Over the last few weeks, a constant refrain in Indian aviation circles has been that within the next four-five years the country will become the third largest aviation market after the U.S. and China. Not without reason: Everyone has been quoting from a study done by KPMG and apex chambers of commerce body, FICCI (Federation of Indian Chambers of Commerce and Industry), called the “India Aviation Report.”      Released at the recent India Aviation 2016 in Hyderabad (this was the fifth edition of the exhibition and conference), the report pointed out that “India is the ninth largest civil aviation market in the world with a market size of $16 billion and aims to become the third largest market by 2020 and the largest by 2030. This is possible due to a host of factors, including increased competition, low-cost carriers, modern airports which are expanding, improved technology in both air side and city side operations, foreign direct investment (FDI), and increased emphasis on regional connectivity.” Those words must have sounded like music to the ears of those handling civil aviation in the country and, in fact, they were even better than International Air Transport Association’s forecast of India achieving the third rank by 2026.
     Predictions apart, the civil aviation leaders in the country do not have cargo on their radar. At Hyderabad, for example, a lonely B777 freighter from Etihad that attracted a lot of attention was on show.      What was, perhaps, worse was that no one in authority (incidentally, Indian President Shri Pranab Mukherjee inaugurated the show and Civil Aviation Minister Shri Ashok Gajapathi Raju Pusapati also spoke) touched on cargo in his or her speeches. Among the industry leaders there was Airbus’ India President Dr. Srinivasan Dwarkanath, who made a passing reference to cargo when he said “with an estimated 10 percent annual traffic growth rate over the next decade, India will require over 1,600 new passenger and freighter aircraft in the next ten years.”
     Boeing had also projected—though not at Hyderabad—a demand of 1,740 new airplanes over the next 20 years in India. While releasing the annual India Current Market Outlook (CMO) in August 2015, Dinesh Keskar, Senior Vice President of Asia Pacific and India Sales, Boeing Commercial Airplanes, had no figures on the number of freighters when he had said, “Over the next 20 years, Boeing forecasts India will need 1,740 new airplanes worth $240 billion. India’s economy and the country’s potential for air travel growth—both for leisure and business—continues to be strong and we remain confident in the Indian commercial aerospace market.”
     At present the country has only seven freighters for the seventh largest economy in the world and barring one, all are operated by courier and express major Blue Dart. Those at the helm of civil aviation in the country are obviously aware of the potential of the cargo market in the country and with the proliferation of e-commerce, the projected volumes have increased manifold. And, so have the problems. In fact, air cargo stakeholders have often talked about the hurdles faced by them.
     Today, with domestic cargo volumes growing by the day—largely due to ecommerce—the problems have multiplied. In fact, matters have come to such a pass that a number of stakeholders have raised the issues with the Minister of Civil Aviation as well as the top bureaucrat in the ministry, the Secretary of Civil Aviation. One of the top issues, for example, are the high airport royalty charges. Add to that ground handling and taxes on ATF and MRO, and the final figure is “unreasonably high.” The Airports Authority of India (AAI), which manages 125 airports of which 18 are international airports and 78 are domestic airports, for example, charges 13 percent of royalty from Indian MROs. Ground Handling (GH) royalty charges are as high as 36.3 percent in some airports. Similar charges and facilities offered by some of the important international airports abroad vis-à-vis Indian airport charges and facilities only emphasize the cost ineffectiveness of Indian airports.
     Privately operated Delhi Airport has been charging 20 percent on MRO services and 13 percent on Ground Handling services as royalty; the AAI-controlled Chennai International Airport’s royalty charges are 13 percent on MRO services and 36 percent on GH services.
     Though the AAI has started an incentive scheme for landing charges for freighters operated by airlines to and from Kolkata and Chennai airports—the incentives are as high as 30 percent for all international scheduled and non-scheduled cargo freighters depending on the number of flights—the scheme is only meant for international cargo operators.
     The American Chamber of Commerce in India (AmCham – India), an association of American business organizations operating in the country, sent out similar suggestions a few months ago as “priority issues to be taken up by the government.”
     “Air cargo operators are faced with a multitude of charges—royalty for ground handling services, royalty charges on security services, landing, and navigation charges, etc. These airport charges taken together have created an extremely high cost environment for cargo handling, which has substantially deterred their hub development,” the note said.
     Apparently, the elusive National Civil Aviation Policy (NCAP)—which is scheduled to make its appearance by the end of April—will have a lot of sops for the cargo sector. Air cargo stakeholders will know the level of interest the ministry of civil aviation has when the NCAP does come.
Tirthankar Ghosh

Vol. 15 No. 36
The Amazon Air Force
Chuckles For May 9, 2016
Namaste Nisha Mahajan
Cambodian Kingdom Of Wonders