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acaai acaai convention convention2015 2015ISSUE ISSUE

SPECIAL FEATURE

focus: air cargo

Reaching for the Skies

CARGOSSOCIATION: Together We Soar Clipped Wings of Dedicated Freighter

Indian Airports await ‘Acche Din’

Ground Reality Opening the Skies for Air Charters

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Contents

ACAAI CONVENTION 2015 ISSUE

Editor and Publisher Smiti Suri

Executive Editor Samaya Chhabra

-2 0 3 0

Assistant Editor Dr Kirti Mudgil Pathak Principal Correspondent Ritika Arora Bhola Roselin Kiro

COVER STORY

SPECIAL FEATURE

CARGOSSOCIATION: Together We Soar

Reaching for the Skies

Special Correspondent Joydeep Banik Deepannita Chakraborty Feature Writer Kiran Sabherwal Director Marketing Ajeet Kumar Manager Marketing Niti Chauhan

FEATURE

Marketing Executive Chetan Pathak Rajesh Basu Asad Mohammad Marketing Support Suman Kumari

• Indian Airports Await • Ground Reality • Clipped Wings of • Opening the Skies for Air Charters ..........72 Dedicated Freighter ..64 ...........................54 ‘Acche Din’ .........42

INTERVIEW

NEWS .......................... 94

Hemant Bhatia, President, ACAAI ..78

We bring you a wide spectrum of updates that will keep you informed about the industry’s plans, performance and initiatives.

Ravinder Sethi, MD, R E Rogers India Pvt Ltd .....................................................80 Ulrich Ogiermann, Chief Officer Cargo, Qatar Airways ................................82 Berhanu Kassa, Director Global Sales & Services, Ethiopian Cargo .............84 J S Balhara, Airport Director, Guwahati Airport .............................................86 Rakesh Shah, Chairman& MD, GSECL .............................................................87 Shailender Anand, MD India, Pronk Multiservices .........................................88

photo feature ................90 GUEST COLUMN Vipin Vohra, Chairman & MD, Continental Carriers Pvt Ltd .......................................92

Administration Vipin Marwah Lavish Thakur Designer & Visualiser Shaique Ahmad Ritesh Kumar All material printed in this publication is the sole property of CargoConnect All printed matter contained in the magazine is based on the information of those featured in it. The views, ideas, comments and opinions expressed are solely of those feature and the Editor and Publisher do not necessarily subscribe to the same. CargoConnect is printed, published and owned by Smiti Suri, and is printed at Compudata Services, 42, Dsidc Shed, Scheme–1, Okhla Industrial Area Complex, Phase–II, New Delhi-110020, and published at 6/31-B, Jangpura–B, New Delhi-110014.

PEOPLE CONNECT

Editor–Smiti Suri

Naveen Rao, Head of Cargo, Aeroflot .....96

6/31-B, Jangpura-B, New Delhi-110014 Tel: +91-11-24373365, 24373465 Mob: 9711383365, 9810962016 Email: cargoconnect@gmail.com info@surecommedia.in Website: surecommedia.in

TOTAL PAGES: 98 (inclusive of covers)

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Focus

Draft Civil Aviation Policy: Paving the Road Ahead

fter much speculation and waiting, the Government of India finally released the Draft National Civil Aviation Policy which has raised many eyebrows in the industry. It has become a hot topic for discussion at forums, conferences and seminars. While a few industry experts are content with the positive and futuristic plans and strategies mentioned in the policy for both air cargo and the aviation sector, some are still complaining about their disillusionment with the Civil Aviation Ministry. Promotion of air cargo has always been a key objective of the present government, given its importance from a ‘Make in India’, e-commerce and exports perspective. Air cargo has a high employment potential, especially for semi-skilled workers. Currently air cargo volumes in India are extremely low as compared to other leading countries due to high charges and high turnaround time. Enlisted are some points from the Draft Civil Aviation policy which will help the Indian air cargo industry grow rapidly in the coming years. 1. Air cargo will be accorded ‘infrastructure’ status if co-located with an airport and will be eligible for Sec 80IA benefits. 2. Air Cargo Logistics Promotion Board (ACLPB) has been constituted to promote growth in air cargo by way of cost reduction, efficiency improvement and better inter-ministerial coordination. The Board and the industry will submit a detailed action plan after stakeholder consultation, with the objective of reducing dwell time of

CargoConnect - focus: air cargo

air cargo from ‘aircraft to truck’ to below 24 hours by December 31, 2016 and to six hours by December 31, 2017. 3. The government will streamline and simplify customs procedures. 4. Advanced Cargo Information (ACI) system will be implemented by April 1, 2016 to facilitate faster processing by customs, security agencies and terminal operators. 5. MoCA plans to leverage the untapped trans-shipment opportunity. The ACLPB will propose specific action steps to promote trans-shipment and the same will be monitored by MoCA on a bi-monthly basis. 6. The space allocated for cargo on the air-side and city side at most Indian airports is inadequate. ACLPB will lay down norms for space allocation for air-cargo for all greenfield airports. The action plan for space-augmentation at existing airports will be developed by ACLPB on a case by case basis.

7. The government will make sure that all relevant central government authorities are available under one roof, at the cargo terminals. These include MoF (Customs), MoEF (wild life clearance for handicrafts etc), MoCF (Drug Controller), MoA (Plant and Animal Quarantine), MoC (Archaeological Survey of India) etc. Clearances will be given promptly and online after necessary checks. 8. The government has commenced 24x7 customs operations at several airports. However, it has not been utilised optimally by the industry. ACLPB will work closely with the industry and propose action steps to spread out cargo handling round the clock. 9. ACLPB will promote global good practices like Free-Trade Warehousing Zones (FTWZ), air freight stations, bonded trucking, dedicated cargo airports, etc. 10. ACLPB will lay down specific

Focus norms and penalties to minimise pilferage, mishandling and damage of cargo. 11. ACLPB will work with AERA and AAI to ensure that user charges at Indian airports are competitive vis-a-vis competing aviation hubs. In particular for the non-metro airports, the lease and other fixed charges levied by AAI on cargo facility will be kept low so that it does not become an entry barrier. 12. The government will consider providing incentives for skill development of people employed in the air cargo value chain. 13. AAI will be permitted to provide space on a 10-year lease to operators of express cargo and freighters who may then develop dedicated infrastructure to improve their operational efficiency. 14. MoCA will encourage devel-

The govt will make sure that all the central govt authorities are available under one roof, at the cargo terminals like MoF, MoEF, MoCF MoA, MoC etc. opment of cargo-villages near airports. 15. The Aircraft Accident and Incident Investigation Bureau (AAIIB) will be strengthened in order to undertake speedy, professional and effective investigations. Apart from these initiatives, the Ministry of Civil Aviation has also focussed on the betterment of the ground handling industry and skill development. It is mentioned that the Ground Handling Policy of 2010 will be replaced by a new framework

CargoConnect - focus: air cargo

listed below: 1. The airport operator will ensure that there will be at least three Ground Handling Agencies (GHA), including Air Indiaâ&#x20AC;&#x2122;s subsidiary/JV at an airport to ensure fair competition. There will be no upper limit on the number of GHAs at an airport. 2. Domestic airlines and charter operators will be free to carry out self-handling themselves or through their own subsidiaries or to outsource the same to other airlines or to a GHA. 3. The ground handling staff will be on the rolls of the airlines or their subsidiaries or the GHA and not of a manpower supplier. Domestic airlines (and their subsidiaries) and GHAs will be permitted to take contract employees on their rolls. Such employment contracts will be for a period of at least one year. 4. MoCA will encourage rationalisation of airport royalties and other additional charges levied on GHAs over and above a reasonable lease rental. Airports Authority of India (AAI) has also taken some important initiatives over the years. Out of 125 airports of AAI, about 95 are operational and 71 have scheduled operations as of July 2015. A few other scheduled developments are mentioned below: 1. AAI will take up new Greenfield or Brownfield airports subject to the following conditions:

2. In order to fast-track capacity enhancement at the existing airports to meet the demands of increasing traffic and to avoid air congestion, brown-field airport projects as well as expansion projects will be exempted from obtaining Environment Clearance. 3. AAI may be suitably compensated by Government of India and/or the relevant State Government in case a new Greenfield airport is approved in future within a 150 km radius of an existing operational AAI airport (not applicable to civil enclaves). Alternatively, AAI may be given option to have the right of first refusal or equity participation up to 49 per cent in the new airport at its discretion. 4. AAI will continue to modernise existing airports and upgrade quality of services. 5. AAI will also explore the possibility of giving out O&M contracts for a cluster of existing and/or new airports. 6. AAI will strive to minimise the royalty, lease rent and other levies imposed on cargo, MRO, ground handling companies and flying training schools. Indeed, the Draft National Civil Aviation Policy has a lot to offer for the air cargo industry, provided the well-framed plans and policies are successfully implemented by the concerned authorities on time.

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Cover story

ARGOSSOCIATION Toget he r W e S o a r

10 CargoConnect - focus: air cargo

Cover story

The Indian aviation sector has grown remarkably in the last decade with a robust ‘take-off’ in passenger and cargo traffic. World leaders, manufacturers, tourism boards, airlines, global businesses and shippers all are looking forward to development in the sector. If a common purpose and platform for all stakeholders could be figured out, a bright future is at hand. The 42nd ACAAI Convention aims at transforming the Indian aviation from ‘local’ to ‘global.’ Ritika Arora Bhola and Joydeep Banik take a sneak-peek at the breathtaking developments in the sector and also point out a few issues that need to be addressed

focus: air cargo - CargoConnect 11

Cover story

forecast by the I nte r n at ion a l A i r Transport Association (IATA) says that India has the potential to become t he t h i rd largest av iation market by 2026 and the largest by 2030. The same also mentions that India has bounced back from a subdued 2014 and is observing a strong increase in domestic frequencies. Complementing the noticeable growth in passenger traffic, the air cargo industry is also growing by leaps and bounds. According to a report by the Airports Authority of India (AAI), passenger throughput grew to 159 million (FY 13) and cargo throughput to 2.19 million tons (FY 13), thereby registering an impressive growth of 13 per cent and 10 per cent Compound Annual Growth (CAGR) respectively over the period FY 2003-2013. Overall, the civil aviation sector is on a high growth trajectory and there is no scope of looking back in this new era of expansion. Despite several stumbling blocks, the road to success boasts of several milestones, too. The annual convention of the Air Cargo Agents Association of India (ACAAI) is one such milestone. To throw light on the significant and serious issues prevailing in the Indian air cargo industry and to provide a common platform for all its stakeholders, ACAAI is all set to host its 42nd air cargo convention in Vietnam from December 16 to 19, 2015.

This year, taking into consideration the much talked about Government of India initiative, ‘Make in India,’ and also keeping in mind the established fact that the Indian air cargo industry is making its presence felt globally, ACAAI members have chosen an ad rem theme - ‘Make in India-Local is now Global.’ The convention which will be attended by experts from the air cargo industry worldwide will not only bring into limelight the problems faced by the industry, but will also delineate constructive solutions aligning by the recommendations of the ‘Make in India’ project.

Significance of the ACCAI theme Throwing light on the theme of the muchawaited event, Hemant Bhatia, President, ACAAI discusses, “The ‘Make in India’ initiative of the Prime Minister is a key ingredient of the Union Government’s plan to revive business sentiments in our country. The Government has, therefore, rightly identified the need to boost the manufacturing sector, which is the main revenue earner in developed economies globally.” Prediman K Koul, Country Head– Airfreight, Jeena & Company feels that it is a highly relevant theme and explains, “Out of the 25 sectors identified under the ‘Make in India’ programme, aviation too falls under the category of selected industries. This initiative of our government is to encourage MNCs as well as domestic companies to

inside Significance of the ACCAI theme ‘Make in India’: An Inspiration Local Becomes Global: The Transformation Challenges and Opportunities Infrastructure and Fund-Raising CARGO CONNECT Perspective

12 CargoConnect - focus: air cargo

Cover story

Hemant Bhatia President, ACAAI

T he ‘Ma ke i n India’ initiative of the Prime Minister is a key ingredient of the Union Government’s pla n to rev ive business sentiments i n o u r c o u n t r y. T he Govern ment ha s, t her efor e, right ly ident ified the need to boost the manufacturing se ctor, w h ich i s the main revenue earner in developed economies globally.

14 CargoConnect - focus: air cargo

manufacture their products in India. With this kind of initiative which is going to boost the business activity in India to fulfil global needs, air cargo industry will have to be ready to play its role in the changing dynamics of the market. The two major elements on which the cargo industry has to now focus are cost-effectiveness and turnaround time.” Discussing the overall prospect, Huseyin Ceyhan, Regional Cargo Director, Asia Pacific, Turkish Airlines asserts, “‘Make in India’ is the new national programme to develop the economic growth of the country by enhancing and improving infrastructure, boosting manufacturing, easing business through de-licensing and deregulation and lastly, opening up Foreign Direct Investment (FDI) in construction, railways and defence. It is designed to transform India into a global manufacturing hub. The theme is encouraging and in tune with this great initiative.” G Balaraju, MD, Sindhu Cargo Services Pvt Ltd echoes, “I think ACCAI has selected the right theme which is the buzzword of the country at present and gaining impetus as we witness plenty of initiatives by the government in this direction.” Bharat Thakkar, Co-Founder and MD, Zeus Air Services gives another view point, “Never before has the air cargo logistics industry in India been as crucial; the challenges of the economic scenario, the slowing growth and rising inflation, the lack of infrastructure and the continuing difficulties of civil aviation, all demand the fullest participation, the closest attention and the most decisive deliberations of all players in the industry to establish the vital nature of the link in the entire global logistics chain. The theme of this convention reminds us of our PM’s dream-‘First Develop India.’ India still remains one of the top three international investment destinations for a vast majority of the world’s finance, industry and trade, and all players in this industry need to recognise the importance of i nteg rat i ng t he i r initiatives and efforts to support the vital role of the industry.” He continues, “Many

compelling factors facilitated a double digit growth of the air cargo sector. But for the last few years, due to global economic meltdown, development has been constricted. It is important to persist growth in consumer demand banking on our 300 million middle-class population, greatly liberalised economic environment, perhaps the largest educated, English-speaking and tech-savvy talent pool, and youth power. The promise of major infrastructure improvements and developments has lured many. Efforts of the government and trade continue for the rationalisation and simplification of regulations and procedures, with the objective of achieving ‘world class’ quality in facilities and services.” Likewise, the ACAAI convention seeks to recognise the challenges of the air freight and logistics arena by examining evolving market needs, changing trends of the logistics environment and the customer’s focus today on outsourcing, quality, competitiveness and innovation in order to bring to focus how air cargo is a vital link towards the goal of achieving economic prosperity. The success of India depends greatly on the effective utilisation of facilities, re-structured regulations, rationalised charges, procedures and simplified process-driven systems through greater automation. Industry big shots are pinning high hopes on th is

Cover story convention as a stepping stone to capitalise on a unique growth opportunity.

‘Make in India’: An Inspiration

Huseyin Ceyhan Regional Cargo Director, Asia PacificTurkish Airlines

'Make in India' is the new national programme to develop the economic growth of the count r y by en ha nci ng and improving infrastructure, boosting manufacturing, easing business through de-licensing and deregulation and lastly, opening up Foreign Direct I nvest ment (FDI) in construction, railways and defence. 16 CargoConnect - focus: air cargo

At present, ‘Make in India,’ one of the flagship campaigns by the Government of India, has literally become the ‘wordof-mouth’ and is gaining momentum at every nook and corner of the economic circle. Industrialists across sectors have taken this initiative very seriously and are working towards specific goals. Of late, experts have engaged in discussing about its pros and cons. It remains to be seen how the initiative will mould India and in how many years. As they say ‘starting early means gaining a competitive edge.’ ‘Make in India’ is a big leap towards making India a manufacturing hub to cater to global needs. However, if India has to make this initiative successful, it is important to scale up our infrastructure to remain efficient and cost-effective and to sustain the expected rate of growth. Explaining the objective behind the initiative, Koul articulates, “The major objective behind this initiative is to focus on job creation and skill enhancement in 25 sectors of the economy, like automobiles, chemicals, IT, pharmaceuticals, textiles, ports, aviation, to name a few. This initiative will result in increased GDP growth and tax revenue. ‘Make in India’ also aims at attaining high quality standard and minimising the negative impact on the environment. This initiative is expected to attract foreign capital, technological investment and to create a high scale of manufacturing and skill development in India. Aviation being one of the selected industries, this initiative will push the sector on a fast track growth trajectory.” He continues, “At present, India’s share is 1.8 per cent of global airfreight volume, but with the new push, the same is expected to grow at CAGR of 6.8 per cent to 2.1 million tons by 2018 which will take India to the sixth position, globally. This initiative also focusses on infrastructure development in the aviation industry as a whole and air cargo is one of the major areas in the draft aviation policy of 2015.” Ceyhan is hopeful that the air cargo industry will benefit substantially from this initiative in the coming years. He says, “It will decrease imports of India, thus may influence

Key points to enable the ‘Make in India’ movement • Starting a new business – ease in getting approvals and clearances • Land and water to support manufacturing – acquisition process to be simple and effective • Credit availability • Taxation – fair approach by GOI • Contract enforcement – clear process of filing and servicing of disputes • Supporting infrastructure- air, road, rail, port, etc. • Skilled workforce for manufacturing, warehousing, transportation, etc.

