The government-controlled Airports Authority of India (AAI) has, at last, woken up to the potential of air cargo in the country. In a move that could change the manner in which AAI goes about its business, AAI has chalked out a strategy for air cargo. AAI Chairman R. K. Srivastava was candid enough to point out that the cargo business “had not been attended to in the last 60-70 years… It has been ignored for too long.”
     The business strategy that has been worked out comes on the heels of the realization that air cargo—both domestic and international—is growing at a fast pace. The growth will be pushed further with the Civil Aviation Ministry’s emphasis on bringing about regional connectivity (the new draft Civil Aviation policy, in particular, underlines this). In fact, a number of regional airlines—those connecting metro cities to Tier-2 and Tier-3 towns—have already started operations. For example, Air Costa, with headquarters at Vijayawada in Andhra Pradesh, has been in operation since October 2013. The carrier has a cargo unit.
     The phenomenal growth in domestic passenger traffic (according to IATA figures, India’s domestic air traffic demand grew 20.5 percent in the year to July compared with the previous year) will continue gradually when the Civil Aviation Ministry finishes upgrading unused airports and even some airstrips built during World War II. All these together would also spawn cargo from smaller towns.
     For its part, AAI has decided to establish a new entity for the cargo business. It has contracted the government-run infrastructure consultant RITES to work out a business model. Srivastava pointed out why AAI had decided on a new business entity. With more connectivity, there would be new cargo opportunities and only after RITES works out the options on ways to handle the cargo business would AAI decide on the business model.
     Further, AAI has started working out plans for internal reorganization to accommodate the growth so that it can function to the best of its ability when new regional airports are added. Once that is done, the authority hopes to attract skilled manpower. This will be especially advantageous for the cargo business, which has the highest component of unskilled personnel. Incidentally, the draft civil aviation policy mentions that air cargo would be an employment generator.
     The AAI Chairman also said that well before the Draft Civil Aviation Policy came, the authority had aimed to invest a total of Rs 20,000 crore over the next five years in order to add capacity for 50 million passengers. Now, with the policy becoming a reality by April 2016, there was a need to create the necessary infrastructure to accommodate a hike in the capacity—of 100 million passengers—over the next seven years.
     In fact, in the beginning of this year Srivastava mentioned at a press conference that, “AAI is venturing into the new area of domestic cargo operations with an objective to create the basic infrastructure at its airports which have potential for air cargo growth.” Since “domestic cargo grew by 10 percent and international by five percent last year,” the Chairman said that with the growth of air cargo at metro and non-metro airports, there was considerable scope to tap the potential and therefore there was a need to improve and better the basic infrastructure.
     In talks with this correspondent, the Chairman said, “India was now poised to take a big leap in manufacturing, development of infra-structure, and e-commerce for which logistics plays a vital role.”      He also mentioned that “understanding the need for rising to the occasion, AAI is now ready to take a lead in developing domestic air cargo in the country. We are already in the process of developing 24 domestic airports for Common User Domestic Cargo Terminal, which will facilitate exploiting the full potential of domestic cargo. This process will be further accelerated through focused approach for developing more and more domestic cargo operations in the coming days.”
Tirthankar Ghosh