Jilted by fliers, airlines woo cargo business

Mumbai: With fewer people taking to air travel, passenger airlines are turning to cargo operations in a bid to add incremental revenues.
The shift seems to be lucrative, so much that airlines are even increasing their cargo handling capacity and expanding cargo network.
Low-cost carrier SpiceJet recently said it would expand cargo carrying capacity to about 110 tonnes a day in the coming months, from the current 85 tonnes a day.
"Cargo's revenue contribution is 3.5% now and has been increasing since we started last year. We expect it to stabilise at 4.5% in this year," said Samyukt Sridharan, chief commercial officer, SpiceJet.
The airline recently added Goa to its 13-city cargo network and will add Jammu after the summer season.
The Wadia Group's GoAir, another budget carrier, is also betting big on the cargo segment. "With our brand new fleet and new routes, we expect cargo to start contributing about 10-11% to the airline's total revenue this year from the current 5%," a GoAir spokesperson told DNA.
M Thiagarajan, chairman and managing director of Paramount Airways, had earlier said that the Chennai-based airline would see cargo contributing around 14% to total revenues. The airline can handle around 100 tonnes per day.
Captain GR Gopinath, chairman and managing director of Deccan Cargo & Express Logistics, said that as airlines are ferrying empty planes, they would like to fill it with something and get income. "It will boost their bottomline," he said.
An increase in cargo revenues will also allow airlines to reduce fares and woo back passengers, Gopinath said.
Currently, most passenger airlines focus on moving perishable and time-sensitive cargo. This includes items such as garments, auto parts, pharmaceuticals, flowers and shrimps.
Mark Martin, head-aviation at research firm KPMG, feels cargo is certainly a money spinner, but warned airlines of operational glitches: "Do airlines want to make the aircraft heavier by increasing cargo capacity, lose more fuel and hamper the operational efficiencies?"
But will airlines be able to garner enough cargo supply, in this slowing market? "India only has 7 freighter aircraft compared with 100 in China and there is enough cargo to be carried," Gopinath said.
09/04/09 Archana Shukla/Daily News & Analysis

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Categories: Cargo Apr 2009, Indian Aviation- In General Apr 2009, New Apr 2009