Indian Courier Co's plan to hike rates by 30%

Courier companies, lead by big names including Blue Dart, First Flight and Overnite Express, are planning 25-30% hike in courier and parcel rates in next fortnight following 67% hike in on-board courier rates by domestic airlines.

The rate hike has been effected only for the courier industry and not on postal services, including EMS SpeedPost. Expenses incurred on board courier accounts for around 30% of operational cost of express courier companies. The Express Industry Council of India (EICI) has written to the civil aviation ministry but is yet to get a response. If they do not get any response within the next 10-15 days, they may pass on the hike to their customers.

Announcing this at a press conference here, Tushar Jani, chairman of the EICI said if the courier rates were not increased, the industry would suffer huge losses which would retard its growth, leading to closure of operations. Major domestic airlines like Indian Airlines, Jet Airways and Air Sahara have increased the courier baggage rates by about 60% from June 16, ’03. This was in addition to the 7% increase effected in January this year following the Gulf War.

The members of the Express Industry Council represent 80-85% of the express courier business in the country and about 95% of the overseas business. He said the justification by the airlines about increasing losses and rise in aviation turbine fuel price was unwarranted as loss of traffic due to introduction of apex fares cannot be passed on to the courier industry and that ATF prices have come down in the last two months.

According to Sandip Shah, chairman and managing director, Elbee Express Service, courier industry contributes about Rs 180 crore annually to the total revenue of domestic airlines. The Rs 3,500-crore courier industry was currently growing at 15-20% annually which has largely helped the companies to absorb any hike in baggage rates by airlines, he said. However, the yields of the industry have gone down by 30% while the costs have increased by 30%, Mr Shah added.

Of the total revenue of Rs 3,500 crore generated by the courier industry, Rs 1,000 crore comes from the organised players and remaining from the unorganised, semi-organised and EMS SpeedPost.