• Safe and secure cargo at cargo terminals

• First in paperless transaction for cargo operation through web-based EDI mode

• Automation/Mechanization of cargo handling activities at AAI managed airports.

• Benchmarking parameters for cargo operations vide Citizen Charter of AAI.

• Augmentation of Infrastructure at Chennai & Kolkata Airport with state-of-the-art facilities like Elevated Transfer Vehicle (ETV) for Export Unitized Cargo and Automated Storage & Retrieval System (AS & RS) for import cargo. • Appointed Ground Handling Agency to improve service levels at airports. • Implementation of EDI under Customs ICES 1.5 version at Chennai & Kolkata Air Cargo Terminals. • AAI is in the process of establishing pharma zone at Chennai & Aurangabad Airports. • AAI is in the process of obtaining Regulated Agent (RA) Status and RA3 status for Chennai & Kolkata Airports.

• AAI is also exploring the possibility of creating Free trade zone (FTZ) at its airports. • Commissioned Common User Domestic Air Cargo Terminal (CUDCT) facility at Port Blair, Coimbatore, Jaipur, Lucknow (outbound), Vizag, Mangalore, Amritsar (interim), Madurai, Chennai airports and already work awarded for commissioning at Raipur, Indore & Ahmedabad Airports. • Further, during the F.Y. 2015-16, plan to commission CUDCT at Goa, Aurangabad, Bhubaneswar, Kolkata, Ranchi and Trivandrum Airports. • During the F.Y. 2016-17, plan to commission CUDCT at Pune, Guwahati, Varanasi, Srinagar, Surat, Vijayawada and Bagdogra airports. • Plan to introduce Air Cargo Community System (ACS). • Steps initiated towards e-banking/e-payment facility.

• Provision of e-warehouse for e-commerce entities and express cargo handling counter are in the pipeline at various airports.

• Plan to commission international courier handling facilities at Trivandrum and Trichy airports apart from the existing facilities at Chennai & Kolkata airports.

• Commissioned international air cargo handling facility at Trichy, Mangalore Airports and proposed at Madurai Airport. Work awarded to an agency by AAI to commission Int’l Cargo facility at Vizag. Airport

• Frequency based incentive for Cargo Freighters introduced w.e.f. 01.01.2015 at Chennai & Kolkata airports apart from the existing 20% discount in export TSP charges for lean hour transaction by exporters.

Cover story air cargo industry in the long run. Such an initiative also does have the potential to increase India’s exports.” Harpreet Singh, DirectorSales & Marketing, TNT India reiterates that the initiative will definitely have a positive impact on the Indian cargo industry. “Manufacturing accounts for only 15 per cent of India’s GDP, which is low compared to other developing South east Asian nations. The Indian Government wants to raise that share to 25 per cent by 2022 and is committed Harpreet Singh to transform India into a global Director-Sales & Marketing, TNT India manufacturing destination. The identified sectors for growth, wh ich i nclude automot ive, Manufacturing acaviation, electronics, textiles, counts for 15 % of etc., among others, will have a huge positive impact on the India's GDP, which is growth prospects of the India air cargo industry.” He also believes, “The framework of ‘Make in India’ is designed to not low compared to develonly attract overseas companies to set up shops in India, but also encourage domestic oping Southeast Asian companies to increase production within the country. In fact, the thrust on producing products that meet high quality standards and which can also be exported is an apt nations. example for the development of going global.” Akash Bansal, Head Logistics, Om Logistics Ltd thinks that ‘Make in India’ will be a big uplift to manufacturing activities within the country and clarifies, “PM Narendra Modi came along with the campaigns ‘Make in India’ and ‘Digital India,’ which is what everyone is talking about. I think it is a very important initiative because it is all about saving dollars. If we talk about imports, a lot of mobile phones are manufactured in China and imported here. Now one multinational brand has come up with the campaign called ‘Make in India, Make for India.’ So we can see development happening. It’s giving a boost to the Indian economy. With the campaign, there will be robust economy growth which will give rise to unlimited job Branches: Delhi Offices: opportunities in India. I am very optimistic about it. It will give Chandigarh, Dadri, Tughlakabad, rise to domestic business as well. Two or three years down the Ludhiana, Mumbai, Patparganj, Kapashera, line, we can see manufacturing facility for every manufacturer.” Kolkata, Jaipur Mahipalpur, Rajokari Meanwhile, Thakkar jots down a few key points to enable the ‘Make in India’ movement: • Starting a new business – ease in getting approvals and Services: International Freight, Export and Import, clearances Custom Clearance, Air Export and Import, Sea Export and • Land and water to support manufacturing – acquisition Import, Warehousing Export and Import, Transportation process to be simple and effective Trucks and Trailer Delhi NCR/ North India • Credit availability • Taxation – fair approach by GOI • Contract enforcement – clear process of filing and servicing of disputes • Supporting infrastructure- air, road, rail, port, etc. • Skilled workforce for manufacturing, warehousing, transportation, etc. SCO – 28 & 30, Sec - 18, HUDA Commercial Complex, Gurgaon - 122015 Zion Group Speaking on ‘Make in India’ being an aspiration, Bhatia figures T: +91-124-4953900, M: +91- 9810162106, 9999122488, 9810052955, out, “The large-scale implementation of this programme has 9810293773 F: +91-124-4953949, www.zionexpress.com - focus: air cargo 18 CargoConnect www.turnerindia.com, E-mail: naveen.sharma@turnerindia.com the potential to create numerous jobs, adopt cutting-edge

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Cover story technology, meet domestic consumption needs as well as to increase exports on a large scale, and to propel India into the league of developed economies. In the services sector, particularly in the information technology (IT) segment, this has already been a huge success primarily due to the technical qualifications, analytical and problem solving skills, English language capabilities and the young age of the Indian technocrats in this sector. It can therefore be expected that ‘Make in India’ programme will be equally successful, if not more so, in the manufacturing sector also.”

G Balaraju MD, Sindhu Cargo Services Private Limited

“Good airport facilities, proper cargo handling, flight connectivity, paperless transactions can make it global.

The framework of ‘Make in India’ is designed not only to attract overseas companies to set up shop in India, but also to encourage domestic companies to increase production within the country.

Local Becomes Global: The Transformation Over the years, foreign players have shown a significant interest in the Indian aviation market. Several international carriers like Qatar Airways, Lufthansa Cargo, Turkish Airlines, Etihad Airways, Singapore Airlines Cargo, etc., had already started their Indian operations many years back and have been operating successfully. Some of the airlines have also launched dedicated freighters for transporting goods to and from India, like pharmaceutical, perishables, textiles, apparel, equipment, etc. India’s aviation market will grow at over 10 per cent annually in the next ten years, that is, double the average global growth rate. India would need 1,291 new passenger and freight aircrafts by 2032 and aircraft makers are bullish on India as a marketplace as well as a manufacturing hub.

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At present, the Indian government is planning to have 250 operational airports by 2030 which will be a big boost to both the domestic as well as the international passenger and cargo sector. After the launch of ‘Make in India,’ India has emerged in 2015 as a top destination globally for FDI, surpassing China and USA. Under this initiative, 100 per cent FDI is allowed for Greenfield airports and 74 per cent for existing airports (which can be extended to 100 per cent under government approval). Koul says, “Moreover, cargo has been of high importance in the Draft Civil Aviation policy 2015. Promotion of air cargo is a key objective of the government, given its importance from ‘Make in India,’ e-commerce development and exports perspective. Air cargo will be given ‘infrastructure’ status if co-located with an airport and will be eligible for benefits under Section 801 A. The

Cover story As per the draft aviation policy, MRO has been dealt in detail, Service Tax on output services of MRO will be zero-rated, MROs are at present required to provide proof of their requirement.

Prediman K Koul, Country Head - Airfreight. Jeena & Company

'Make in India' aims at attaining quality standard and minimising the negative impact on the environment.

Air Cargo Logistics Promotion Board has been constituted to promote growth. Keeping in view the push for infrastructure development, participation of foreign investment and the need of more airports, aircrafts, it is very clear that India is not only a big market, but also a huge opportunity for investments. According to Singh, “The framework of ‘Make in India’ is designed not only to attract overseas companies to set up shop in India, but also to encourage domestic companies to increase production within the country. In fact, the thrust on producing products that meet high quality standards which can also be exported is an apt example for the development of going global.” Ceyhan stresses on the stability of the domestic market, “India’s domestic cargo movement is increasing rapidly in recent years. Investment in the local market can also be transferred to global, especially taking into consideration the current e-commence business.” Balaraju explains in brief, “Good airport facilities, proper handling of cargo, flight connectivity, paperless transactions and single window operations can make it global.”

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22 CargoConnect - focus: air cargo

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Cover story Challenges and Opportunities

Akash Bansal Head-Logistics,Om Logistics Ltd

I am optimistic about 'Make in India.' It will give rise to domestic business.

India’s

Currently, India is ranked 139th out domestic cargo of 189 countries on the World Bank’s movement is increasing ‘Ease of doing Business’ index. A 2014 rapidly in recent years. World Bank survey ranked India 46th in global trade logistics performance, Investment in the local market placing it behind Mexico and Turkey. can also be transferred to The population of workers aged 15-24 in global, especially taking India is projected to rise by almost 50 per into consideration the cent by 2020. The major challenges faced by the air current e-commence cargo industry in India are: business. • Very often, we can see volatility in fuel prices combined with highest tax on aviation turbine fuel • High rate of foreign exchange is a matter of concern • Perishables and cold supply chains face a 20 per cent spoilage rate on an average due to inefficiencies in domestic freight infrastructure • Frequent power outages impact manufacturing schedules and costs • The import process remains complicated and non-standardised, causing higher than normal inventory requirements • Indian bureaucracy poses a challenge as the policies and processes are complex and confusing • Airports often face congestion problems which hinder the smooth movement of cargo Problems will remain, but even then, the silver lining looks prominent. From an over-regulated and under-managed sector, the air cargo industry in India has now

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24 CargoConnect - focus: air cargo

Cover story transformed to become more open, liberal and investment-friendly. Some major factors contributing to this are: • Higher household incomes • Entry of low-cost carriers(LCC) • FDI in domestic airlines • Increased tourist inflow and cargo penetration • Cutting-edge information technology (IT) interventions • Focus on regional connectivity • Rise in the number of modern airports and cargo terminals Bharat Thakkar

Infrastructure and Fund-Raising

Co-Founder and MD, Zeus Air Services

‘Make in India’ initiative truly provides the necessary boost to infrastructure and MRO (maintenance, repair and overhaul) facilities. Before the initiative was launched, foreign equity caps in various sectors had been relaxed. Most of the applications for licenses were made available online and validity of licenses was increased to three years. Various other norms and procedures were also relaxed. It would not be an exaggeration to say that Indian air cargo sector is going

Industry needs to recognise the importance of integrating their initiatives and efforts to support the vital role of industry.

26 CargoConnect - focus: air cargo

through a stage of complete metamorphosis, riding on the success of infrastructure development due to ‘Make in India.’ Koul comments, “If India has to make this initiative successful, it is important to scale up our infrastructure to remain efficient and cost-effective and to sustain the growth which is expected from this initiative. It will require huge investments and infrastructure development across the country. Recently, the government opened MRO activity for 100 per cent FDI. As per the new draft aviation policy, MRO has been dealt in detail, the highlights of which are: Service tax on output services of MRO will be zero-rated, MROs are at present required to provide proof of their requirement of parts or orders from their clients which has been relaxed in the said policy. To enable economies of scale, the period for which the spare parts imported by MROs can be stored tax-free shall be extended to three years. Foreign aircrafts brought to India for MRO work will be allowed to stay for the entire period of maintenance or up to six months, whichever is lesser. Foreign MRO experts

“Continually Innovative”

Cover story

will be provided visa promptly, especially in case of an AOG situation. All these relaxations will help in making India a place to do business with ease.” Singh shares, “One of the key focus areas for the initiative is to improve the ease of doing business in India through a planned physical infrastructure upgrade to support growth. The Indian Government has unveiled plans of developing industrial corridors, industrial clusters and smart cities across the country. This will definitely provide a boost to manufacturing and transform India into a global manufacturing destination.” Thakkar ‘More or Less’ briefly outlines “what is required to support manufacturing:

• Less Bureaucracy, More Action • Less Congestion, More Speed • Less Power Thefts/Outages, More Power • Less Roadblocks, More Ease of Movement • Less Paperwork, More Compliance • Less Pilferages, More Throughput • Less Red Tape, More Wired Network • Less Policy, More Execution • Less Politics, More Co-operation • Less by Chance, More Technology” Ceyhan says, “Along with qualified people, a well-established infrastructure is the basic need for a country’s development. For the air cargo industry, infrastructure for inland transfers, airports, facilities, are of crucial importance. India is now building new airports, roads and other facilities. However, the general infrastructure still lacks coverage in the country and needs focus considering the competition of India with important countries such as China, Thailand and Vietnam.” If there is a common goal among all stakeholders in the aviation sector of India, a bright future can be expected. India is not merely a market, but an investment opportunity for the air cargo sector. A stronger manufacturing sector could help in a host of other ways and boost the confidence of investors. According to Balaraju, “Linking India to global supply chains and boosting exports will promote huge growth in the Indian air cargo industry.” The success of India to be a leading air cargo infrastructure hub depends greatly on its effective utilisation of facilities.

CargoConnect Perspective

28 CargoConnect - focus: air cargo

Yes, the Indian civil aviation market is indeed eying asset-based growth big time. The government continues to encourage private investment in both passenger as well as cargo aerospace to implement technological advancement and achieve indigenisation. But are we moving in the right direction, at the required pace and in a manner so integrated as to effectively bring together the desired results? Is the link strong enough and is it complete? Retrospection is imperative. The proactive policy regime by the government has begun to bear fruit. In the last five years, there have been significant investments by large and small domestic companies that have entered this industry. However, the FDI inflow has been very low (at about USD 4 million). The government needs to review the 26 per cent cap on FDI as well as streamline the various policies to promote greater investment. The complex and multi-tiered tax structure in India makes domestic manufacturing uncompetitive and directly works against the ‘Make in India’ policy of the government. The government needs to review policies that will enable the creation of MSME clusters with quality infrastructure and building capabilities. Of late, the Indian Government has unveiled plans of developing industrial corridors, industrial clusters and smart cities. All these will definitely provide a boost to manufacturing and infrastructure and transform India into a global destination for air cargo-related activities. With great enthusiasm, our team at CargoConnect waits to hear the Indian air cargo sector tell the tale of its industry with ‘Chai, Charcha and More’ at Ho Chi Minh City. We keep our fingers crossed for a very positive outcome and it will be our constant endeavour to pen down the deliberations and the emerging tricks of the trade in our future editions.

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Special Feature

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Reaching for the Skies

Indian civil aviation industry has been witnessing tremendous growth for the last few years and is expected to become the worldâ&#x20AC;&#x2122;s third largest aviation market by 2020 and the largest by 2030. No doubt, the industry is on a high growth trajectory albeit with minor hiccups like inadequate infrastructure, lack of skilled manpower and poor connectivity. Experts feel that the commercial and cargo sector of the Indian aviation industry has huge untapped potential which needs to be recognised. Ritika Arora Bhola, with the help of experts, compiles significant facts and figures which envisage a bright future of the industry

30 CargoConnect - focus: air cargo

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Special Feature

ky is the limit for the Indian aviation industry! On paper, India is expected to become the world’s third largest aviation market by 2020. Indian aviation industry, no doubt, has always had the potential but limited infrastructure, inefficiency and lack of economic reforms have slowed its development. However, despite the problems of the past, the commercial and cargo sector of the aviation industry is now showing positive signs of growth and improvement and looks set to give a boost to the country’s economy. According to a report presented by the CAPA – Centre for Asia Pacific Aviation and SITA, air transport IT specialist, Indian aviation industry is examining whether the country has the right investment, infrastructure and regulatory system to enable this growth. As per the analysis, Indian aviation has changed hugely since 2000 when just one carrier flew overseas, while today, there are many. Passenger traffic has increased from 42 million to 150 million and the country’s fleet has grown from 119 aircrafts to 437. Also, over the next 10 years, all six met-

ropolitan cities - Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Mumbai are expected to have provisioned for a second airport for both cargo and passenger, and Mumbai will need to start preparing for a third. Several non-metro cities such as Ahmedabad and Pune will also outgrow their existing infrastructure and require new airports. If we talk about investment, total investment in the sector between 2004 and 2020 is expected to reach USD 120 billion, of which USD 80 billion is represented by aircraft, USD 30 billion in airport infrastructure and USD 10 billion in ancillary services such as ground handling, maintenance, cargo handling air traffic management, security and training. Likewise, another report presented by FICCI and KPMG states that India has the potential to become the third largest aviation market by 2020 and the largest by 2030. The industry has ushered in a new wave of expansion driven by Low Cost Carriers (LCC), modern airports, Foreign Direct Investments (FDI) in domestic airlines, cutting-edge Information Technology (IT), growing emphasis on No-Frills Airports (NFA) and re-

The most significant development in the Indian domestic market is the growing dominance of the low cost carrier model, which in FY 2013 accounted for almost 70 per cent of the domestic capacity.

