Minister for Civil Aviation Ashok Gajapathi Raju at a press meet in New Delhi. The Minister of State for Culture (Independent Charge), Tourism (Independent Charge) and Civil Aviation, Dr. Mahesh Sharma (on Minister Raju’s left); Secretary, Ministry of Civil Aviation, R. N. Choubey (extreme left); and Director General of Civil Aviation M. Sathiyavathy (extreme right) are also in the picture.

     India’s much-awaited Civil Aviation Policy was recently approved by the Cabinet and made public.
     Announcing the policy, which took almost two years to formulate, Civil Aviation Minister Ashok Gajapathi Raju pointed out that India’s aviation sector is poised to become the world’s third largest by 2022.
     The policy states that providing safe, secure, affordable, and sustainable air travel for passengers and air transportation of cargo with access to various parts of India and the world would be the government’s mission. Minister Raju has often emphasized the importance of air cargo and the aviation policy specifically looks at that.

First, The Passengers

      In an interview with a business daily a few days before the release of the policy, the minister pointed out that in India, aviation was centered on passengers.
     “For some odd reasons in India, aircraft are passenger-centric, running like a bus.
     “But the largest airline in the world is a cargo airline.
     “Here, we only have two cargo airlines.” India had a good domestic cargo market, he said, “and with e-commerce volumes going up, there was need for more dedicated cargo carriers.”


Hell With Dwell

      “Ultimately, transport should not become a bottleneck for economic activity.
     “This is what we are trying to achieve,” he said.
     “Cargo,” he underlined, “has a tremendous potential.
     “Right now, there is very little cargo going in the belly of aircraft and being exported out of the country.
     “The problem is that India’s dwell time is not very good.
     “So, (our) strategy is to bring down this dwell time.
     “We have to work together in the government and try to see that this dwell time goes down,” the minister said.

Opening Up The Skies

      One of the major policy decisions is whether to grant permission to domestic carriers to fly abroad, doing away with the earlier 5/20 rule (carriers had to complete five years of flying domestic routes and also have 20 aircraft in their fleet).
     Now, Indian carriers can fly abroad if they have 20 aircraft or 20 percent of their capacity, whichever is higher.
     Another decision that has been hailed by experts is one that allows foreign airlines to join hands with overseas investors to set up a fully foreign-owned airline.
     A part of the liberalization policy of the Narendra Modi-led government (in fact, Modi had tweeted:  “Gov’t radically liberalizes FDI regime with the objective of providing major impetus to employment & job creation”), the move, according to KPMG’s Amber Dubey, will have a salutary effect on Indian carriers since they “can look for enhanced valuations in case they wish to raise funds or go for partial or complete divestment.”
     “We may see its positive impact over the next six to 12 months.”
     He also mentioned that the government had plans to go for a massive improvement in the country’s global and domestic connectivity, affordability, and ease of doing business.

Express Council Chimes In

      For cargo stakeholders—especially the express industry—the policy is a breath of fresh air. Vijay Kumar, Chief Operating Officer, Express Industry Council of India (EICI), went on record to point out that the government’s moves to usher in reforms for the Indian aviation industry was laudable.
     “The policy takes cognizance of the distinctiveness of the Express Delivery Services and the potential it offers, also recognizing Express Delivery Services (EDS) as a separate segment within air cargo owing to its distinctive nature and processes,” said Kumar, emphasizing that EICI had been advocating such a demand on behalf of the express industry.
     The EICI COO also mentioned that the “Express Industry is turning out to be a pivotal segment for enhancing exports, especially in the small-and medium-sized enterprises (SME) segment, in view of expansion of e-commerce and other new age industries.

Make In India & Air Cargo Promotion

      With the emphasis of the government on ‘Make In India’, ‘Ease of doing business’ and enhancement of exports, it is all the more important that EDS is recognized and facilitated with adequate infrastructure at the airports, with rational lease tenures and rentals to provide efficient services in India.
     Other than the express business, the policy has provided a booster dose to the air cargo sector.
     To ensure the growth of the sector, cargo facilities located at an airport will be covered under the ‘Harmonized List of Infrastructure’ and will receive the benefits of the ‘infrastructure’ sector, enabling air cargo facilitators to avail flexible structuring of long-term project loans, long-term funding from infra- funds at lower interest rates, as well as Income Tax benefits.

Air Cargo Logistics Promotion Board

According to the policy, the Air Cargo Logistics Promotion Board (ACLPB) will play a major role. The board will promote growth by finding ways to reduce costs, improve efficiency, and bring about better inter-ministerial coordination.

Time Tables

     The board and the industry have been tasked with submitting a detailed action plan after consultation with stakeholders on how to reduce dwell time of air cargo from ‘aircraft to truck’ to below 48 hours by December 31, 2016, and to 24 hours by December 31, 2017.
     For exports, the dwell time will be reduced to 12 hours by December 31, 2016, and eight hours by December 31, 2017.
     In addition, the board will develop non-legal and indicative Service Delivery Modules after consultations with stakeholders for all elements of the air cargo express cargo value chain such as airlines, airports, terminal operators, Customs House Agents (CHA), freight forwarders, and government agencies like Customs, airport security, quarantine officers, etc.
     There is also provision to set up an Air Cargo Community System that will avoid delays.
     It’s important to note the policy has recognized the fact that the space allocated for cargo was inadequate both on the air side and city side at a majority of the country’s airports.

