Domestic Air Cargo Market India-Project Report

MBA Dissertation Help on Domestic Air Cargo Market India- How to Write Project Report?

 

Air cargo forms 7-8 per cent of total revenue for airlines

Air cargo forms around 7-8 per cent of total revenue for FSCs in India. It is an auxiliary revenue stream for airlines. Airlines in India can form alliance and enter long term tie-ups with courier companies and freight forwarding agents  to increase their WLF, which currently ranges from 60 to 70 per cent for international and domestic operations. Cargo carried on aircraft includes mail, perishable goods, super critical machinery and equipment parts, textiles and other products.

Sharp decline in market share of freight carried by scheduled commercial airlines in both international and domestic cargo market since 2004-05

Market share of freight carried by scheduled commercial Indian carriers in domestic air cargo market fell from 94 per cent in 2004-05 to 71 per cent in 2006-07 due to rapid expansion of fleet by  integrated courier companies since 2004-05. Integrated courier companies offered end-to-end delivery of air cargo with high reliability and timely delivery, helping them capture higher domestic air cargo market share.

Market share of freight carried by scheduled commercial Indian carriers in international air cargo market fell from 36 per cent in 2004-05 to 13 per cent in 2006-07 as Indian carriers faced huge competition from foreign airlines/air cargo companies, which increased their frequency of operations during the same period.

Limited scope of expansion by scheduled commercial airlines in air cargo market due to strained financials and strong competition from integrated air cargo companies

Majority of scheduled commercial airlines in India are highly geared leaving them with limited scope to carry full fledged air cargo operations that includes having dedicated cargo fleet, distribution, marketing network, cargo terminals and warehouse space at airports. Airlines may also face strong competition from well-entrenched integrated air cargo companies in domestic and international segment, which have dedicated freighter fleet to carry out air cargo operations and a strong distribution network.

High freight traffic congestion at metro airports

More than 90 per cent of air cargo, international and domestic operations is handled at metro airports in India making these airports highly congested and thereby increasing turnaround time for airlines and air cargo companies. Turnaround times at Mumbai and Delhi airports are high due to heavy traffic leading to inefficient utilisation of aircrafts.  

Sharp decline in traffic in 2008-09; degrowth expected to continue in 2009-10

Domestic pax-km is estimated to fall by 10.1 per cent in 2008-09 and by 3 per cent in 2009-10 due to slowing economy and lower corporate and leisure travel. Average PLF is estimated to be 65 per cent in 2008-09 and 68 per cent in 2009-10 due to potential industry consolidation and capacity reduction in fleet by airlines.

 � s ; D �} sp;     Scheduled domestic commercial airlines had 71 per cent market share in air cargo market in 2006-07, while the market share of air cargo companies was 29 per cent.

·         Jet Airways (Jet-IATA Code 9W) had 31 per cent of scheduled domestic air cargo market share in 2006-07. Jet carried 117 thousand tonnes of domestic air freight in 2006-07. National Aviation Company of India Ltd (NACIL-IATA code 098 for Air India and 058 for Indian Airlines) had 28.7 per cent of scheduled domestic air cargo market share in 2006-07.

·         Both Jet and NACIL have an extensive network, large fleet of airplanes and high frequency of operations between major destinations in the country, enabling them to capture higher market share.

·         Market share of other airlines was low due to smaller fleet size and limited frequency of operations between major routes. Jet Lite, erstwhile Air Sahara and Kingfisher had smaller fleet size compared to Jet and NACIL in 2006-07.

Market share of companies in international air cargo market: Foreign airlines/air cargo companies had 86.9 per cent of air cargo market share in 2006-07

·         Foreign airlines/air cargo companies had 86.9 per cent market share of scheduled international air cargo, while Indian carriers had only 13.1 per cent market share of scheduled international air cargo. 

·         Foreign airlines/air cargo companies had large market share due to superior connectivity and high frequency operations to and from India.

·         Some of the prominent new foreign airlines, which have entered Indian markets since 2004-05, are Etihad Airways, Alitalia, Qantas, Finnair, Austrian airlines etc. Existing foreign airlines like Emirates, Singapore Airlines, Lufthansa Airlines, Cathay Pacific, Qatar Airways, Korean Air etc, have increased frequency of their operations on metro and non-metro airports.

·         Foreign air cargo companies like FedEx, UPS, TNT etc, having dedicated freighter fleet, increased frequency of their operations from 2004-05. Also, many foreign air cargo companies formed alliances and entered tie-ups with domestic courier companies to carry out international freight. For example- in 2002, DHL formed an alliance with Blue Dart to carry out international air cargo.

WLF and market share of scheduled Indian commerical carriers in domestic and international air cargo market

International and domestic WLF: Opposing trends

Weight load factor (WLF) is cargo expressed as a percentage of gross cargo carrying capacity of an aircraft

Domestic WLF: Increasing trend from 2002-03 to 2006-07 due to bouyant demand

Domestic WLF was on increasing trend from 2002-03 to 2006-07, despite increase in fleet size by commercial Indian carriers. This growth was due to buoyant demand for quick movement of cargo. Domestic WLF increased from 53.5 per cent in 2002-03 to 67.1 per cent in 2006-07.