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Special Feature

India would also be among the 10 largest international freight markets by 2018 led by the US supplying 10,054,000 tons and China with 5,639,000 tons. With more favourable regulatory decisions being made by the government, the Indian air cargo industry is certainly on the right path of becoming a global major in the years to come. Willy Co, CEO (Former), AISATS

gional connectivity. At present, the Indian civil aviation industry is among the top 10 in the world with a size of around USD 16 billion. The report also points out that the next generation of aviation growth in India will be triggered by regional airports. At present, there are around 450 used, unused, abandoned airports and airstrips all over the country. Many Indian states, especially in eastern India, have started taking proactive measures to promote air connectivity. These initiatives include reduction in sales tax on Aviation Turbine Fuel (ATF), development of no-frills airports, promotion of aviation academies and supportive policies for airlines and tourism. Considering the great growth prospects, recently the government proposed to set up additional 51 airports to enhance air connectivity to small cities in Andhra Pradesh, Jharkhand, Bihar, Punjab, Uttar Pradesh, Assam, Arunachal Pradesh, Madhya Pradesh, Rajasthan and Maharashtra. And of the 51 low-cost airports, Airports Authority of India (AAI) is planning to start work on 15 airports this calendar year.

Focussing on the air cargo sector, Willy Co, Former CEO, AISATS opines, “According to a recent study by the IATA for 2014-2018, India is expected to emerge as the second fastest growing air cargo market after the Middle East, with an annual compound growth rate of about seven per cent over the next five years. India would also be among the 10 largest international freight markets by 2018 led by the US supplying 10,054,000 tons and China with 5,639,000 tons. With more favourable regulatory decisions being made by the government, the Indian air cargo industry is certainly on the right path of becoming a global major in the years to come.” On a positive note, Bertrand Schmoll, Chairman and CEO, ECS Group asserts, India is already a key hub and will continue to be so. “The country has a huge size, population and good infrastructure. That’s why we are very happy to be here. I come here every quarter and I find the country changing. It is becoming more organised and the market is growing fast. Nowadays, people want their consignments quickly. This will boost air cargo development in India,” he shares. Observing the same, Giam Ming Toh, Chief Commercial Officer, Vistara affirms that the forecast is very promising and this gives a lot of confidence about the aviation sector’s potential. However, he points out that the aspects of ease of doing business and cost of doing business are two major challenges that need to be addressed as soon as possible. He continues, “Sector’s projected growth is achievable, albeit with a progressive aviation policy aimed at fortifying the Indian aviation industry’s global po-

34 CargoConnect - focus: air cargo

As per KPMG estimates, the total manpower requirement of airlines is estimated to rise from 62,000 in FY2011 to 117,000 by FY2017. The sector will need about 350,000 new employees to facilitate growth in the next decade.

Special Feature

India is already a key hub and will continue to be so. You have all the potential to become one of the leading countries. The country has a huge size, population and good infrastructure. That’s why we are very happy to be here. Bertrand Schmoll, Chairman and CEO, ECS Group

sitioning and standing. India is the seventh largest country in the world with a population of nearly 1.2 billion and the potential is largely untapped. To catapult India onto the world aviation platform, a liberal, forward looking, pro-business aviation policy is a prerequisite. India needs to be at par with global aviation hubs like Singapore and Dubai as it has a large domestic demand to support direct operations and a prime geographical

Think

position on the crossroads of North AsiaAfrica, SAARC, Middle East and SWP, East Asia-Europe, East America.” Ming Toh further adds that the aviation policy has a lot of hope riding on it. “But, key issues that need to be addressed in the policy formulation are 5/20 rule, utilisation of bilateral rights, less complex formula for Route Dispersal Guidelines (RDG) with viability gap funding for remote regional

routes, allowing the market forces to prevail and most importantly, ease of doing business. The policy has to be long term, sustainable, pro-growth, pro-business and pro-people,” he says. Indian government has also unveiled the much-awaited draft civil aviation policy. R.N. Choubey, Aviation Secretary, said in a statement that one of the most important initiatives proposed to boost air travel in smaller

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Special Feature

The forecast is very promising and this gives a lot of confidence about the aviation sectorâ&#x20AC;&#x2122;s potential. However, the aspects of ease of doing business and cost of doing business are two major challenges that need to be addressed as soon as possible. Giam Ming Toh, Chief Commercial Officer, Vistara

towns is the Regional Connectivity Scheme (RCS), under which the government will work towards revival of unserved airports, build no-frills airports and also give incentives and subsidies to stakeholders. The two per cent levy from air tickets will also go into these funds. The policy also suggests a number of incentives for the Maintenance, Repair and Overhaul (MRO) sector, including service tax waiver, with an aim to develop India as an MRO hub in Asia. The policy document adds that states will be persuaded not to impose any VAT charges. It has proposed that MRO, ground handling, cargo, and ATF infrastructure located together at an airport will also get infrastructure status with benefits under Section 80-IA of the Income tax Act, among others. Talking about how air cargo industry is progressing, Veli Polat, Regional Director, South Asia and Middle East, Lufthansa Cargo shares, â&#x20AC;&#x153;The biggest change in our industry happened on the ground and not in the air. It is still happening on the ground level. We do have many modern aircrafts, engines, which are economic in fuel consumption. But the impact of basically what happened on the ground, especially with digitisation, has been revolutionary. As far as I can remember, when I started in 1994-1995, e-mail accounts came in at a very slow pace and today we have world-class technology. One thing which still stays is our dependence on the global process chain. Therefore, we are also depending on the people who are part of this whole chain. Each process chain has to be hundred per cent accurate, otherwise we will not get the quality standard which we aim for. The process has

also evolved to reflect IT capability. What technology offers us is much more modernised.â&#x20AC;? If we talk about both passenger and cargo sector as per data from the AAI, passenger throughput grew to 159 million (FY 2013) and cargo throughput to 2.19 million tons (FY 2013), thereby registering an impressive growth of 13 per cent and 10 per cent CAGR respectively over the period FY 2003-2013. On the global front, aircrafts transported around 3.1 billion passengers and over 51.6 million tons of freight in 2013-2014. The most significant development in the Indian domestic market is the growing dominance of the low cost carrier model, which in FY 2013 accounted for almost 70 per cent of the domestic capacity. Also, Indian carriers plan to double their fleet size by 2020 to around 800 aircraft.

Role of Technology Technology also plays a great role in the overall development of the industry. Experts rely greatly on technology and whopping investments have also been done in technology over the last few years. Now, we have world-class technology installed at airports and in aircrafts. Technology definitely has the potential to play a central role in creating a new transformational business model to viably support this level of growth. In the past, IT was largely internally focussed, supporting processes and functionality.

38 CargoConnect - focus: air cargo

Total investment in the sector between 20042020 is expected to reach $120 billion, of which $80 billion is represented by aircraft, $30 billion in airport infrastructure and $10 billion in ancillary services like ground handling, maintenance, cargo handling etc.

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I think the biggest change in our industry happened on the ground and not in the air. It is still happening on the ground level. We do have many modern aircrafts, engines, which are economic in fuel consumption. But the impact of basically what happened on the ground, especially with digitisation, has been revolutionary. Veli Polat, Regional Director, South Asia and Middle East, Lufthansa Cargo

However, now it enables closer integration with the customer experience, and the ability to shape and personalise the relationship with the passenger or customer, from the time of planning and booking, through to airport facilitation, in-flight, baggage claim and service recovery. Technology, if deployed correctly, can deliver simplicity and transparency. IT and the use of analytics could be as important for an airline as an aircraft because it can drive a competitive business model by reducing costs, increasing efficiencies, enhancing the customer experience and generating new revenue streams. According to a report, airline IT spend as a percentage of revenue ranges from one to three per cent, with 70 per cent of those surveyed expecting their IT spend to increase. Ninety per cent of respondents

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are expecting to increase investment in this area. There is an increased deployment of the use of websites for sales, implementation of Common Use Terminal Equipment (CUTE) in airports, Common Use Self Service (CUSS), baggage reconciliation systems; flight information display systems, and others. Technology in Indian aviation is largely considered to be an operational issue rather than forming an integral component of the company’s key objectives and is not directly linked to profit and loss performance. IT is largely not used for revenue generation, and in the case of cost reduction, the approach is quite unstructured, such that there is limited measurement of the efficiencies that are achieved.

Increase in Job Opportunities The air cargo industry complains of shortage of skilled manpower, tremendous growth has resulted in increased job opportunities in the aviation sector. With passengers and aircraft fleet likely to double by 2020, the need to strengthen the human resource development infrastructure is immediate. As per KPMG estimates, the total manpower requirement of airlines is estimated to rise from 62,000 in FY-2011 to 117,000 by FY-2017. It is estimated that the sector, overall, will need about 3,50,000 new employees to facilitate growth in the next decade. Shortfalls in skilled labour could create safety issues and may see staff salaries rise, hurting India’s cost competitiveness. It is a well-known fact that the Indian aviation industry is overtaxed and this is being reflected in the industry’s lack of competitiveness at the global level.

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Indian aviation industry has a long way to go. And in order to become a top aviation market, all round improvements are required for airports, air navigation, cargo handling at the terminals/aircrafts, general aviation and human resource development. India would need to broaden the base of domestic flyers. No-frills airports in tier 2 and tier 3 cities need to be developed and the proposed Essential Air Services Fund (EASF) needs to be activated to address financing challenges. Government policies, procedures and regulatory framework need to be futuristic, proactive and aligned to stakeholder expectations. The Indian aviation sector has a huge untapped potential – we need to recognise it and go for it.

lookout

Indian Airports await....... â&#x20AC;&#x2DC;Acche Dinâ&#x20AC;&#x2122; The Indian civil aviation industry is changing rapidly with the inclusion of low-cost carriers (LCC), FDI in domestic airlines, growing emphasis on regional connectivity and capacity increase with the launch of new airlines and airports. Roselin kiro with facts and figures from experts in the industry dissects on how ready are Indian airports in terms of infrastructure and investments to keep pace with the strong expectation of growth in the coming times 42 CargoConnect - focus: air cargo

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lookout

raffic at Indian airports has grown impressively in recent times. It grew by an impressive 11 per cent in FY 2014-15 to 2.52 mmtpa. But that is just the tip of the iceberg. The real growth was in the domestic air cargo sector which grew a whopping 18 per cent to 0.99 mmtpa on the back of the e-commerce boom in India. Strong economic growth, improving purchasing power, lower fuel prices and reform initiatives by the government will drive the growth of air traffic in India. India’s rising aircraft fleet also adds to the belly cargo capacity and is expected to push cargo charges down and volumes upwards.

this, Airport Authority of India (AAI) has come up with a low cost model to back the government’s proposition, helping smooth and easy transport of both passengers and cargo, and for the development of airport infrastructure and easing of the financial constraints. Additionally, foreign investments have also been encouraged to a large extent in India as per the new civil aviation policy. The government allows 100 per cent FDI via automatic route for the Greenfield airports and allows 49 per cent FDI in the aviation sector majorly deployed in expanding aircraft fleet, developing aircraft manufacturing and maintenance facilities in India and having other open sky policies in place. Talking about the initiatives taken by the government to develop the airports in India, Amber Dubey, Partner and Investment and Infrastruc- Head-Aerospace and Defence, KPMG ture: Key to Development of India elaborates, “The Government of Airports India is supporting the aviation industry Airport infrastructure is part of the by bringing in much anticipated reforms country’s economic development. The in the sector through the National airport infrastructure market is highly Civil Aviation Policy (NCAP 2015), the competitive, but has a lot of growth draft of which was released for public oppor t u n it ie s i n consultation Ind ia as it is set By 2025, passenger traffic, recently. NCAP to have developed 2015 has been freight traffic is likely to infrastructure a pleasant become three-fold and i n the next 10 sur pr ise. The years. The private chapter devoted twofold respectively. sector is being to a i r ca rgo encouraged to become actively involved reforms in NCAP 2015 is perhaps one of in the construction of airports through the most detailed, with clear action steps different PPP models, with substantial and deadlines. NCAP 2015 acknowledges state support in terms of financing, the importance of air cargo from concessional land allotment, tax holidays a ‘Ma ke i n I nd ia’, e-Com me rce, and other incentives. The government e x p or t s , cr os s s ubsid i sat ion of has already identified 50 airports passenger airfare and employment in tier-2 and tier-3 cities to improve generation perspective. It signals the regional connectivity. In tune with government’s resolve to do necessary

Source: CAPA Research

The government has proposed to set up five no frill airports and 50 low cost airports in tier II and tier III cities. But till date, nothing has been executed at the ground level. focus: air cargo - CargoConnect 45

lookout Satyendra Kumar Associate Manager, CAPA India

We believe India is underprepared to amicably handle this situation and create the required airport infrastructure in a timely manner. Airport infrastructure cannot be developed overnight hence a detailed master plan on airport development for at least the next two decades is the need of the hour. course corrections. The focus should now be on policy execution. Perhaps the biggest boost in NCAP 2015 is that air cargo will be accorded ‘infrastructure’ if co-located with an airport and will be eligible for Sec 80IA benefits. This will help the industry get priority lending at lower rates and exemption from corporate tax for 10 years. The government should consider not restricting the benefits to facilities located at the airport since the idea is to de-congest the airport and promote off-airport cargo processing.” Further adding into the future growth prospects of the airport, he continues, “The government has commenced 24x7 customs operations at several airports. However, it has not been utilised optimally by the industry. The Air Cargo Logistics Promotion Board (ACLPB) plans to work closely with the industry and propose action steps to spread out cargo handling round the clock. All these augur well for the air cargo industry in India.” Developing new infrastructure and modernisation of the existing infrastructure is the prime focus of the government to improve the quality of customer service ex perience. The in frastr ucture thus

developed needs to be complemented with world class airport service providers not only at major airports, but at tier II and tier III city airports as well. Improved air cargo infrastructure and better domestic and international air connectivity will give further boost to the cargo trade. These government initiatives would require world class experienced infrastructure developers

The government has commenced 24x7 customs operations at several airports. However, it has not been utilised optimally by the industry. The Air Cargo Logistics Promotion Board (ACLPB) plans to work closely with the industry and propose action steps to spread out cargo handling round the clock. to develop and manage these facilities. Satyendra Kumar, Associate Manager, CAPA India, predicting better days for the Indian airports avows, “By 2025, passenger traffic, freight traffic is likely to become three- fold and two fold respectively. Though it’s a great opportunity for India’s growth, at the same time it requires consistent upgrade of infrastructure at airport and cargo terminals so that current demand can be sustained and infrastructure can be developed to cater to the anticipated demand. Most of the existing airports do not have land available to expand to cater to future demand. On top of that, airspace

46 CargoConnect - focus: air cargo

congestion at some airports could become a hurdle in growth. The uncertainty on economic regulation of Greenfield airport projects is aggravating the problem further. It has also hurt the sentiments of foreign/ Indian investors and could lead to a situation where a less number of investors participate in upcoming airport projects. We believe India is underprepared to amicably handle this situation and create the required airport infrastructure in a timely manner. Airport infrastructure cannot be developed overnight hence a detailed master plan on airport development for at least the next two decades is the need of the hour.” Talking about the importance of air cargo contributing in the boom of the economy of the country, Mike Chew, CEO, AISATS says, “Air cargo represents an average of about 10 per cent of the airline industry’s revenue and about 35 per cent of goods traded globally are transported by air. Thus, with a boom in economic activity, demand for air transport and logistics is also set to grow. Opportunities in the air cargo sector now extend to tier II cities as they witness a significant growth in air cargo volume owing to rising local demand, improved international connectivity, resulting consolidation activity and expanding cargo handling infrastructure.”

Government Proposal in Establishing New Airports The government has proposed to set up new airports, five no frill airports and 50 low cost airports in tier II and tier III cities. But till date nothing has been executed at the ground level. Airport development in tier II and tier III cities is critical to enhance connectivity and to integrate hinterland to mainland India. The development of these airports may also help airlines to deploy access capacity on

lookout JS Balhara Airport Director, Lokpriya Gopinath Bordoloi International Airport, Guwahati

It is anticipated that GST will result in consolidation of warehousing alongside facilitating seamless inter-state flow of goods. GST is also expected to provide an opportunity to dismantle various check posts, thus bringing about a substantial reduction in logistics costs.

