier terminals at 24 airports after “minor modifications.” Where Is The Action?     Among those airports where common user facilities were set up or were in the process of establishment are Amritsar, Lucknow, and Varanasi in the north; Ahmedabad, Surat, and Aurangabad in the west; Chennai, Coimbatore, Mangalore, Trichy, Trivandrum, Calicut, Madurai, and Vishakhapatnam in the south; Kolkata, Bhubaneswar, Ranchi, Gaya, and Raipur in the east; and Guwahati in the north-east.      The high domestic air cargo tonnages notwithstanding, stakeholders have been raising issues that could retard the growth. Meetings & Moves      In a recent move, DACAAI members President Suraj Agarwal, General Secretary Amit Bajaj, Secretary General Co.l R. P. Shukla, and Presiding Officer Arvind M. Nayak met the Minister of State for Civil Aviation Dr. Mahesh Sharma to apprise him about the growth of domestic cargo and the problems the sector was facing.      Speaking to ACNFT, Suraj Agarwal said: “There is a fantastic growth in air cargo. We don’t have proper infrastructure to handle this type of growth. The growth is much higher than the figures are showing but the growth is getting diverted to the other modes of transportation because we are not able to handle this growth properly.”      Highlighting the unplanned and ad hoc infrastructure available for air cargo stakeholders, it was pointed out that apart from the metro airports, airports operated by AAI had provided some facilities but they were not properly planned. At many places, these facilities are non-existent or being provided by individual airlines from their airport/city offices, which are scattered, resulting in waste of time and money, according to the DACAAI members.      Even at the metro airports, the infrastructure was not efficient enough to cater to the present tonnage and growth.      As a result, domestic air cargo handlers and airlines have been utilizing only 25 percent of their capacity.      On average, each aircraft has available capacity of around 2,500 kgs but today is only able to record 600 kgs per departure. Some Further Study     To achieve efficiency in handling such large tonnages of domestic cargo, DACAAI conducted a study on the need for proper standard centralized domestic cargo facilities that was handed to the MoCA in October last year.      The study had recommended the creation of common terminals in 32 airports—where domestic air cargo has been witnessing rapid growth—in the first phase. “We would like the Ministry to utilize DACAAl’s experience in handling domestic air cargo,” said President Suraj Agarwal.      Consulting DACAAI before issuing policy guidelines could accomplish this.      One of the irksome issues was the multiple charges levied by different airport operators and the establishment of standard facilities, handling, and screening equipment, “so that investments by AAI and JV airports are utilized properly for trade facilitation.” Agarwal also mentioned that “the major hurdle is infrastructure and the cargo warehouses where we accept the cargo are not up to the mark.”      He acknowledged that the Civil Aviation Ministry had taken initiatives “but those are not enough to handle such type of growth.” Taxing Situation      Forwarders also mentioned the heavy burden of service tax—14 percent—on domestic air cargo. General Secretary Amit Bajaj added that service tax was a major issue that needed to be addressed by the government.      “Service tax charged on air cargo is 14 percent while only 4.2 percent is charged on other modes of transport.      “On international cargo it is 0 percent.      “This heavy taxation inflates the cost of air freight and makes it uncompetitive as compared to train and road.”      He also pointed out the high terminal handling charges: in fact, the charges varied from airport to airport.      “There are charges by terminals on air freight.      “We are looking at the increasing charges that should go down,” Bajaj said. Other Voices Needed     The trade body also demanded an independent ombudsman who could be approached for grievances, would highlighting issues like service levels by different providers, and sort out bottlenecks in handling domestic air cargo.      “A robust, exclusive, monitoring, consultation and redressal mechanism needs to be put in place.      “We would like the Ministry to give us a separate ombudsman,” said Agarwal.      For his part, Minister Dr. Sharma said that air cargo was one of the top priorities that his ministry was working on.      “We are working on how to increase the cargo business, how to ease this cargo business.      “Even after having everything, our share of cargo is very small just because charges are very high and there is poor infrastructure support.      “We are going to discuss this with the related ministers,” he said. He went on to emphasize: “we are committed towards addressing the problems of air cargo industry in a proper manner,” he said. Published in  New York based international magazine named as Air Cargo News.