ACLPB Hands On Ahead

      The ACLPB will recommend norms for space allocation for air cargo, including express cargo for all Greenfield airports. Further, an action plan will have to be worked out by the ACLPB to boost space at existing airports on a “case by case basis” in consultation with stakeholders.

Single Window Access

     To ease business processes, the government, says the policy, will ensure that all relevant central government authorities—Customs, wildlife clearance, Drug Controller, Plant and Animal Quarantine, Food Safety & Standards Authority of India (FSSAI), Archaeological Survey of India, etc.—would be available through a single window at cargo terminals, where clearances would be provided promptly and online after necessary checks.
     Pointing to the implementation of the 24x7 Customs operations at airports, the policy mentioned it had not been utilized by the industry.
     So, the ACLPB will consult stakeholders and propose steps to ensure cargo handling is done round the clock.
     The suggestions and recommendations of the ACLPB would be given top priority.
     The board has also been given the responsibility to promote Free Trade Warehousing Zones (FTWZ), Air Freight Stations, bonded trucking, and dedicated cargo airports.

Getting Down On User Charges

      One of the contentious issues for air cargo stakeholders was the user charges at airports. The ACLPB along with the Airports Economic Regulatory Authority (AERA) and airport operators would recommend competitive user charges. For the non-metro airports handled by the government controlled Airports Authority of India (AAI), the lease and other fixed charges would be kept low to ensure they do not become entry barriers.
     The policy has to be implemented to make it a success. Minister Raju felt it was time to sensitize that the opportunity was available and “we need to harness it.”
Tirthankar Ghosh

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     In the next few months RwandAir and Ethiopian Airlines expect to formally establish a strategic partnership that would see the two African carriers working closely together. Under the terms of a deal provisionally reached earlier this month, Ethiopian Airlines will acquire a 49 percent stake in the smaller RwandAir, giving it the opportunity to create a new east African hub in the Rwandan capital of Kigali.
     RwandAir will begin flights to Mumbai in September of this year, marking another milestone in India–Africa relations.
     The four weekly flights between Mumbai and Kigali with a stopover in Dar-es-Salaam, Tanzania, will increase business opportunities and tourism and strengthen relationships between the two nations.
     Announcing the flights, RwandAir CEO John Mirenge said “this is a big milestone for the airline as we continue to expand and open Rwanda to the world.”
     Mirenge had also pointed out that Mumbai was selected to be “our first long haul destination and will definitely connect the people of Rwanda and India together” as the carrier introduced widebody aircraft in the fleet.
     From Kigali, its hub in the heart of Africa, Rwanda was the first African country to initiate road shows to promote tourism and investment opportunities in Mumbai and Bangalore after the October 2015 India-Africa summit in Delhi.

Ethiopian Freighters

     Addis Ababa-based Ethiopian Airlines continues to be bullish on India.
     With an eye on India’s growing aviation market, Ethiopian Airlines has chalked out plans to expand operations.
     The carrier presently operates freighter services to Chennai, Bengaluru, New Delhi, and Mumbai along with a daily double passenger service to New Delhi and Mumbai from Addis Ababa.
     It has held talks with the Indian Directorate General of Civil Aviation (DGCA) to start passenger services to Chennai.
     The talks follow the bilateral pact signed last year between India and Ethiopia that allows carriers from the two countries to increase the number of weekly flights from 21 to 28.
     According to Ethiopian sources, the carrier wants to expand its freighter flights to Bangalore and add Hyderabad and Ahmedabad.
     Ethiopian Airline’s CEO Tewolde Gebremariam said:
     “India is among the top ten markets for Ethiopian Airlines and it is trying to expand this further.”
     The carrier has focused on Bangalore for its IT and biotech units. In addition, the city is the epicenter for a number of international companies.

Air Djibouti Adds Up

     Air Djibouti, the national airline of Djibouti, says it is seriously looking at cargo services from India (Air Djibouti was relaunched with management from the Wales-based Cardiff Aviation, which was founded by English heavy metal band Iron Maiden’s Bruce Dickinson). Senior Director of Strategic Planning Dawit Michael Gebre-Ab notes that India’s trade with Africa was still in its nascent stages and there was room for growth.
     In fact, India-Africa trade was only $70 billion per year while Djibouti trade with China hovered around the $200 billion-per-year mark.
     According to a study by the UN Economic Commission for Africa and the Confederation of Indian Industry, Africa accounted for 11 percent of India’s exports and 9 percent of its imports in 2014.
     Since 2010, India’s exports to and imports from Africa increased by 93 percent and 28 percent, respectively.
     In the meantime, Africa’s share from India’s total exports has increased from 8.1 percent to 10.9 percent.
     In 2014, India was Africa’s third strongest trade partner, just after the European Union and China.