An airport should focus on improving efficiency in airside, terminal and landside because an efficient airport infrastructure will automatically enhance the experience for passengers as well as for people involved in cargo processing.

certain profitable routes among tier II and tier III cities. It would also facilitate the growth of general aviation. Kumar avows, “The low cost airport infrastructure approach could be a way to develop such airports. However, airport development should be done on the basis of economic and technical feasibility of the project rather than driven by any political motives. In recent past, some of the airports developed in tier II and tier III cities were not economically feasible but were built solely for political motives and today they are running on losses and some of them do not even have scheduled operations. For airport development in tier II and tier III cities, a consultative approach, where seeking inputs from airlines (as to whether they would like to fly to the particular place) before developing such infrastructure can be useful.” Regional connectivity is the central theme of the National Civil Aviation Policy (NCAP 2015). Improved regional connectivity

48 CargoConnect - focus: air cargo

PPP airports like Delhi, Mumbai, Hyderabad and Bengaluru today rank among the best in their categories, though there has been public criticism about the high charges. is dependent on the operationalisation of nonfunctional regional airports and development of new regional airports. Dubey adds, “This will get a major push now with development of No Frills Airports (NFA) and direct subsidy to airlines operating at the NFA under the proposed Regional Connectivity Scheme (RCS).” It is of great concern that this industry requires a long term horizon looking for 2030 years ahead, but there is hardly any such

capacity plan for AAI. It is important for an indepth structural capacity review in order to make the base infrastructure assessment and the forward plans stronger and sustainable. In the short term, efficient use of existing facilities and e-processing would increase capacity while limiting the financial burden on users. However, with the expected increase in air cargo, it is critical to have long term plans for new infrastructure, keeping in mind the challenges in land acquisition, regulatory hurdles and funding requirement to ensure timely commissioning of facilities for use.

Role of PPP in Development of Airports The government has recently shelved a proposal to develop and improve efficiency at four airports at Chennai, Kolkata, Jaipur and Ahmedabad on Public-Private-Partnership (PPP) basis. PPP has transformed the quality and efficiency of airport infrastructure in the country in a relatively short span of time. PPP airports like Delhi, Mumbai, Hyderabad and Bengaluru today rank among the best in their categories. Kumar states about the important role that PPP plays in the development of airports in the days to come. He says, “The PPP mode of airport development is a global phenomenon now. India opened up the airport sector for private participation through PPP mode in 2005 and since then, five airports are operating under this mode. Though Cochin airport was the first airport to become privatised, it is a unique case when compared to other private airports in India. A fter pr ivatisation, a rema rkable improvement in passenger experience at the airports has been observed. Aesthetically, several airports have been able to uplift the mood of the passengers. Some of the Indian

lookout Mike Chew CEO, AISATS

The airport infrastructure market is highly competitive, but has a lot of growth opportunities in India as it is set to have developed infrastructure in the next 10 years and the private sector is being encouraged to become actively involved in the construction of airports through different PPP models. airports have been consistently ranked higher in air passenger service survey among their counterparts from across the globe. Now passengers have more choices for shopping, eating and entertaining themselves at the airport while waiting for a flight. At a few airports, efficiency — airside as well as terminal — has also improved significantly.” So far, the PPP mode has been able to complete airport development in a timely manner and can be adopted to develop more airports in the times to come. Adding into it Dubey says, “New Greenfield airports e.g. the second airports in Mumbai and Goa are being developed under the PPP mode. Engaging world-class airport companies to operate the existing airports will bring in global best practices, greater competition, higher non-aeronautical revenues and ultimately lower cost per passenger. The government has put the PPP

MoCA will continue to encourage development of airports by the state government or the private sector or in PPP mode. programme at MAA, CCU, JAI and AMD in abeyance for the time being. The government should reconsider the decision and open these airports for PPP, with the tariff regulator AERA keeping a close check on the user charges.” Therefore, PPP plays a vital role in the enhancement of airports, and with mores such initiatives, better days are ensured for the airports.

50 CargoConnect - focus: air cargo

Innovative Practices to Make the Airports World Class An airport should focus on improving efficiency in airside, terminal and landside because an efficient airport infrastructure will automatically enhance the experience for both passengers as well as for people involved in cargo processing. A lot has been done so far to enhance passenger experience at airports but a lot more is still required to be done for cargo handling/ processing. Chew avows, “AISATS has recently been awarded with ISAGO and ISO 9001:2008 certification at all the airports where they operate i.e. Bengaluru, Delhi, Hyderabad, Trivandrum and Mangalore, including their head office in Mumbai. ISAGO certification is a mark of the highest safety standards being followed at the operations. Similarly, our air freight terminal at Bengaluru has been certified with TAPA as per FSR Class A 2014 standards, which ensures enhanced security of the cargo at the warehouse. Apart from safe and secure operations at the airport, AISATS is also committed to investing and upgrading their GSEs. AISATS uses equipment such as electric tractors which help in reducing emission of harmful pollutants and the negative impact upon the environment.” Further talking about the initiatives taken by AISATS for cargo movement at airfreight terminals through the warehouses, he says, “For faster cargo movement through the warehouse, AISATS at their Bengaluru cargo airfreight terminal has adopted revolutionary innovations by introducing Automated Storage and Retrieval Systems (ASRS), Very Narrow Aisle (VNA) trucks with high-rise racking and COSYS software in our operations. In 2014,

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lookout Amber Dubey Partner and Head-Aerospace and Defence, KPMG India

Engaging world-class airport companies to operate the exist-

ing airports will bring in global best practices, greater competition,

higher non-aeronautical revenues and ultimately lower cost per passenger.

we pioneered the use of the carton clamp to enable more efficient handling of loose cargo. The warehouse is also equipped with hitech temperature control system to ensure that perishable and pharmaceutical products are well preserved. E-freight initiative at the warehouse helps in seamless electronic data interchange, leading to rise in efficiency and cost-effectiveness, while further speeding up customs clearance in the cargo operations. A new dedicated perishable cargo handling centre–AISATS Cool port is also currently being constructed at Kempegowda International Airport in Bengaluru. AISATS also has its Dangerous Goods Regulation (DGR) training facility at Trivandrum, duly approved by the Directorate General of Civil Aviation (DGCA) where it provides in-house training for the handling of dangerous goods, both for its staff and also for external customers.”

GST a Boost for Air Cargo Industry It is expected that the proposed Goods and Service Tax (GST) will cause substantial reduction in logistics costs and consolidation of warehousing facilities. JS Balhara, Airport Director, Lokpriya Gopinath Bordoloi International Airport, Guwahati says, “It is anticipated that GST will result in consolidation of warehousing alongside facilitating seamless inter-state flow of goods. GST is also expected to provide an opportunity to dismantle various check posts,

India is expected to be the third largest civil aviation market in the world by 2020 after the United States and China thus bringing about a substantial reduction in logistics costs. Despite faster growth, transport and logistics sector is burdened with high logistics cost of 13-14 per cent of the value of goods. In other developed or developing economies, these costs stand at 6-8 per cent of the value of goods. In a direct cost comparison with China, India’s average cost to export or import one container is around 72 per cent higher in higher transit time. The overall tax on the supply of indigenous goods is around 29.37 per cent.” With the implementation of GST, the revenue neutral rate will be much lower than the present tax rates on goods. This will lead to a lower tax burden for consumers, thereby facilitating a consumption-led growth.

52 CargoConnect - focus: air cargo

(Source: Review of Traffic at Indian Airports 2007-08 by AAI & Jan-Mar 2009 Quarterly Review of Traffic, AAI)

Draft Aviation Policy to Help New Airports The Government of India is supporting the aviation industry by bringing in the much anticipated reforms in the sector through the National Civil Aviation Policy (NCAP 2015), the draft of which was released for public consultation on 30 Oct 2015. The draft states • MoCA will continue to encourage development of airports by the state government or the private sector or in PPP mode. • MoCA will endeavour to provide regulatory certainty. • The capital expenditure of all future Greenfield and Brownfield airport projects promoted by AAI in PPP mode will be monitored closely by AAI. • Tariff at all future airports will be calculated on a ‘hybrid till’ basis. • MoCA will explore ways to unlock potential land use by liberalising the end-use restrictions for existing (excluding PPP) and future airports of AAI and future airport projects under PPP. • MoCA will coordinate with respective ministries and state governments to provide multi-modal hinterland connectivity (road, rail, metro, waterways, etc., as relevant). The future growth in cargo traffic and development of airports requires significant investments in terms of construction of new airports, expansion and modernisation of existing airports and cargo terminals, improvement in connecting infrastructure and better airspace management. While several new projects are in various stages of conceptualisation, development and completion, additional investments in infrastructure would be required to cater to the growing demand and these for sure will bring ‘Acche din’ for the Indian airports.

feature

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ns ratio red the e p t. ng o side ndli en con anspor ling a h be nd nd r tr Grou always er’ of ai und ha o o e hav om feedrport gr mated t t ti n t ai o ‘b bal now es 0 billio t is o l g 8 e s e i D h T S h s m n ines over U his seg e growt s u b orth t v i t d sit en an be w nnum s of po e segm ht g n i a h per ing sig ever, t d the r n w w sho ia. Ho sues a ed on o d t y is in In nique be pla ndlers ik o a u n t h a s ha need ound eep B io r s r d card art of g se. Joy t scena ndling e p n a h e e th with t e curr und h ith o w l dea sses th es of gr India, g n u i i g c s n g s a n e di hall handlin e incre nals c d th ermi an argo t c s on and ial focu f cargo o c spe rtance o p im

54 CargoConnect - focus: air cargo

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feature

round handling addresses the Pushback Baggage Handling numerous service requirements of an airliner from the time it arrives at the airport terminal Boarding Cargo Handling gate till it departs on the next flight. Most ground services Loading are not directly related to the Check-in actual flying of the aircraft but involve other tasks and cover a PRM wide spectrum of airline opera- Cleaning tions. Ground handlers provide efficient, reliable and cost-effective services that include ramp opMaintenance Fueling erations, cargo warehouse handling, aircraft servicing, cleaning of aircrafts, automated weight Security and balance checks, cargo handling and ground Catering support equipment maintenance. Hence, they are considered an integral part of the overall air cargo value chain and contribute significantly to the growth of this sector. craft. The handler has to put in a fair bit of capital investment since all the equipments used in India for wide body planes are Loading and Unloading: Back to Basics imported. Loading a plane is a very specialised task. Apart from Ground handling services begin with unloading. It is the key to success just the task of loading and offloading, the handler is accountin air cargo operations and can be achieved only by adopting secure, able for safety and loading dynamics as well.” timely and efficient ground handling practices and using specialised The work begins from the moment an aircraft lands. A equipment. According to Murali Ramachandran, CEO India, Celebi ground handling staff signals to the pilot with paddles in both Aviation Holding Inc, “Loading and unloading definitely forms a key hands and guides the aircraft to the location where it should part of the air logistics chain. This involves specialised equipment that stop. After arrival, cargo is offloaded, and then the cargo of the is required to load and offload cargo from the belly of a wide body airnext flight is loaded. Cargo is offloaded carefully according to an instruction sheet based on the Load Plan so as to prevent the aircraft from losing its balance in the fore and rear due to the positions of cargo in the cargo compartment. A supervisor (also www.dignityshipping.com known as Load Master) watches carefully so that handling is achieved according to the plan.

A CAPA report from the year 2008 stated that there is no fixed global template for ground handling activities and that

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remains the case today. Even while the aircraft is parked, many ground handling personnel work hard night and day to ensure the safety of the passengers and the aircraft. The ground handler moves the incoming cargo and hands it over to the Cargo Terminal Operator (CTO). Similarly, the outbound cargo is taken from the CTO; it is then shifted and loaded on the aircraft by the ground handler. A different team of CTOs work in the cargo terminal for security, safety and smooth movement of cargo within the cargo terminal, for receipt of outbound cargo and speedy clearance and delivery of inbound cargo. However, in India, there is hardly any difference between the role played by the ground handling agent and the terminal operator.

feature “Given that the airlines’

Quality and Consistency Professional ground handling is not a matter of chance. The main issues or agendas in ground handling that lead to quality and consistency are compliance to safety standards, professionalism and operational excellence. High l ighting their importance, Ramachandran says, “We handle over 40,000 flights per annum between Delhi, Mumbai and Ahmedabad and manage the largest warehouse in Delhi, handling over 4,00,000 MT of cargo per annum. Celebi has invested over `600 crore in these businesses, employing over 4,000 staff. Highly focused on efficiencies and quality, we have grown in India by demonstrating these values in practice to our valuable customers. We were the first ground handler in India to be ISAGO certified. Airlines have other priorities and hence it is important that they have a credible partner to work with, one who understands their expectations and delivers accordingly. Our intention is always to exceed these expectations. This could be in terms of equipment quality, dovetailed with customised service designs and backed up with a strong CRM process.”

key priorities are aircraft safety and aircraft utilisation, we as a ground handler have to deliver our part in ensuring this. Turnaround time Murali Ramachandran CEO India, Celebi Aviation Holding Inc

Prem Bajaj, Chairman & MD, Bhadra International (India) Limited opines, “We firmly believe that customers pay a premium price for air cargo with an expectation to deliver the products at a fast pace. Our efforts as an industry should be synchronised and focused to cater to the need of the hour which is to promote express mode of cargo processing.”

plays an important part in ensuring on-time performance. If a flight running late, we try and give back time through our processes on ground.”

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feature “One of the most com-

Current Scenario In the good old days, the ground handling business was simple. Over time, the handling function has developed as a business opportunity for incumbent airlines and a source of monopoly profits for some. Riding on the opportunity, the market has evolved and today there are large international businesses based on a whole raft of support services to airlines–from executive lounge provision to aircraft cleaning, passenger services to ramp services. Therefore, it is quite important to maintain a consistency in terms of quality and functionality to satisfy customers. Interestingly, ground handling operators have been seen to be highly localised despite the fact that the aviation business increas-

Ground handling services begin with unloading. It is the key to success in air cargo operations and could be achieved only by adopting secure, timely and efficient ground handling practices. ingly demands global solutions. Things are developing slowly in our country and a silver lining is yet to be seen. Some of the major challenges for ground handlers in India are: • Coping up with equipment costs and labour costs which are constantly on the rise, in contrast to low profit margins • Reducing handling errors • Accumulating and exchanging faster and accurate information

mon concerns in the developing world is the long dwell time for air cargo. To improve efficiency, cargo handlers at air Prem Bajaj Chairman & MD, Bhadra International (India) Ltd

cargo terminals should ensure efficient, timely and secure handling of

Significance of Cargo Terminals Thirty five per cent of the world trade by value is transported by air. Air cargo transport thus enables nations, regardless of their geographical locations, to efficiently connect to distant markets and global supply chains in a reliable manner. It is vital to implement best international business practices including just-in-time inventory management. As a result, cargo terminals have become essential links in air transportation chains. Terminals require specific loading and unloading equipment and a wide range of handling gear. Also, the unique feature of most freight activity is a need for intermediate storage space. Assembling the individual bundles of goods may be time consuming and thus some storage may be required. This produces the need for cargo terminals to be equipped with specialised infrastructure such as storage racks, pallets, containers, refrigerated warehouses, Elevated Transfer Vehicles (ETV), etc., to meet the increased demand for air commodity storage. Also, cargo terminals are becoming more

the cargo.” and more important for the processing of bulk cargo and express cargo. Speaking on this issue, Bajaj says, “With the e-commerce industry booming, there is a lot of focus on the airports and the handler to keep pace and bank up the bandwidth for such transactions. Time and speed is of essence in such transactions, given the nature of the consignments.With increasing time sensitivity, air cargo transportation has already become the preferred mode of transportation for various industries. Globalisation of business transactions, shift of focus to just-in-time manufacturing and inventory control methods, along with the growing requirement of industries to deliver products quickly by air to distant customers are the key driving forces in the development of express cargo.”

Minimising Turnaround Time It is vital for an airline to minimise the turnaround time for aircrafts in order to improve operational efficiencies; the role of ground

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feature handlers becomes very critical in achieving turnaround efficiencies. For accurate and efficient loading and unloading of cargo from an aircraft, the ground handling agency needs to be equipped with state-of-the-art handling equipment matching the aircraft configurations coupled with a well trained workforce and clearly defined procedures for each and every activity involved in the complete chain of cargo handling. Celebi, as a terminal operator, has taken significant steps to promote this segment. Ramachandran shares, “We have • Brought in world-class infrastructure with huge capacity to accommodate any

surge in cargo, hence avoiding any form of congestion. • Introduced advanced equipment, including high-end forklifts, reach trucks, TLX machines with automated weight and volumetric scanners for faster processing of cargo and achieving service standards. • Complete automation of the terminal including usage of HHTs in a barcode-based environment • Dedicated zones for perishable and pharma goods processing • Apart from infrastructural and procedural developments, implemented fast track products such as ‘Export Express Acceptance’ and ‘Import Expedited Delivery’ with faster committed processing timelines.” Speed, efficiency and accuracy are the keys to success in ground handling. Ramachandran goes on to say, “Safe, Secure and On-time is the core mantra that defines efficient and reliable ground handling. This, of course, does not undermine service efficiency and other soft aspects of the business. Given that the airlines’ key priorities are aircraft safety and aircraft utilisation, we as a ground handler have to deliver our part in ensuring this. Turnaround time plays an important part in ensuring ontime performance. If a flight is running late, we try and give back time through our processes

62 CargoConnect - focus: air cargo

on ground.” Bajaj rightly points out, “One of the most common concerns in the developing world is the long dwell time for air cargo. To improve efficiency, cargo handlers at the air cargo terminals should ensure efficient, timely and secure handling of the cargo.”

