India can be a global air cargo hub

Fuel price will have to come down for better competitiveness

BY A CORRESPONDENT
April 14, 2006

Experts at the 'India Cargo Summit' contend that India can emerge as a major global hub for air cargo, if infrastructure is improved and issues of cost efficiency in certain key areas (like the cost of air turbine fuel or ATF) can be addressed. Already, India is seeing its first national air cargo hub in Nagpur with the government aggressively backing the city with tax holidays and business sops.

Singapore Airlines Cargo Pte Ltd President Hwang Teng Aun said at the Confederation of Indian Industry-led Summit: "Considering its geographical location, India, especially Delhi, has the potential to become a global hub for air cargo." Its geographical location and the substantial amount of international trade carried out here, in addition to its growth in the manufacturing sector as well as in exports and imports are all factors that make it a possible successful destination, he said.

However, he also warned that infrastructure issues would have to be sorted out. In addition, he said, "The cost of ATF in India is almost 15 per cent higher compared to the global price. ATF makes for about 35 per cent of operating cost of air cargo, and in a business such as this where profit margin is just about 5 per cent, airlines using India as a fuel uptake place will have lesser profit margins."

Some of these issues have been partially mitigated with the Nagpur air cargo hub, where the government is offering access to fuel at cheaper rates. Civil Aviation Minister Praful Patel has said that a policy to promote Nagpur would be ready by June. He added, according to a DNA report, "Business sops and tax holidays will be given to attract freight companies, national and international courier companies, airlines and allied sectors to set up business there." Also, "Operators will have access to air fuel at cheaper rates along with land infrastructure support, tax holidays and other sops to help them consolidate their business."

Seeing this area as a potentially significant contributor to economic growth, he added, "Considering the urgency for at least one national cargo hub, we will extend incentives for concessional landing and parking rates and navigational charges for about five years." Mr.Lim had stressed that transportation bottlenecks could result in a drop in India's GDP.

Patel stressed the need to increase the numerical strength of cargo freighter aircraft, currently only five, he appealed to private firms to contribute to this sector. According to him, "The airport will have modern facilities and serve as a national cargo grid with warehouses and cold storages in a complex spread over 5,000 hectares."