New Free Zone

     Air Djibouti is banking on its infrastructure to provide cargo: it will soon have the biggest free trade zone in Africa.
     The 150-hectare zone has created a lot of interest among Indian companies that want to set up industry there.
     The Indian government is going all out to boost trade with Africa. External Affairs Minister Sushma Swaraj recently pointed out that bilateral trade between India and Africa had multiplied 20 times in the last 15 years.
     India, she said, was among the first countries to put a duty-free market access scheme in place for LDCs (least developed countries).
     In 2014, the scheme was extended to 34 African countries to increase their exports to India.
TG

     The overtures to boost trade made by Indian Prime Minister Narendra Modi to 54 African leaders at last October’s third India-Africa Forum Summit (IAFS) are yet to see action on the ground.
     This, despite the Prime Minister’s emphasis that “Africa will remain at the center of our attention. Our engagement with Africa will remain intense and regular.”

Going Astral

     Sanjeev Gadhia, CEO, Astral Aviation Limited pointed out that the time had indeed come “for more air connectivity between Africa and India, strengthened as it is with the Prime Minister’s keenness to bolster ties with Africa.”
     However, the “sad reality is that airlines from India have no footprint in Africa as the market is dominated mainly by African airlines such as Ethiopian Airlines and Kenya Airways.”

It’s About Time

      Gadhia underlined that “it was about time that airlines from India commence schedule services into key African hubs such as Nairobi, Johannesburg, Lagos, and Addis Ababa.”
     Astral, too, has kept away from India.
     The CEO mentioned that while his freighters currently operate from Nairobi to London and Liege in Europe in addition to eight African destinations on a scheduled basis, “Astral does not operate a direct freighter service to India or China as it relies on its interline alliances, especially with the Middle Eastern carriers, for moving its cargo into the Nairobi hub.”
     He was quick to also point out that it was “commercially not viable to fly a direct freighter service to/from Africa to India and China as there were no air-exports from Africa to India and China.”
     He went on to explain that, “in the absence of two-way traffic, it would not be financially economical to sustain freighter services.”

China Cooperation

     “Astral,” Gadhia said, “has an agreement with China Southern Airlines [that] has opened a door to continue to pursue interline agreements with as many airlines as possible that fly into its Nairobi hub.”
     For his part, however, Gadhia has been a strong advocate of intra-Africa trade that is “on the increase as more Africans have realized the importance of trading with each other.
     “African manufactured goods are competitively priced and attract lower customs tariffs in addition to being of good quality,” he stressed.

Blocks Emerging

     “The important point here,” Mr. Gadhia said, “is the emergence of three trade blocs.
     “These include the Economic Community Of West African States (ECOWAS), the Southern African Development Community (SADC), and the Common Market for Eastern and Southern Africa (COMESA) that covered nearly two-thirds of the continent.
     “Just one year ago in June 2015, COMESA-EAC-SADC Tripartite Free Trade Area (Tripartite FTA) was established representing a market of 26 countries with a combined total of 632 million people, which is 57 percent of Africa’s population; and with a total Gross Domestic Product (GDP) of USD$ 1.3 Trillion contributing 58 percent of Africa’s GDP.
     “To service such a huge market, we deployed a B747-400 freighter (110 tons), B727-200 freighter (24 tons), DC9F (15 tons), and F27 (5.5 tons).
     “We hope to acquire a further six B737-300 freighters over the next three years.
     “While a majority of our freighters are used for intra-Africa services, our twice weekly B747-400F Nairobi-London Stansted ‘perishables services’ carries cut flowers and fresh vegetables grown in Kenya.”
     The carrier joined the African Airlines Association (AFRAA) some time ago as its only cargo airline and perhaps the only privately owned airline in the association.
     Said Gadhia, “Membership in AFRAA has benefited Astral especially in savings in fuel and ground-handling due to AFRAA's initiatives for its member-airlines.
     “Most important is the effectiveness of AFRAA in lobbying for liberalization for African airlines and promoting cooperation between member-airlines, for which AFRAA has been very pro-active.”
     This is important since the “lack of liberalization combined with high taxes on fuel and cargo are some of the hurdles that we face in Africa,” said Gadhia.
     “The other hurdle was the lack of adequate airport infrastructure in many African destinations.
     “But obstacles aside, Astral’s offer of reliable and cost-effective air-freight solutions to over 50 destinations in the continent now opens new opportunities and markets intra-Africa.
     “With a middle class population of 300 million across Africa, Astral offers accessibility to its customers like never before.”
     “As potential in the continent grows,” Gadhia said, “Astral will continue to offer air-freight solutions to existing and new regions.”
TG

Vol 15. No. 56
TempControl Krisha Medium Cool
Back To Normal In The USA
Chuckles For July 25, 2016
Letters for July 25, 2016
Then There Was One