Compliance to Security Standards It is an untold secret that safety in the air begins at the ground. A CAPA report from the year 2008 stated that there is no fixed global template for ground handling activities and that remains the case today. Regulations vary widely across the world, often based on a historic pretext or driven by the desire to enhance competition that is often found in pan-national political and trading blocs. However, one of the universal truths about ground handling is that it is a highly specialised activity with high quality security equipment specially for baggage and cargo handling. A spokesperson at IGI Airport, in a conversation with CargoConnect, said that the quality of handling and security is their top priority and they are trying to improve consistently with their innovative solutions. To support smooth cooperation between all stakeholders, IATA actively drives the development of ground handling operations standards and promotes global consistency and harmonisation. In addition to Airport Handling Manual (AHM) and IATA Ground Operations Manual (IGOM), the IATA Safety Audit for Ground Operations (ISAGO) and Ground Damage Database offer an integrated, unique solution to effectively manage risks in ground operations. Adaptation of high standard risk management methods help in: • Standardised performance • Reduced work complexity and consistent turnaround times • Reduced audit redundancy • Identification of hazards and measurement of corrective actions

• Data driven improvements of performance

Final Words With the rollout of the new Draft Civil Aviation policy, Indian carriers are allowed to continue self-handling ground operations. Hence, the opportunity for third party handlers has ceased. Labour is by far the largest single cost item and is likely to increase over time. Developing infrastructure at cargo terminals with innovative automation techniques is the need of the hour. Handling and processing of cargo comes with its own challenges and requirements involving various stakeholders. India’s aviation industry is in a constant state of flux, where trends and developments on multiple fronts can each exert an influence on a ground handler’s business. Experts predict that in the near future, new operating models will emerge and also, a competitive battle will begin between the few existing players having pan-India presence. Ground handlers are an indispensable part of the successful operations of an airline, and there is a huge opportunity in this segment. Stakeholders need to realise this potential and raise a call for standardisation. This in turn will lead to reduced air cargo costs and improved freight times.

feature

of Dedicated Freighter

64 CargoConnect - focus: air cargo

Feature

Over the last few years, with a rise in demand for rapid delivery of products and changing business models, the demand for dedicated air freighters has increased significantly all over the world. But in India, apart from a select few, no Indian operator offers a dedicated freighter service. Dr Kirti Mudgil Pathak seeks an indepth insight from experts to search the loopholes that prevent Indian operators from entering the field that has such immense scope

focus: air cargo - CargoConnect 65

feature ust-in-time manufacturing and global outsourcing models contribute to the rapid growth of the cargo logistics business. In the present ever changing, ever growing business environment, speed-to- market is a competitive imperative. Thus, a quiet revolution is taking place in the nonglamourous air cargo segment which is fast coming at par with the now familiar boom in the passenger airline segment. Forecast of air cargo volume for India suggests that the domestic and international air cargo throughput is expected to grow by eight to ten times the present level in the next twenty years.

Bellies vs freighters However, Indian flag airlines have always focussed on carrying passengers over cargo. This only shows the poor patronage for cargo. Strong passenger demand among airlines works against a dedicated cargo service. Keku Bomi Gazder, Regional Director-Cargo Indian Sub-Continent, Saudi Arabian Airlines Cargo agrees, “This is a classic case of bellies vs freighters. Both have their importance in their respective business environments. True that the modern long range passenger flights have a substantial belly capacity available, however, the importance of freighters on certain routes and for certain commodities cannot be undervalued.”

Red Tapeism The emphasis placed by the new government in India on development and

good governance has created a new opportunity to reinvigorate bilateral ties and enhance cooperation. Prime Minister Narendra Modi’s visit to different nations from Asian countries to the US and to Europe and the new initiatives like ‘Make in India’, ‘Clean India’, etc., have opened up new avenues. But unfortunately, as of now, according to the ministry of commerce and industry, the trade deficit for April-February, 2014-15 was estimated at USD 125220.94 million which was higher than the deficit of USD 124844.53 million during April-February, 2013-14. Anil Dogra, Cargo Sales Manager, Gulf Air-DelhiCargo opines, “Despite India becoming one of the emerging economic powers, we are lacking in exports. If we compare ourselves with China, we stand nowhere. The red tapeism in our country is the major reason for exports not flourishing.” Economic meltdown, pending free trade agreements or economic and political disturbances could also be the cuprits. Sandeep Juneja, VP–Commercial, DHL Express India states, “While the government has always encouraged exports, the implementation on the ground has always been a concern due to the various barriers and hurdles faced by the trade. The airport infrastructure with its space constraints, cost, multiple agencies and lack of world class freighter handling may also be the reason for the potential remaining untapped.”

Lacunae Affecting Dedicated Freighters The reason for not having a dedicated freighter is poor volume. The demand for cargo space increases only on particular occasions. Juneja says, “It is a fact that passenger and passenger baggage will always have precedence over cargo shipment in a passenger aircraft. Hence airline cargo space capacity will be a challenge when cargo freighters are reducing. The space constraints become profound during peak season just before Christmas, financial year-end or half year-end. The space constraints also occur due to seasonal product rush.” But if that is the reason, it should also be applicable to foreign airlines like Emirates, Lufthansa, Cathay Pacific and Singapore Airlines that dominate this segment by carrying over 80 per cent of all international cargo to and from India. And, most of them have dedicated freighter service. Benaifer Jehani, Director, Crisil pinpoints the problem, “Though this

Feature

Keku Bomi Gazder Regional Director-Cargo Indian Sub-Continent, Saudi Arabian Airlines Cargo

True that the modern long range passenger flights

have a substantial belly capacity available, however, the

importance of freighters on certain routes and for certain commodities cannot be undervalued.

Mumbai

Delhi

Chennai Kolkata Bangalore Hyderabad Ahmedabad

Freight Handled by Major Airports, 2014 (Jan-Sept)

Domestic

According to the DGCA, for financial year 2014, Indian carriers carried only around 18 per cent of the total freight movement in and out of India. This was achieved by way of ‘belly cargo’ in passenger aircraft

ments, production samples, electronics consumer goods and perishable agricultural as well as seafood products. Dogra clarifies, “Due to low yields it becomes very difficult to have dedicated cargo services as they are unable to match operating costs.” Juneja adds, “The biggest concern that can hinder the demand or growth is the lack of airport infrastructure or conducive environment being laid by the airport operators for air cargo and express shipments. While operators have invested in passenger terminals, the same level of importance and investment has not been made for cargo. If the concerns of airport infrastructure and cost is mitigated with the implementation of the government’s vision, India can witness a strong growth unless there is world economic recession.” The demand for transport and logistics services grows in proportion to the buoyancy in economic activity at any given time. Consumer and business demand for goods and services inevitably translates into higher demand for transport and logistics services. Juneja is optimistic, “The turbulence in global trade will indeed reflect in air movements. At the same time, ‘time sensitive’ goods

International

is one of the factors which limit cargo traffic, there are several other issues such as volatility in year-round demand/adequate air cargo (both onward and return routes), gaps in cost-effective infrastructure and regulatory issues pertaining to taxes, duties and levies, etc. In terms of infrastructure, for instance, Common User Domestic Cargo Terminal (CUDCT) is currently functional only at nine locations. Regulation of taxing domestic air cargo service at 14 per cent vis-àvis nil taxation in international air freight adds to the cost of domestic air freight. In this context, Domestic Air Cargo Agents Association of India (DACAAI), in its annual convention held in September 2015, have raised these issues to the Ministry of Civil Aviation.” The demand for air freight is also limited by cost since it is typically priced four to five times that of road transport and 12–16 times that of sea transport. These values differ from country to country, season to season and from product to product and for different volumes also. Cargo shipped by air have high values per unit or are very timesensitive, such as documents, pharmaceuticals, fashion gar-

Source: http://www.slideshare.net

focus: air cargo - CargoConnect 67

feature

Anil Dogra Cargo Sales Manager, Gulf Air -Delhi-Cargo

Increased passenger demand to/from India has resulted in increase of cargo capacity against cargo available in the market.

will continue to travel by air either in the standard cargo mode or express mode. In India, we can expect a strong growth if the government implements its vision of ‘Make in India’, ‘Ease of doing

business’, ‘Single Window’, ‘Digital India’ and such other growth initiatives. Further, the increasing level of sub-contracting, royalty cost and earning expectation adds to the cost of logistics to the

airlines, service provider and exporter/importer. If the concerns of airport infrastructure and cost is mitigated with the implementation of the government’s vision, India can witness strong growth unless

there is world economic recession.” Despite a boom in airline passenger traffic in India, the air cargo industry continues to get step-motherly treatment. Lack of infrastructure, absence

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68 CargoConnect - focus: air cargo

Feature

Sandeep Juneja VP – Commercial, DHL Express India

While the government has always encouraged ex-

ports, the implementation on ground has always been

a concern due to the various barriers and hurdles faced by the trade.

strong support from airport operators will encourage dedicated air cargo services.”

Despite India being on the road to becoming one of the top global economies, the total air cargo handled by all Indian airports was around 1.64 million tons in FY 2014 of dedicated cargo facilities at airports and negligible presence of dedicated freighters in the domestic market are just some of the impediments to its growth. Jehani says, “In March 2015, one of the airlines planned to begin dedicated air cargo services. However, within three months of announcement, it withdrew its plans of setting up dedicated cargo fleet citing similar commercial and operational concerns.”

Juneja adds, “To run a dedicated air cargo service, a high base load is needed to be able to survive for a long sustainable time. The current operator gets critical base load from their express business and smart business initiatives. Unfortunately, the rest of the operators have not been able to survive the cost of operation nor have there been any incentives from the government or airport operators. FDI in cargo aviation and some

Middle East Freighters Recognise Potential Airlines from the Middle East are leading the charts for expansion in the Indian air cargo trade with their tie-ups and initiatives, thus giving tough competition to carriers from Europe, Asia and America. They plan to explore new destinations and increase freighter cargo capacity in near future. Gazder informs, “Recently Saudia Cargo commenced a biweekly freighter using a B747400F on the route PVG / DEL / RUH / JED to connect Africa, Middle East and Europe. This is apart from the bi-weekly turnaround RUH/MUM/JED

which also connects points in Africa, Middle East and Europe. As and when we do see some opport un ities to g row th is business further, we will step into those markets.” Foreign carriers have realised the significant untapped potential for air cargo in India which is the largest air cargo market in the South Asia region. But the Indian carriers have not, say industry sources. Gazder adds, “We are focussed and dedicated on our products and what value proposition we offer our clients. We prefer our growth to be linear and move to markets in which we see an opportunity for long term sustainability. This year we will further increase the number of both passenger flights and freighters.” While Air India’s first phase

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feature

Benaifer Jehani Director, Crisil

Though this is one of the factors which limit cargo traffic, there are several other issues such as volatility in year-round demand / adequate air cargo (both onward and return routes), gaps in cost-effective infrastructure and regulatory issues pertaining to taxes, duties and levies, etc.

of freighter operations was rewarding, it chose to focus on Middle East passenger flights due to good returns rather than on the freight business. In the late 90s, Air India withdrew from freighter markets but restarted in 2007 when it converted its AB310 aircraft into a freighter. But even this was later withdrawn. Similarly, in March 2015, Jet Airways announced

Indian airports was around 1.64 million tons in FY 2014. This is considerably less than the total cargo handled by major airports like Hong Kong, Incheon, Paris, etc. Dogra says, “To survive in the market, we are forced to compete with the other carriers. However, this results in very low yields and because of that, some airlines are reducing their frequencies or quitting dedicated

(a) Route-wise cargo volumes (b) Ease and cost effectiveness of handling the specified commodity at originating and destination airport (c) Availability of alternate modes of transport relative to time sensitivity (d) Regulatory framework, including those that might p e r t a i n to t he sp e ci f ic commodity covering aspects such as tax duties, safety and other compliance aspects.

Cargo Handling

Foreign carriers have realised untapped potential for air cargo which our own carriers have not its plan to launch freighter services, becoming the first private Indian passenger airline to offer all-cargo services, but withdrew its plans in June. Despite India being on the road to becoming one of the top global economies, the total air cargo handled by all

cargo services.” Certainly for some routes, it might be feasible to carry specialised cargo. However, it might be difficult to generalise it on all routes pan-India. According to Jehani ,”Such decisions depend on a combination of factors such as:

70 CargoConnect - focus: air cargo

Airlines, air cargo terminal operators, ground handling service providers, integrated ex press ser v ice prov iders, forwarders, domestic cargo transport service providers and custom house agents are the key players in the entire air cargo supply chain. Thus, the air cargo industry presents a w id e va r iet y of se r v ice providers coming together to move goods both domestically and internationally with a single-minded purpose of faster and efficient delivery. Jehani opines, “Air cargo handled in any country is a function of a basket of commodities entering, flowing through and leaving the country. In addition, it is also driven by

re-export and transshipment cargo handled at the country’s airport by virtue of factors such as (a) geographic location ( b) reg u lator y adva ntages such as SEZ, free zone and (c) widespread air connectivity to other locations, etc. In this respect, air cargo traffic handled in India has been impacted by gaps. For instance, the export competitiveness of India in some of the air cargo dominated industries such as high-end engineering, electronics, highend fashion, etc., has been relatively weak. Add to it lack of clarity on regulatory aspects and gaps observed in some export- oriented zones with limited support from physical infrastructure such as roads, high throughput warehouses, etc., have adversely impacted the aggregate air cargo in India.”

Mending the Loopholes A careful analysis of the above aspects reveals that the Indian air cargo industry is in urgent need to mend the cur rent loopholes in the supply chain if it wishes to compete successfully in the rat race and pocket the harvest that other countries have been successfully reaping so far.

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feature

Opening the Skies s r e t r a r Air Ch

72 CargoConnect - focus: air cargo

Feature

Till date there is no substantial increase in the popularity, growth or utilisation of cargo air charters. India’s air cargo charter market even now faces challenges due to lack of proper infrastructure as well as slot issues and congestion at key airports. Roselin Kiro with inputs from experts scrutinises the areas where the air charter cargo can grow to its full potential

ndia has always had the potential to become a key hub for the international air cargo market but it is still on paper and seems like a distant dream. It is because India lacks economic reforms and poor infrastructure investment has slowed down development. However, keeping in mind India’s growing demand for cargo services, the government is currently working on constructing new cargo centres.

of passengers across all airlines. This is more commendable if we look into the fact that the low frill airlines phenomenon has subsided. Expressing concern over the withdrawal of low frills airlines and airports, Manpreet Singh Dahri, Manager Cargo and Business

in airport infrastructure is the only solution to slot issues.”

Flexibility of Air Charter Operations Flexibility as well as easy formalities in

Infrastructure a Menace Paucity of warehouse storage facility, cold storage, administrative facility such as customs and technical equipments for the storage of cargo and onward upliftments at key airports hampers day to day quick routine clearances. Rishabh Birla, Managing Director, Air Shagoon Network Pvt Ltd shares his opinion about the challenges, “The problem is prominent as far as perishable goods are concerned. The non-acceptance of slot approval for wide body aircrafts and also limited parking time at their disposal is also a matter of concern. The airline operators have to co-op the proceedings on war footing which results in mishandling of cargo and also attracting damages to the cargo. However, if the airport operators ascertain to create special warehousing space, arrange equipments for utilisation in a proper manner and encourage more and more aircrafts irrespective of size to land and get parked the cargo market would find more time to accumulate maximum cargo to later dispense the same in the warehouse and later onward transportation.” India is emerging as the fastest growing aviation market and domestic air travel has shown a fast and positive growth in the number

Development, Namaste India Aviation Pvt Ltd comments, “The phenomenon of low frill airlines and airports cannot be wished away considering the positive market scenarios. The government has to formulate a policy to develop low frills airports to sustain the growth of the domestic travel market and it will also aid the growth of tourism, both domestic as well as international. The technological advancement in navigation and tracking of aircraft movement offers possibilities to address the issues of congestion. Upgrading the existing airport infrastructure and facilitating further growth

air charter cargo market is at a very nascent stage in India and controlled by a handful of people air charter operations can result in more aircraft movement, making it viable for cargo air chartering in India. With the onset of open sky policy, validated by the Government of India during the year 1992, air charter movement in the territory of India both passenger and cargo aircrafts was expected to increase vastly. In the same context, Birla avows, “Due to

focus: air cargo - CargoConnect 73

feature the intervention of red tapeism, the open skies policy as envisaged by our government with regard to giving more space and facility to aircraft operators is not all that emboldening.” Some factors need to be taken care of, like the prohibitive cost of landing, parking charges, coupled with the high cost of Aviation Turbine Fuel (ATF) and other costs depending on the taxation structure, etc., which are not letting the air charter business grow to its full potential. Dahri adds, “The restrictions in the use of available air strips have eased off in the last few years, but still there needs a lot to be done in removing the restrictions on many airfields which are primarily used by defence forces. Acquisition of aircrafts should be made simpler and the government should offer incentives to air charter operators till the time low frills airports infrastructure attains a remarkable presence across India.”

