Panel to attract private companies in air cargo

In order to attract private investments in air cargo operations from Reliance, Tatas and Deccan Aviation, the government has set up an inter-ministerial group (IMG).

“The group will identify requirements of different sectors – ranging from those trading in perishable goods to consumer durables – and make suggestions to expedite and improve cargo trade at domestic airports,” an official in the government said.

The civil aviation ministry, which is formulating a new policy to develop domestic airports for international cargo handling, will include suggestions of various ministries in that policy.

The move is significant since a host of private companies such as Reliance and Deccan Aviation as well as Tata group have recently shown interest in starting dedicated air cargo carriers, he said. The group comprises of officials from civil aviation, finance and commerce ministries. Representatives from the cargo industry such as DHL Express and Blue Dart are also part of the IMG.

The policy on cargo would also encourage foreign participation in the sector, he said. The civil aviation minister Praful Patel had earlier said that the government would adopt a very liberal policy towards FDI in under-developed segments of aviation industry such as air cargo.

Under the new policy on cargo, a Centre for Perishable Cargo (CPC) will be established which would try to expedite movement of cargo at airports. The civil aviation ministry also plans open up cold storage chains across major airports. Separate facilities will be developed at airports to handle perishable goods, durables and non-perishable commodities like textiles.

Further, a fully electronic data clearance system would be developed to speed up the movement of air cargo. At present, air cargo within India is carried primarily by Jet Airways, state-owned Indian and express delivery firms DHL and Blue Dart Express Ltd.

Even low cost airlines such as Air Deccan, GoAir and SpiceJet are bullish on air cargo operations. These carriers expect package and document shipments to make up at least 10% of their revenue in their first full year of cargo operations.

International airlines such as Cathay Pacific, Etihad Cargo and Srilankan Airlines too have been increasing numbers of their freighter aircraft to exploit the air cargo opportunity. The airfreight cargo in India has risen from about 4.9 lakh tonnes in 2000-01 to over 14 lakh tonnes in 2004-05.

According to a research report by Edelweiss Securities, the Rs 2,200 crore courier industry and the Rs 4,000 crore express segments are expected to grow 20-25% a year.