Preparations are
on for a battle royale in air cargo.
The opposing sides have readied their strategies
and it won’t be long before skirmishes break out.
Holding the fort on one side is the privately-held Bengaluru International
Airport (BIAL), red dot left in map above now known as Kempegowda International
Airport, while on the other is the government-controlled Airports Authority
of India (AAI), which operates Chennai International Airport, blue dot
right in map above.
Seeds Of
Discontent
It all started with a report that BIAL had
decided to reduce landing charges to freighters.
The move was apparently aimed to woo international
freighter operators to start operations to the airport in southern India.
Obviously, the move affected Chennai airport:
in fact, a number of forwarders have stopped using the airport and diverted
shipments to Bengaluru.
FlyingTypers talked
to BIAL to find out about the rebates offered to cargo carriers by the
airport.
The important question was whether such
rebates were offered to all cargo carriers or only those planning to start
services—in other words, new entrants to Bengaluru.
The BIAL spokesperson pointed out that there
were “no special rebates offered to cargo carriers operating at
the Kempegowda International Airport, Bengaluru (KIAB).”
The spokesperson also said that “with
the introduction of the innovative AERA (Airports Economic Regulatory
Authority, an independent regulator that determines tariffs charged by
all major airports in the country) approved Variable Tariff Plan (VTP)
from July last year, any scheduled international cargo airline that operates
a ‘new route’ is eligible for lower tariffs.”
The airport management has implemented this
“with an intent to create a mechanism that was transparent and one
that would be both attractive and benefit any potential new cargo carrier.”
Impressive
Numbers
For the record, Bengaluru handles around
86 freighter ATMs (air traffic movements) per week and the cargo volumes
show that. Cargo tonnage handled for FY 2014-15 at the airport totaled:
279,532 MT.
Of this, 73,213 MT was for imports while
92,253 MT was for exports.
Domestic tonnages were: Inbound 58,345 MT
and Outbound 55,721 MT. In fact, fiscal year 2014-15 witnessed 15.9 percent
growth in cargo: there was 25.3 percent growth in domestic and 10 percent
growth in international cargo.
Who Gets
The Cargo?
Though no figures were available on how
much cargo destined for Chennai had been diverted to Bengaluru, it is
apparent a considerable volume does.
Some time ago, FlyingTypers
was informed that Bengaluru airport was keen to get cargo from Chennai
and the surrounding areas by road.
Apparently, the initiative is still on.
As the BIAL spokesperson declared:
“This is an ongoing priority and objective
for KIAB. While work in this area has already begun, the cargo business
fundamentally works to ensure every effort is made to ship consignments
by road or otherwise on the shortest possible route in an expeditious
manner.
“This is a business process and will
take some time to establish.
“To that extent, KIAB, along with
its cargo concessionaires and the entire cargo value chain locally in
Chennai and the hinterland areas, continue to explore ways of how to move
cargo consignments to Bengaluru where and whenever possible.”
AAI Wakes
Up?
Unfazed by the challenge from the GVK-controlled
KIAB, AAI has woken up and has plans to hit back by offering incentives
in landing charges to freighters at two of the major international airports
it controls—Chennai and Kolkata.
To counter the reduction in charges offered
by KIAB, AAI has decided to have a graded structure of discounts: the
higher the number of freighter flights by an airline, the larger the percentage
of discounts.
The icing on the cake from AAI is that the
discounts were being offered with retrospective effect from January this
year.
So, a freighter operator could ask for refunds
Stay tuned for that scenario report.
In any case, this latest move by AAI could
help to enhance its non-core revenue.
AAI Chairman R. K. Srivastava recently said
that many initiatives were in the pipeline “to increase our revenue:
our target is to increase our non-aero revenue.”
Cargo, for example, brings AAI around $32
million per year. Once the graded discount scheme is implemented, the
figure is expected to rise with more freighter carriers landing at Chennai
and Kolkata.
However, the kind of facilities offered
by KIAB could tilt the scales in its favor.
The Greenfield Bengaluru airport is in the
seventh year of operations and “cargo has become a critical component
in the regional supply chain,” the spokesperson said, “across
pharmaceuticals, perishables, electronics, machinery, automotive, textiles.”
Trending Growth
A developing business trend that has been
critical to cargo growth from the region is the e-commerce business (Amazon
headquarters are in Bengaluru), in particular leather and pharma shipments.
KIAB has seen growth in cargo.
Underlying this growth is the airport’s
robust plan and strategic intent to grow the cargo business.
To make it happen, the airport has invested
in developing a world-class cargo infrastructure with state-of-the-art
cargo terminals. In 2013, the airside Air Cargo capacity was enhanced
with the opening of seven wide-body dedicated freighter aircraft bays
with seamless access to the cargo terminal.
Most recently, in a pioneering initiative
to improve efficiency and accuracy and reduce turnaround times and paper
usage, KIAB became the first airport in the country to successfully achieve
the IATA e-freight “Proof of concept” and to operationalize
at the cargo terminals completely.
KIAB’s cargo partners Menzies Aviation
Bobba Bangalore and AISATS move together to make the airport a pharmaceutical,
biotechnology, and perishable hub of the region. Last year, for example,
Menzies Aviation Bobba Bangalore inaugurated a world-class pharma cold
zone, allowing efficient movement of temperature-sensitive goods.
Additionally, AISATS will soon open its
Perishable Handling Center, which is being built for the efficient handling
of perishable products by creating sufficient storage capacity, minimizing
waste, and reducing operational costs through innovative solutions.
Tirthankar Ghosh
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