Challenges Faced by Air Charter Operators in India According to experts, there are various hindrances which defunct air charter operations. Dahri says, “The government does not recognise the potential of the air cargo charter fraternity as an essential component of the aviation industry. The primary problems for the air cargo charter fraternity are: a) Prohibitive cost of landing and parking charges at airports.

b) ATF and different cost of ATF in each Indian state. c) Outdated policies of Minimum Crossing Altitude (MCA) and DGCA regulations which do not reflect on the present aviation market requirements.” Birla says, “There are challenges such as stringent custom policies towards import / export rules which ultimately result in delays as well as penalties which are not in the knowledge of either the importers or the exporters. The amount charged towards various services by both airport operators and warehouse organisers is exorbitant, which certainly demoralises the promotion of cargo services. The Government of India, on behalf

Manpreet Singh Dahri Manager Cargo and Business Development, Namaste India Aviation Pvt Ltd

“Till the time the government recognises the air charter cargo market as an essential component of the aviation industry, we cannot

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expect any exponential growth in the number of trained and professional people for this industry.” of its ministry, must look into the above symptoms of challenges to be diagnosed favourably.”

Operations in Domestic Market Cargo professionals work in fine tuning with airlines and eco friendly airports and also are involved in the administrative functioning within airports. They are also required to maintain good relations with importers/exporters dealing with worldwide international corporate houses and fulfill their needs by giving their services on behalf of their airlines. But their numbers can be be counted on finger tips. Dahri expresses concern over the slow growth and says, “The air charter cargo market is at a very nascent stage in India and controlled by a handful of people who have connections in the corporate world and political sphere. Since this market is small, very few trained or experienced people are found in this field. Till the government recognises the air charter cargo market as an essential component of the aviation industry, we cannot expect any exponential growth in the number of trained and profes-

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sional people for this industry.” Encouraging more air cargo charters can pave the way for operators who wish to fly on those routes which are presently not within their reach. Birla says, “It is quite evident that the more the sky is covered, the better is the advantage for those who have been yearning to get themselves inducted and established in far flung areas where accessibility for such kind of transportation was not possible earlier.” Dahria adds, “There are certain areas which do not bring the required financial results with scheduled operations due to certain factors like seasonality, terrain, population spread and accessibility, but such places do offer possibilities which can be explored for economical gains. Air cargo charter fraternity can step in and make use of such possibilities.”

Directorate General of Civil Aviation (DGCA’s) Initiative The Directorate General of Civil Aviation (DGCA) has considered allowing cargo and air charter firms to convert to scheduled operators to fly on routes not touched by existing scheduled airlines. The decision of DGCA to amend the regulations which have eased off the restrictions on a minimum number of aircrafts required to qualify as scheduled airlines is a great step which will help the growth of air charter cargo industry. It will help to enhance connectivity to hinterlands of

How Beneficial is ‘Make in India’ Programme? The entire logistics industry is optimistic about the ‘Make in India’ campaign. It is a driving growth in the logistics segment and along with e-commerce, this is a segment that is set to grow quite well. The air cargo industry in India has grounds for increasing optimism as the rise in e-commerce and the ‘Make in India’ programme begin to flourish. Will this also boost the cargo air charter sector? Birla elucidates, “The recent ‘Make in India’ initiative will

Rishabh Birla Managing Director, Air Shagoon Network Pvt Ltd

“It is quite evident that the more the sky is covered, the better is the advantage for those who have been yearning to get themselves

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make it more convenient both internationally as well as on the domestic front. This can be a great opportunity for the air charter cargo industry if initiatives are taken for such operations. Talking about the opportunities, Dahri claims, “The scheduled airline operators may be big in their own space but they also have some limitations besides their capabilities. The last mile connectivity for the to and from movement of goods under ecommerce and the ‘Make in India’ programme will offer many opportunities of growth to air cargo charter operators.” Therefore, air chargo charter operations have tremendous scope in the Indian aviation sector but all needs reformed policies, encouragement from the government and acceptance from the industry. It is time government rethinks on the policies and offers incentives to air cargo charter operators which will help this industry segment grow and prove to be an essential segment of the Indian aviation industry.

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Interview

“Make in India bound to increase imports and exports” The Air Cargo Agents Association of India (ACAAI) is set to host its 42nd Annual Convention in Vietnam in December. Hemant Bhatia, President, ACAAI in an interview with Ritika Arora Bhola, talks about the much relevant theme, ‘Make in India – Local is now Global,’ its activities, choosing Vietnam as a venue and the developments that can truly convert ‘local’ to ‘global’

78 CargoConnect - focus: air cargo

Tell us about your background and journey so far. The ‘Make in India’ initiative of the PM is a key ingredient of the Union Government’s plan to revive business sentiments in our country. During the last few years, India’s foreign exchange earnings have been largely derived from export of services, particularly the IT services sector. The Union Government has, therefore, rightly identified the need to boost the manufacturing sector, which is the main revenue earner in the developed economies globally. The large-scale implementation of this programme has the potential to create numerous jobs, adopt cutting-edge technology, meet domestic consumption needs, as well as increase exports on a large scale and propel India into the league of developed economies. In the services sector, ‘Make in India’ has already been a huge success on a global scale, particularly in the IT services segment. This is primarily due to the technical qualifications, analytical and problem solving skills, English language capabilities and the young age

experiences to its members through its annual conventions, so that they can enlarge their business interests while also experiencing different cultures.

Please tell us about the initiatives taken up by the ACAAI body for the development of the Infrastructure is the key for ‘Ease air cargo industry? ACAAI, founded in 1970, has a strength of Doing Business’ and ‘Make in of over 600 members. The primary ob- India’ initiative provides the necjectives of ACA AI are to promote the essary boost to infrastructure growth of the air cargo industry in India, and MRO facilities. Comment. facilitate the ease of doing business and safeguard and promote the interests of its members. ACAAI promotes growth, development and professionalism in the Indian air cargo sector. The association provides a regular medium for dialogue with ministries and departments, regulatory authorities, airlines, customers, exporters, importers, etc. ACAAI maintains close contacts with world bodies related to the air cargo trade and represents matters affecting our country’s air freight forwarding industry at various international forums. ACAAI

The expected boost to manufacturing activities in India through the ‘Make in India’ proincrease in the scale of imports and exports.

Why have you selected Vietnam as the venue for ACAAI Convention this time? Vietnam is an emerging economy in the Asia-Pacific Region, and an important trade partner of India. The trade between India and Vietnam is expected to grow substantially during the next few years. ACAAI has kept this significant aspect in mind when deciding to hold its 42nd Annual Convention at Ho Chi Minh City this year. ACAAI also tries to give varied

In general, the industry requires good infrastructure to implement programmes with speed, efficiency and cost-effectivness. ‘Make in India’ will therefore act as a catalyst for the enhancement and upgradation of the existing infrastructure in our country. The Union Government is providing the required thrust in this regard through its various programmes for expanding road network, modernising the railway system, upgrading and modernising airports and seaports, improving communication facilities, availability of power, etc. Thus it can be seen that all the complementary actions which are required for the successful implementation of the ‘Make in India’ initiative are being addressed by the government.

India is not merely a market but an investment opportunity for the international air cargo sector. What according to you are the developments that can truly convert ‘local’ to ‘global’?

gramme is bound to result in an

of the Indian technocrats in this sector. It can, therefore, be expected that the ‘Make in India’ programme will be equally successful, if not more so, in the manufacturing sector.

has also partnered with Kale Logistics Solutions Pvt Ltd in developing a Cargo Community System ‘UPLIFT’, which is one of the most advanced systems of its kind in the world. This system is widely used by freight forwarders, airlines, etc., for their day-to-day operations.

gathers useful information on different aspects of the industry and disseminates the same to members and allied organisations through regular circulars and newsletters. ACAAI is a member of several important government committees, including Air Cargo Logistics Promotion Board (ACLPB), Standing Committee on Promotion of Exports by Air (SCOPE Air), Advisory Committees of the Indian customs like Trade Facilitation Committee (TFC), Cargo Facilitation Committees of the Airports Authority of India (CAFAC) among others. As a member of several national Chambers of Commerce, such as ASSOCHAM, IMC, CII, ACAAI actively participates in the activities of these bodies and contributes inputs pertaining to logistics and air freight sectors. ACAAI

The expected boost to manufacturing activities in India through the ‘Make in India’ programme is bound to result in an increase in the scale of imports and exports. Local goods which are manufactured in India will require a certain amount of imports. The manufactured goods will be exported. Thus ‘local’ goods will become ‘global,’ as is the case with major export-oriented economies, such as Japan. The increase in imports and exports will necessitate more air freight services, thereby providing a great opportunity for the air cargo sector to enhance its volumes and revenues significantly. Quality standards are also bound to improve considerably to meet the exacting requirements of foreign customers.

focus: air cargo - CargoConnect 79

Interview

“We took the lead in making this a specialised industry” Founded in 1986, R E Rogers India Pvt Ltd has earned the industry leader position today. Over the last two decades, it has played a vital role in the national and international trade exhibition industry. Ravinder Sethi, MD, R E Rogers India Pvt Ltd and also a visionary entrepreneur, in an interview with Joydeep Banik opens his heart out on his journey so far in India and the road ahead

Tell us about your background and journey so far.

Let’s start from the beginning. My father’s first posting as a career diplomat was in Cairo, making me an Egyptian by birth. Interestingly, the first two letters of my name ‘Ra’ was the Egyptian Sun God! There are pros and cons to such a childhood. The social downside of moving homes regularly meant parting from friends but the up-

80 CargoConnect - focus: air cargo

side was making new ones. My challenge was to learn how to adjust fast. Being part of a diplomatic family enabled me to hone the interpersonal skills needed to effectively adjust to the vast variety of cultures I deal with daily in my business. On the whole, I found that the travelling in my early years enhanced my level of knowledge, tolerance and maturity as I became an adult. It was a practical education which is unattainable in any university in the world! In 1986, I, along with my wife, founded R E Rogers India Pvt Ltd. Today the company has become the leading force in the exhibition logistics industry in India.

earlier, continued to guide and help me with my venture. The other challenge was finances. My pride did not allow me to borrow–so, we struggled and succeeded.

How are you taking exhibition logistics to a global level? Previously, the exhibition logistics industry was literally non-existent. Lot of things were done on an informal basis, using obsolete infrastructure and skilled manpower for operations. We took the lead in making this a specialised industry, different from the normal cargo lo-

I say with pride that we led the way, set the systems, and put this industry on par with global trends. As a company, we kept pace with the digital revolution, state-of- the- art infrastructure and a high level of professionalism in human resources. We have also earned a high level of respect in the global industry through our business acumen and our involvement in several associations such as UFI where I serve on the Executive Committee. Other associations include International Exhibition Logistics Association (IELA) in which I am on the Board and was also past Chairman, and the Indian Exhibition Industry Association (IEIA), where as a founding member I played various roles, and I am an Executive Committee member till date.

What were the initial challenges when you established the company?

To be ver y honest, the initial challenges were not related to the work, to logistics, to freight, or customs, because I had all the experience and expertise. The biggest challenge was how to run a business. Coming from a middle class background and being thrown into this world was the biggest challenge. Here my mentor and guru, TN Vohra, with whom I was working

gistics. I say with pride that we led the way, set the systems, and put this industry on par with global trends. As a company, we kept pace with the digital revolution, state-of-the-art infrastructure and a high level of professionalism in human resources.

What motivated you to be a part of the logistics industry and how has the experience been so far? I never wanted to be in logistics. I did my Bachelors in Economics, followed by a Masters in Business Economics from the Delhi School of Economics. I wanted a doctorate and become a professor. Personal reasons necessitated me to start working. My second career option was marketing in one of the pivotal private sector companies at that time. That didn’t happen either. So, destiny deemed it otherwise. I got into exhibition logistics purely by chance on October 1, 1977 and here I am today. Absolutely no regrets!

How important were your ISO accreditations in getting to those levels?

On ISO, let me tell you a secret. At the initial stage, I was no enthusiast for ISO certifications. I wanted to only use the ISO stamp for marketing purposes. But this perception changed very fast. Today we have quality, environment and health and safety accreditations that are being strictly followed. I have no doubt that in doing so, we have enhanced our service quality levels and made a fruitful contribution to society.

What are the special requirements for supply chain in the military and defence sector in India?

a) Delivery of highly sensitive equipment to highly obscure locations with military precision needs all the components of the supply chain operating per excellence. There is absolutely no scope for fault or a break. b) State-of-the-art handling equipments, high quality systems and professional manpower are absolute necessities. c) If there is a ‘litmus test’ on the effectiveness of supply chain, it is in the military and defence sector in India.

Any expansion projects/plans in near future?

There are two major areas for expansion in our present portfolios. First, we are moving at a very fast pace in handling import defence projects. In line with the government’s ‘Make in India’ focus for this sector, we are ensuring the global investors are serviced by R E Rogers India – a 100 per cent Indian company. Secondly, we have initiated the expansion of our overseas exhibition business. As we are market leaders in handling exhibition logistics in India, we will take on this lead role for taking Indian exhibitors abroad. Give us 12 to 18 months for this.

In a few words, what would you say is the ‘mantra’ for your success?

- We lead the way and set the rules. - We keep pace with the fast charging digital and technical revolutions. - We maintain relationships, both internally and externally. - We retain our culture and our humility.

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Interview

“India is an important market” Qatar Airways Cargo recently organised a press meet in Doha, Qatar to showcase their world-class facilities at Hamad International Airport and the new services started by the country’s national airline. Ulrich Ogiermann, Chief Officer Cargo, Qatar Airways, in an EXCLUSIVE interview with Ritika Arora Bhola talks about their new services like QR Equine and QR Express. He also comments on the Indian market and types of cargo transported to and from the country

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Please share the current scenario of Qatar Airways Cargo in India. How crucial is the Indian market for your cargo operations? India is an important market. The demand for air cargo transportation to and from India has increased significantly over the last few years. In India, there are big restrictions on the passenger side, but we have open skies for cargo transportation and this helps us at the moment tremendously because India is a liberal country and a booming economy. We see a lot of trade coming in and out. We are also increasing our network according to the needs of the Indian subcontinent. At present we transport airfreight to 12 destinations which include Delhi, Mumbai, Hyderabad, Ahmedabad, Kolkata, Bengaluru, Goa, Chennai, Kochi, Calicut, etc., providing more than 100 frequencies per week combined through its dedicated freighter and passenger fleet.

cells, allowing us to cater to specific customer requests and demanding shipment requirements. We al s o ha v e the Q uick Ramp Transfer (QRT), the fastest airline transfer in Doha. The use of climate-controlled vehicles eliminates temperature exposure risk and guarantees absolute temperature-controlled transfers. We have now 54 certified stations in the network which are most important for pharmaceutical traffic.

We have been involved in this service for a long time. There is a state in Doha called Al Shaqab, which has the world’s largest training and breeding ground for race horses. We are also investing more in infrastructure, equipment and hiring more animal veterinarians so as to provide a one- stop shop solution to our customers.

Please elaborate on the worldPlease tell us about the prodclass pharmaceutical transporucts that are mainly transporttation services provided by the Please tell us about the new ed to and from India. Qatar Airways Cargo transports prodQatar Airways Cargo. We offer a well-designed service that ser vice ‘QR Equine’ started ucts such as garments, textiles, leather provides optimal conditions for pharma- by the Qatar Airways Cargo products, perishables, meat, machinery, ceutical shipments across the world. We for safe equine transportation pharmaceuticals, automotive parts, luxury cars, to name a few. have Pharma Express flights direct from worldwide. pharmaceutical production areas, feeding our hub in Doha, where our new fleet of climate-controlled vehicles eliminate temperature excursions and provide a rapid seamless transfer. We have ‘Active Temperature-Controlled Containers’ that are specially designed to maintain a constant temperature during the entire transportation chain. We offer a choice of C Safe for Envirotainer Active Units that maintain a precise temperature from -20 degree Celsius to + 25 degree Celsius. They are designed to provide a constant temperature throughout the entire journey. For full container loads, we have passively packed shipments with temperature-controlled storage either at +2 degree Celsius to +8 degree Celsius or +15 degree Celsius to +25 degree Celsius in any one of the over 150 temperaturecontrolled and monitored container

We offer professional care and worldclass services to the horses. With our modern fleet of Airbus A330, Boeing 777 freighters with controlled temperature zones and a network of more than 150 destinations, comfortable and spacious horse stalls. We guarantee care, comfort, safety and reliability for the smooth transportation of our equine guests. Our dedicated team is well-trained and works in line with IATA’s Live Animals Regulations (LAR). On board, we provide first class jet stalls and dedicated product management and support so that the horses are comfortable. In our aircrafts, A330 freighter, we have nine horse stalls which can accomodate 27 horses at one time whereas our freighters B777 and B747 have 25 and 26 horse stalls and can carry 75 and 78 horses respectively. It is not that we have started with this type of transportation all of a sudden.

The e-commerce sector is growing at a very fast pace. Please tell us about your new courier service–QR Express.

Due to our huge network, we are catering to a lot of destinations. We have many freighters with huge belly capacities, lots of overnight opportunities and therefore, we are in a position to offer this kind of product here. If you have small operations, smaller destinations and less number of freighters, you cannot run courier operations. We can’t do everything ourselves, we are finalising the contract with an outside specialist, who is an expert in that area. They will do the infrastructure on the ground, receiving of the shipments, handling load to the carriers and door-to-door delivery to the customers.

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Interview

Strengthening the Indo-Africa Knot Indiaâ&#x20AC;&#x201C;Africa air cargo business sees a great rise in the times to come. Efforts are being taken to bring both the countries together at various India-Africa forums for the better growth of bilateral trade. Berhanu Kassa, Director Global Sales & Services, Ethiopian Cargo in an exclusive interview with Roselin Kiro avows how Ethiopian has seized this opportunity to fill the gap between both the countries, strengthening the Indo-Africa growth ideology

What are the deliberated key issues that could help further strengthen the India-Africa cargo trade? Bilateral trade growth and development of India and African nations will provide greater opportunity for increased trade relationship. This requires the right policy and a long term strategic economic development cooperation move by India.

The recent India-Africa forum summit, wherein 40 African countries participated for investment in various development trades, business investments in IT, healthcare, agriculture, security and defense sectors, gave a robust fillip to India-Africa overall growth. Bilateral agreements between India and Africa will further strengthen trade relations and enhance trade.

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It is said that India is most likely to invest in Africa, but there is lack of freighter flights from India to Africa. How do you think this gap can be filled? India has clearly announced its intention to invest in Africa at various India-Africa forums. Ethiopian has seized this opportunity in its position as the premier

airlines to connect India with Africa over the past over four decades, in keeping with the age-old slogan “Bringing Africa to the world,” to further strengthen the Indo-Arica growth ideology. Ethiopian being the largest freighter operator of Africa extended its reach to cover Indian markets and ser ve maximum destinations across Africa being the largest freighter fleet, STAR Alliance member, fastest growing airlines with the youngest fleet operating state-ofthe-art aircraft B787-Dreamliner, B777, etc. Ethiopian Airlines has been serving India for the last 25 years using Mumbai as gateway. Currently Ethiopian operates from DEL, MUM, MAA and soon to launch BLR with B777 freighter aircraft, thereby covering the major air export markets of India. These freighter services have connections to all African cities with scheduled passenger and freighter services. Major African cities such as Lagos, Kano, Kinshasa, Brazzaville, Lome, Lusaka, Harare, Kigali, Bujumbura, Nairobi,

SLOT on arrival due to airport congestion and airport construction activities. Besides, so many customs and public holidays in India slows down export clearance, forcing the airline to cancel or re-schedule flights to ensure maximum cargo uplift to aircraft capacity.

Indian exports having potential in African markets are pharmaceuticals, healthcare products, textiles, garments, telecom products, petroleum products, machinery, chemicals, projects cargo. Pharma is a major export from India to Africa, covering east, west, central and South African points. Apart from pharma, various other products like textiles, garments, machinery, telecom products, raw materials for various projects in Africa, etc., are equally important. Telecom products were a major

tion, raw material, machinery and consumer goods are major export commodities into Africa. Similarly there is a significant amount of cereals, and apparel imported into Indian markets through airfreight from Africa.

What are the challenges of operating full time freighter services between these countries?

Export from African countries to India is very limited. Hence, flights to India have to operate empty to pick up Indian exports. The other major challenges for freighter services operation are Strict

als, precious stones, etc.

There is a need for direct connecApart from pharma, what are the tivity to Africa from India which other potential goods and sectors at present goes through hubs in which can boost trade between Middle East. Please comment. the two countries? Indian corporate companies have already

Project cargo of power equipment, construc-

Juba are serviced with B757 freighter on regular basis, besides operating part and full charters to a plethora of African points. Ethiopian Airlines has sufficient capacity to serve India – Africa market and has plans to expand its services by adding more frequency on existing points as well as adding more points in India.

Africa to India impor ts potential: leather products, live animals, flowers, fruit and vegetables, fish, spices, miner-

export when NOKIA was in India and now moved to the Far East, which reduced huge volumes of about 26,000 tons of annual air exports worldwide, with a majority to Africa. Hopefully, a replacement company will arrive in the near future to replace these huge volumes. Another future promising air export product would be India-Africa e-commerce, which if established, will remove inventories to a great extent, and bring greater export volumes. India is a huge exporter of a variety of perishables like flowers, fruits, vegetables, fish, meat, etc., to various other countries and recent African countries. Wealth from oil, minerals, etc., will add substantial buying clout from buyers in Africa in the near future.

begun investment in African countries infrastructure etc., especially with African countries new finds in oil, minerals etc., bringing huge wealth and purchasing power. In the past, African traders would travel to India and search for products. IT has bridged the commerce gaps to directly and instantly deal with purchase of various commodities directly from Indian exporters, with a plethora of choices to African buyers, increasing the supply cycle and reducing storage costs, bringing about almost zero inventories for African buyers. Ethiopian airlines is a direct link serving India to Africa directly and hence still plays a dominant role in transporting Indian exports to African countries. With the growing number and capacity, Middle East carriers are also taking the share although via their hubs in Gulf points. Passenger aircraft operate to various African cities to supplement the belly capacity of average of 10 to 15 tons per flight to cover various African points and reach to cover maximum destinations in Africa. The airline has one of the largest state-of-the-art cargo terminals which provides various facilities for general cargo, perishable cargo, DGR, courier, temperature controlled cargo, etc., and is further increasing capacity by also building a new modern cargo facility which will give 200 per cent capacity increase by the end of 2016. Hence, the airline will remain the right choice to connect the India sub-continent directly with Africa.

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Interview

Guwahati AirportOpening Skies for the Eight Sisters India has the fastest growing domestic aviation market in the world. Experts forecast that the domestic traffic will grow at 15 per cent for the current fiscal year. Guwahati being the gateway to the northeastern Indian states, also foresees a huge potential in the air cargo market. J S Balhara, Airport Director, Lokpriya Gopinath Bordoloi International Airport, Guwahati in an exclusive interview with Roselin Kiro shares the current scenario of air cargo, infrastructural growth and the business that the airport anticipates in the coming years

What is the scenario of air cargo at Guwahati airport?

The domestic cargo has got a huge potential at Guwahati. All scheduled airlines operating from Guwahati like Spice Jet, Indigo, Air India, Jet Airways, etc., carry a lot of cargo to and from the airport. Due to geographical conditions also, many cargo are airlifted to states like Manipur, Agartala,etc., from Guwahati. Looking at the potential recently Blue Dart, a major player in air cargo, has started their cargo operation from Guwahati.

Is Guwahati airport ready for change in terms of infrastructure and investments?

Guwahati airport handles almost 8,000 passengers and 150 tons of cargo per day. The number is growing day by day. To accommodate this, AAI has already started an integrated cargo terminal with an estimated cost of `3,00,00,000 and expected to be completed by March 2016. Also, a state-of-the-art perishable cargo terminal is planned to be constructed at Guwahati in coordination with Assam Industrial Development Corporation (AIDC).

What kind of increase in business are you anticipating in the coming years?

Guwahati is among the top 15 cities of India in online commerce. Out of 1,300 species of Orchids, 800 are found in the north east. Assam itself accounts for a 55 per cent share. North east produces 1,000 MT Kiwi fruit and 50,000 tons of passion fruit every year. Forty

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per cent of the total pineapple of the country is produced in the north east. Forty per cent of the total cardamom of the country is produced in the region, 2.3 lakh MT ginger is produced by north east every year. 400 million kg tea is exported every year from Assam. Due to the absence of an international flight, all export is routed via Kolkata.

What is your take on GST? Will it act as a boost to the air cargo industry in Guwahati? The proposed Goods and Service Tax (GST) will result in substantial reduction in logistics costs and consolidation of warehousing facilities. An inefficient logistics network created using smaller warehouses to save on state taxes has resulted in higher costs and increased inventory levels. It is anticipated that GST will result in the consolidation of warehousing alongside facilitating a seamless inter-state flow of goods. GST is also expected to provide an opportunity to dismantle various check posts, thus bringing about a substantial reduction in logistics costs. Despite faster growth, the transport and logistics sector is burdened with high logistics cost of 13-14 per cent of the value of goods. In other developed or developing economies, these costs stand at 6-8 per cent of the same. With the implementation of GST, the revenue neutral rate will be much lower than the present tax rates on goods. This will lead to a lower tax burden for consumers, thereby facilitating a consumption-led growth.

Interview

“We are looking at creating asset-based growth” GSEC Limited, formerly known as Gujarat State Export Corporation Limited is a public limited company that engages in the activities of export and import facilities as a merchant exporter, and is a custodian of customs at Air Cargo Complex, Ahmedabad. GSECL aims to set the pace of the logistics sector in India and offers customised air cargo solutions for local trade. Rakesh Shah, Chairman and MD, GSECL in an interview with Joydeep Banik discusses their operational areas and future expansion plans

Tell us about your back- After cargo admission at ground and journey so far. airports, what activities are We had been in domestic and inter- performed by your agents/ national trading for over three decades before we began managing employees to facilitate custhe air cargo complex at Ahmedabad toms clearance and ensure a International Airport in 2004. The hassle-free EXIM trade? experience assimilated during our trading days have come in very handy since we could appreciate the demand of trade associates – having ourselves been one. The journey so far has been extremely satisfying. From levels of 5000 MTs to 30000 MTs in just over a decade is an indication that whatever we did met with positive response from the industry. We are proud of the goodwill we have generated across stakeholders during this period. We are also happy that we have been able to augment our air cargo operations at Ahmedabad by creating product-specific facilities and de-bottlenecking. We are also operating at Indore and Vizag. We are now focusing on domestic CUDCT operations and would soon commence operations at Raipur and Indore CUDCT.

Though as custodians, we do not directly involve ourselves with customs clearance, our employees ensure that all activities leading to customs clearance and post-clearance are carried out as efficiently as possible. We have migrated from an in-house IT system to Kale Consultant’s Galaxy so as to ensure faster processing and future connectivity of our database with stake holders. We see this as a major facilitation initiative going forward.

Tell us about your in-house infrastructure projects like ICDs, oil refinery, etc., and other initiatives. We are looking at creating an assetbased growth and planning to implement an ICD project soon.

How do you provide customised air cargo solutions for Any expansion plans or new importers and exporters? projects in the pipeline? We try to analyse the pain areas for local trade and resolve them. For example, pharma industry had a specific cold chain requirement and we went about resolving it by adding cold rooms, temperature controlled x-ray areas and post-screening cold areas. Similarly for bullion, mobile phones and other electronics, we have created secure areas specific to the needs of importers.

As I mentioned, we are currently focusing on domestic cargo opportunities. We have successfully bid for Raipur and Indore CUDCT and would continue to look at more opportunities in this area. Aviation as a sector looks very attractive and we intend to grow in this sector leveraging our experience so far.

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Interview

“They’ll say Pronk-it, instead of pack it” Pronk Multiservices is a constantly growing company which adds value to the business of industrial packaging and lashing of cargo which are effective and economical to people who wish to try out new products of packaging. Shailendra Singh, MD and India Head, Pronk Multiservices shares with Deepannita Chakraborty more about the company, its vision, its USP and the latest trends in the packaging industry. He is confident that a day will come when they’ll say Pronkit, instead of pack it!

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Please elaborate on the current percentage of growth observed by Pronk in the last few years. Where do you see the graph moving in the coming years?

We started Pronk in the year 2011, so we are just a four-year-old company. When we started, the market condition was not up to the mark. India was hit by recession, but we took off pretty well. For the next three consecutive years we saw a growth percentage of approximately 300 per cent, 200 per cent and 100 per cent respectively, which is pretty good considering the current scenario. Our major focus in India is on industrial packaging which basically consists of packing of heavy/odd-dimensional machinery and equipment such as aeronautical products, turbines, wind mills, boilers, cars, trucks, aircrafts, etc. We are certainly growing and in the next five years we foresee a growth percentage by almost 30 per cent every year.

things which are unpackable. We pack railway coaches, windmills, electrical panels, turbines. Small packing is something which everyone can do. But we do something different. We have engineers and software who help us in the packing process. In a span of four years, we have a workforce of 300 people. We have diversified ourselves a lot. We did not isolate ourselves to one kind of packaging. From heavy engineering to automotives to aeronautics, we have ventured into all the arenas. There will be a day when people will say â&#x20AC;&#x2DC;Pronk it instead of Pack it.â&#x20AC;&#x2122;

The packing and lashing industry is still at a nascent stage in When it comes to air freight, India. Comment. People are not willing to understand what are the factors which afthe fact that there are more solutions fect the secure transportation to packaging which are user-friendly and cost-effective. They depend on the of cargo? What packing servicold wooden packaging since time imme- es do you offer to your custommorial. Packaging has gone a lot ahead ers for air cargo? with a number of innovations. And we at Pronk ensure that our clients are satisfied with our services. We have got lots

People are not willing to understand the fact that there are more solutions to packaging which are user-friendly and costeffective. They depend on the old wooden packaging since time immemorial. Packaging has gone a lot ahead with a

The journey has been very exciting. It was definitely a roller coaster ride. I come from a hardcore freight forwarding background and after serving two decades in the cargo industry, it was not an easy task for me to manage the packaging and lashing industry. For us in the cargo industry, packaging was a small thing, but here the scenario is completely different. At Pronk, we pack

We always start a project with three things in mind. First and foremost, we provide world class packaging to secure the product. The packaging is secured to arrest the product inside the box to prevent damage due to movement. Second, carriers (be it vessel, airlines or road transport operator) should find it easy to handle the packed product. It should be packed lightly. The third equally important factor which we keep in mind is to offer a competitive pricing to our customers.

What are the new projects in the pipeline?

number of innovations. How has the journey been so far?

ture and technology? Our aim is to give the same level of professional services across the country and we focus a lot on enhancing technology, speed, accuracy and always try to introduce new packaging material which is a continuous process. In order to increase production capacity, people have started using latest technologies like wood cutting and timber cutting machines, pneumatic nailers with mobile compressors, etc. Nowadays, more and more companies are gearing towards eco-friendly packaging.

of intelligence in our network. We deal in knowledge-sharing network, where we share knowledge from one centre to the other. It is taking time and effort for us to educate ourselves. It is definitely at a nascent stage but we are improving on it.

Please tell us about the latest trends in the packing and lashing industry. Do we have the required expertise, infrastruc-

In the coming year 2016, we are planning to set up plants in the eastern part of India near Kolkata. We are also coming up with something related to railways.

What is your clientele in India? We have customers like Alstom, ABB, LG Electronics, Nissan Cars, Triumph Motorc ycle, Volvo Tr uck s, Terex , ISGEC Heavy Engineering Ltd, Metso Minerals, Axis Aerospace, Expeditors International, SDV Airlink, Flyjac, GIR, to name a few.

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Photo feature

Qatar - Next Air Cargo Hub in the Making Qatar Airways Cargo recently organised a press meet and cargo terminal tour in Doha, Qatar to showcase their world-class infrastructure, technology and latest trends and innovations at the newly built Hamad International Airport. John Dowds, Senior Manager, Cargo Network Operations & Handling, Qatar Airways takes Ritika Arora Bhola EXCLUSIVELY on an exciting and informative cargo terminal tour and shows varied sections like pharmaceutical zone, perishables zone, animals space, area for bulk cargo storage, IT room, department for custom clearance, Boeing 777, etc. He also shares in-depth details of its operations and functioning. Here are some snapshots with brief details

Hamad International Airport’s huge Cargo Terminal. With the cargo complex area of 2,92,000 sq mtr, it has cargo capacity of 4.4 million tons per year. Cargo terminal building is 55,000 sq mtr whereas cargo agent building is 5,000 sq mtr. It can park up to 11 freighters. Types of cargo include express products, dangerous goods, live animals, oversized cargo, garments, textiles, leather products, perishables, meat,

That’s the area where shipments are kept in an organised way. The shipments come in and are placed using robots and equipment. The cargo is later moved or

machinery, pharmaceutical, automotive parts, luxury cars, etc. John Dowds, Senior

loaded in the plane as per the requirements of consignee

Manager, Cargo Network Operations & Handling, Qatar Airways informs, “85 per cent

or customer after getting customer clearance at the

cargo at the warehouse is transit cargo. One per cent export and 15 per cent import.”

terminal itself.

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Photo feature

y. The ed wa cargo is is n a g n or r t. The pt in a equipmen nsignees o e k e r a o d c n s f t a . o n lf s me ents l itse obot re ship sing r e requirem e termina a whe e placed u th h e t r t r a a e e e r p a th as don That’s ome in and the plane rance r clea in sc e t d n m e e o d t shipm ved or loa etting cus g mo after later mers custo

Live birds from all over the wor ld are kept in sp conditioned zo ecial airnes. The veterin aries are also av Dowds stresses ailable 24 hour , ”The transit tim s. e is usually 2-4 hours. They ar kept with utm e ost care and sa fety.”

Here, r custom eefer vehicle is read er y from U s. Salmon fr om No to deliver th ganda e prod rway, m , etc., a uc re tran sporte eat from Aus ts to the turnar d via re tralia, ound t flower ime of efer ve s only a h few ho icles with th urs. e

These are th e pharmaceu organised m tical produc anner in clim ts packed, se ate-contro aled and ke team monit lled zones. pt in an ors the ship A dedicated ment from climate cont climate cont ac ce rolled hand pt an rol ce to delivery whi ling with ov er 150 palle ch have t positions in one zone .

(On the left ) Here you can clearly air freighte see cargo be r Boeing 77 ing offloade 7 and is re controlled ady to be lo d from the reefer vehic aded in the le, parked ri exposed to temperatu gh t the sunligh there (Righ ret only for tw t). Perishab le products o to three minutes an in the vehic d are loaded are les. safely

. “It loaded cargo is ss la re c e h d w rl , o ing 777 with w e d o e is B p r, re ip hte equ o, the the freig pallets and is g cts. Als 7 a inside e produ imals, includin The are y capacity of 3 s safety of th n a e v li of ell ure has a b ich ens ransportation tes. logy wh lica for t p t x n e e techno s d m ,” Dow arrange horses special

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guest column

Securing the Supply Chain with AEO By Vipin Vohra

The objective of mutual recognition of customs security standards, controls and control results is that two customs administrations recognise reciprocally the customs security standards, controls and control results carried out by the other customs administration, thus avoiding duplication of interventions.

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While international trade is an essential element for economic development, the global trading system is vulnerable to terrorist exploitation. Customs plays a unique role in providing increased security to global trade while facilitating the legitimate flow of goods. In 2005, the World Customs Organisation (WCO), an organisation of 178 customs administrations, adopted the ‘SAFE Framework of Standards’ to secure and facilitate global trade which included the concept of Authorised Economic Operator (AEO), whereby a party engaged in the international movement of goods is approved by customs as compliant with supply chain security standards, and given benefits by way of simplified customs procedures and reduced customs intervention. The AEO concept is being increasingly adopted by various customs administrations with the objective of securing the supply chain with resultant benefits for the trading community. As per European Commission guidelines, “Economic operator means a person who, in the course of his business, is involved in activities covered by customs legislation.” The WCO’s SAFE framework identifies mutual recognition as a key element to strengthen and facilitate the end-to-end security of international supply chains and as a useful tool to avoid duplication of security and compliance controls. For customs administrations to deliver the benefits associated with mutual recognition, it is imperative that they can recognise each other’s AEOs.

Types of Mutual Recognition: a) Customs administration recognises the AEO status granted by another country. The objective of such mutual recognition of AEO status or equivalent

is that one customs administration recognises the validation findings and AEO authorisations issued under the programme of the other and agrees to provide substantial, comparable and, where possible, reciprocal benefits/facilitations to the mutually recognised AEO. Currently, only AEOs which meet the security and safety criterion will be recognised and receive benefits within an MRA. b) Customs administration recognises the customs security standards, risk assessment controls and control results of another country. The objective of mutual recognition of customs security standards, controls and control results is that two customs administrations recognise reciprocally the customs security standards, controls and control results carried out by the other customs administration, thus avoiding duplication of interventions. This will allow international trade to run smoothly while maintaining a consistent level of security.

India’s AEO Programme Consistent with the “SAFE Framework” developed by the WCO, the Indian customs administration has developed an AEO programme that encompasses various players in the international supply chain such as importers, exporters, warehouse owners, custom house agents, cargo forwarders and carriers. The objective of the AEO programme is to provide businesses with an internationally recognised quality mark which will indicate their secure role in the international supply chain and that their customs procedures are efficient and compliant. An entity with an AEO status can, therefore, be considered a ‘secure’ trader and a reliable trading partner. In view of growing concern among customs administrations about the threat

posed through misuse of channels of import and export, there is a need to ensure security in the global supply chain in the international movement of goods. Keeping this in view, CBEC has finalised the ‘Authorised Economic Operators (AEO)’ programme for implementation to secure the supply chain of imported and export goods. This programme has been developed pursuant to the guidelines of WCO adopted in SAFE FoS (Framework of Standard) in 2005. The AEO programme shall be implemented by the Directorate General of Inspection (DGICCE) and the Additional Director General, DGICCE (HQ), New Delhi will be the AEO programme manager. The AEO programme manager shall be assisted by a team of officers viz. the AEO programme team. The AEO programme would be implemented on voluntary basis i.e. those who are interested in getting benefits of the programme may apply for authorisation. The authorisation shall be granted after detailed pre-certification verification and validation done by the AEO programme team. Organisations not involved in customs related work (e.g. general banks, insurance companies, consultants, etc.) do not qualify for participation in AEO. AEO status to a particular entity is not applicable to its group companies. Each entity has to apply for AEO separately. On the other hand, one applicant having more than one branch will have to maintain same AEO compliant processes in all its branches.

Eligibility criteria AEO is available to any organisation established in India that is involved in global trade e.g. importers, exporters, cargo agents, warehouse operators, port operators, carriers and customs house agents, irrespective of the size of business.

Programme Benefits Like other AEO programmes around the world, there are various benefits to AEO status holders. Following are some major benefits which can be availed by the various organisations involved in global trade: Importers: Reduced examination and inspection, higher facilitation than ACP

clients, and acceptance of pre-arrival import declarations. E x p o r t e r s : Reduced examination and inspection, acceptance of export declarations without bringing goods into customs area. Warehouse Operators: Faster approvals for a new warehouse, reduced audits. Custom House Agents: Acceptance of pre-arrival import declarations for client importers. L o g i s t i c s P r o v i d e r s (C a r r i e r s / For warders / etc.): Transit of goods without case by case permissions, and without customs escort. Compliance is the most important aspect of AEO programmes and organisations are required to maintain them to continue to avail the AEO benefits. The Indian AEO programme requires that • Organisations applying for AEO status must demonstrate an adherence to customs, central excise and service tax laws, as well as allied laws for the preceding three years. • Applicant organisations must demonstrate they have procedures in place to identify and disclose any irregularity/ error to the customs authorities or, where appropriate, other regulatory bodies. They must also demonstrate they have in place appropriate remedial actions when irregularities/errors are identified. • Applicant organisations must have a satisfactory system for managing commercial and transport records. Such a system may include the following: • An accounting system consistent with Generally Accepted Accounting Principles (GAAP) / International Financial Reporting Standards (IFRS) which facilitates audit- based customs control. • Allowing the AEO programme team physical or electronic access to customs and transport records. • Administrative process and documented procedures to control and manage the movement of goods. • Internal controls capable of detecting illegal or irregular transactions. • Satisfactory procedures for the handling of licenses, authorisations and docu-

•

• •

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ments connected to export/import. Satisfactory procedures to archive and retrieve records and information, including protection against loss of information. Ensure that a company’s employees are made aware of the need to inform customs authorities whenever compliance difficulties are discovered, including establishing suitable contacts for this activity. Satisfactory procedures for verifying the accuracy of customs declarations. Appropriate information technology security to protect against unauthorised intrusion. Applicant organisations must demonstrate they have proper arrangements in place to ensure safety and security of import/export cargo, conveyances, premises, etc., compliant to global standards.

Developments In its first release for AEO certification (July 2012), Directorate General of Inspection, Government of India, awarded AEO certificates to three entities with a validity of three years. The validity of the certification has since been increased to five years. Since November 2012 when the government launched AEO on a full scale, there have been a total of 18 entities who have received their AEO certification. Although the AEO programme is capable of providing a safe and secure international supply chain with various benefits, it still has a long way to go in achieving its full objectives worldwide. There is an expectation that the benefits are instantly realised by the organisations already working within AEO compliant standards in countries where AEO is operational. For organisations not compliant with AEO standards, this programme may require additional investments to be compliant. Considering the benefits of the AEO programme, and proven success stories, this additional investment appears to be one that inevitably provides a competitive advantage in this rapidly growing global trade environment. (The writer is Chairman & Managing Director, Continental Carriers (P) Ltd)

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News

RCPL wins ‘Best Rapid Service Provider’ award

GVK MIAL implements e-freight

Arvind Group recently organised an event in Bengaluru to felicitate all the vendors of M/S Arvind Lifestyle Ltd. The meet, titled as Unnati 5 saw industry experts in good number. Manish Gupta, MD, RCPL Logistics Pvt Ltd received the award for ‘Best Rapid Service Provider for Train Movement.’ There were presentation and corporate films given by Alok, CEO, For The Product Flying Machine, U.S Pollo, Elle, Ed Hardy, Ramani, CEO, For The Product Arrow, Gant, I zod, Nautica, Aliwar, CEO, For The Product GAP to name a few. RCPL multimodal services provider and offers the most efficient delivery schedule by Air, Train and Surface express. It has over 100 delivery locations covering length and breadth of the country. It is expanding network day by day as per market demand.

CSIA Air Cargo Terminal operated by GVK MIAL has become the first airport in India to achieve the below e-freight compliances. 1. E-reception of Goods, since January 1, 2009 2. Elimination of hard copy of Master Airway Bill at export cargo acceptance and import flight checking, since March 12, 2012 3. Elimination of Master and House Airway Bill along with House Manifest through obtaining electronic FWB and FHL messages from airlines. These messages are also successfully integrated with customs EDI. Lufthansa cargo is the first carrier to support this initiative at CSIA and these messages are currently received from 15 airlines July 16, 2014. 4. Elimination of hard copy of delivery order at the time of generation of import consignment delivery permit August 1, 2015. 5. The above initiatives have significantly minimised the operational dwell times of export cargo processing, import cargo segregation and delivery at Mumbai Air Cargo Terminal handled by GVK MIAL.

DACAAI seeks Govt Support for domestic air cargo industry

Services

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After reviewing the Draft Civil Aviation Policy 2015, The Domestic Air Cargo Agents Association of India (DACAAI) jots down few comments to seek support of the government for domestic air cargo industry. 1. The Draft Policy does not specifically deals with domestic air cargo which is growing at approx 20 per cent per annum and will leave behind international cargo in 2020. 2. Separate domestic cargo terminals with exclusive infrastructure to be created at new Airports. 3. Exclusive and separate tax regime to be created for domestic air cargo, with a view to promote it. 4. Over taxation of airlines in service tax, Airport Usage Tax and Tax on Maintenance of Aircrafts is passed on to domestic cargo as well. Whereas, domestic cargo is already taxed on higher side. Thus, whole business becomes costly as compared to other modes of cargo transportation. 5. Govt must promote domestic cargo for far flung areas of the country, where Life Saving Drugs, vaccination and other medical aids is provided to common people. 6. For ‘Make in India’ vision and mission, domestic cargo must be provided industrial status and policy frame work.

Chairman’s Message There being enormous potential for growth of air cargo in India, it is our endeavor to take advantage of the situation by providing the cargo facilities even at second tier cities in India which should also meet the principles of hub & spoke for overall development of all regions in India. It is with great sense of pride and satisfaction that I wish to say that AAI envisages to enter into the operation of handling the domestic cargo in a full- fledged manner which will also integrate the far flung areas and regions for development of air cargo, thus facilitate trade in the process. Accordingly, 24 airports across the country have been identified for this purpose. The objective being to create the basic infrastructure at AAI Airports having potential for air cargo growth by creating Common User Domestic-cum-Cargo Terminals. This would also get manifested in fulfilling the socio-economic responsibilities of developing the regions which have remained uncovered through air cargo movement. AAI already has a vast reservoir of human resources in cargo handling who have the requisite expertise and experience in handling the cargo operations which could be effectively utilize for its old, redundant and under-utilized domestic passenger terminals by converting them in to a cargo facility after carrying out necessary modifications. AAI is also exploring to launch Air Freight Stations (AFS) Free Trade Zone (FTZ), e-Commerce facilities by optimally & judiciously utilizing the excess land available with AAI at off-airport and nearby-locations which is on the anvil. There is a move initiated by AAI for Corporatization of its Cargo handling services for AAI managed airports in the country, therefore, Good times for air cargo is looming large in the horizon. AAI firmly believes that an open and constructive dialogue between global and national entities and between industry and regulators, will lead not only to mutual learning and understanding, but to a leaner, more agile, robust, effective and secure processes, driving wealth and welfare for the global population of to-day and generations of tomorrow.

R K Srivastava, Chairman, Airports Authority of India (AAI)

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PEOPLE CONNECT

“India has best minds but lacks skills” During his tenure, he had his share of ups and downs, but he didn’t give up, stood strong and started a new journey. Naveen Rao, Head of Cargo, Aeroflot, in a candid interview with Ritika Arora Bhola talks about challenges, interests and hobbies My Journey So Far… My journey started many years back, when I opened a small travel agency in Tushkan, Russia while studying medicine. At that time, Aeroflot was the only carrier which was flying to India and I had good contacts with the person who managed seat control system in Aeroflot. Later, the same person came to Calcutta as a General Manager of Aeroflot. At that time, Aeroflot started flights to Calcutta, Bombay and Delhi. In Delhi, we had sixth freedom hub for Aeroflot. So, we were flying to Singapore, Bangkok, and Dhaka. We started selling Delhi-SingaporeDelhi, Delhi-Bangkok-Delhi and DelhiDhaka-Delhi tickets. So, I opened my first company and office in Calcutta, second office in Bombay Martin Roos and third in Delhi as a Director, DSV Airwas & called PSAManaging of Aeroflot. The company Sea Pvt Ltd as Aerospace Pvt Ltd and it could do the turnover of two to three crores a month in a very short span of time. Then, in 1998 we opened our office in Moscow and later expanded in Chennai, Jalandhar in India. It was the proprietorship of mine in the first go and I managed to introduce some partners later. But, there was some downfall in the business and I had trouble from the partners so they grabbed everything from me and I was again on zero. Then I opened a company called Info Tree Software Solution Pvt Ltd. At that time developing a website was something very new. And I developed websites for embassies. I started my Moscow office again and we were the GSA of Uzbekistan

96 CargoConnect - focus: air cargo

Airways in Russia, 2003. At that time, we had only 7 flights weekly and now to Moscow only we have 37 flights. We catered to many other destinations all over Russia where Uzbekistan flies. Then we became consolidators for many other airlines in Russia and also had visa centers for countries. Then we started Delmos aviation. We started with Aeroflot in 2006 again as a passenger. We specialise more in group transportation. We don’t do subagency, credit business at all. We are more concentrated on government sector and some of the corporate which are good in payments. Then we opened Delmos Cargo and became GSA of Delmos Aeroflot in 2007.

My Biggest Challenge The ye a r 20 0 0 to 20 03 wa s ve r y challenging for me. That was the time when my partners ditched me and grabbed everything from me, they made bad image of me. During this period, I learned that I will not partner with anyone till I am confident enough. I was again on zero. It was a very depressing period. I could run Info Tree Software Solution Pvt Ltd only for two years because website bubble burst. But, I didn’t lose my self-confidence, didn’t

hesitate, didn’t give up and started afresh. If we talk about aviation industry, at that time, there were hurdles with Indian and Russian bureaucracy. Also, airlines had difficulties with group sales or group transportation. Airlines should handle groups perfectly. Group business is huge and is cash operative.

My Interests & Hobbies I can read, write, live and breathe aviation industry. I am always curious to know what’s happening around the world. My clients like Aeroflot and Uzbekistan Airways bank on me and consult me when in trouble. I like to swim and play badminton also.

A Message for the Aspirants I feel India has the best minds but we lack skills. Either people are very much confident and they don’t want to listen to anyone or they are becoming lazy and work with the mindset that they are working only to get salary. There’s no passion, no self-initiative. If they have creativity and passion in place, Indians can do wonders.

98 CargoConnect - focus: air cargo