International WLF: Declining trend from 2002-03 to 2006-07 due to large capacity addition

Expansion of international operations by Indian carriers coupled with entry/expansion of global air cargo companies and other international airlines in the Indian market from 2004-05 led to overcapacity, resulting in declining WLF. International WLF declined from 70.4 per cent in 2002-03 to 59.7 per cent in 2006-07.

Falling market share of scheduled Indian commerical carriers in domestic and international air cargo market

 

Market share of Indian carriers in scheduled domestic air cargo market: Sharp decline in market share due to rapid expansion of integrated cargo companies

Market share of scheduled commercial Indian carriers for scheduled domestic air cargo market fell from 94 per cent in 2004-05 to 71 per cent in 2006-07 due to increase in dedicated fleet of integrated cargo player- Blue Dart, which rapidly expanded its operations. The fleet size of Blue Dart increased from three to seven during the same period. Also, domestic air cargo company offered end-to-end delivery of air cargo with high reliability and timely delivery, leading the company to capture a high market share in domestic air cargo segment. 

Market share of Indian carriers in scheduled international air cargo market: Sharp decline due to increased competition

Market share of scheduled commercial Indian carriers for international air cargo market fell from 36 per cent in 2004-05 to 13 per cent in 2006-07 as Indian carriers faced huge competition from foreign airlines/air cargo companies, who increased their frequency of operations during the same period. 

Market share of companies in domestic air cargo market: Indian scheduled commercial airlines had 71 per cent of air cargo market share in 2006-07

·         Scheduled domestic commercial airlines had 71 per cent market share in air cargo market in 2006-07, while the market share of air cargo companies was 29 per cent.

·         Jet Airways (Jet-IATA Code 9W) had 31 per cent of scheduled domestic air cargo market share in 2006-07. Jet carried 117 thousand tonnes of domestic air freight in 2006-07. National Aviation Company of India Ltd (NACIL-IATA code 098 for Air India and 058 for Indian Airlines) had 28.7 per cent of scheduled domestic air cargo market share in 2006-07.

·         Both Jet and NACIL have an extensive network, large fleet of airplanes and high frequency of operations between major destinations in the country, enabling them to capture higher market share.

·         Market share of other airlines was low due to smaller fleet size and limited frequency of operations between major routes. Jet Lite, erstwhile Air Sahara and Kingfisher had smaller fleet size compared to Jet and NACIL in 2006-07.

Market share of companies in international air cargo market: Foreign airlines/air cargo companies had 86.9 per cent of air cargo market share in 2006-07

·         Foreign airlines/air cargo companies had 86.9 per cent market share of scheduled international air cargo, while Indian carriers had only 13.1 per cent market share of scheduled international air cargo. 

·         Foreign airlines/air cargo companies had large market share due to superior connectivity and high frequency operations to and from India.

·         Some of the prominent new foreign airlines, which have entered Indian markets since 2004-05, are Etihad Airways, Alitalia, Qantas, Finnair, Austrian airlines etc. Existing foreign airlines like Emirates, Singapore Airlines, Lufthansa Airlines, Cathay Pacific, Qatar Airways, Korean Air etc, have increased frequency of their operations on metro and non-metro airports.

·         Foreign air cargo companies like FedEx, UPS, TNT etc, having dedicated freighter fleet, increased frequency of their operations from 2004-05. Also, many foreign air cargo companies formed alliances and entered tie-ups with domestic courier companies to carry out international freight. For example- in 2002, DHL formed an alliance with Blue Dart to carry out international air cargo.

WLF and market share of scheduled Indian commerical carriers in domestic and international air cargo market

 

Domestic WLF: Increasing trend from 2002-03 to 2006-07 due to bouyant demand

Domestic WLF was on increasing trend from 2002-03 to 2006-07, despite increase in fleet size by commercial Indian carriers. This growth was due to buoyant demand for quick movement of cargo. Domestic WLF increased from 53.5 per cent in 2002-03 to 67.1 per cent in 2006-07.

International WLF: Declining trend from 2002-03 to 2006-07 due to large capacity addition

Expansion of international operations by Indian carriers coupled with entry/expansion of global air cargo companies and other international airlines in the Indian market from 2004-05 led to overcapacity, resulting in declining WLF. International WLF declined from 70.4 per cent in 2002-03 to 59.7 per cent in 2006-07.

Falling market share of scheduled Indian commerical carriers in domestic and international air cargo market

 

Market share of Indian carriers in scheduled domestic air cargo market: Sharp decline in market share due to rapid expansion of integrated cargo companies

Market share of scheduled commercial Indian carriers for scheduled domestic air cargo market fell from 94 per cent in 2004-05 to 71 per cent in 2006-07 due to increase in dedicated fleet of integrated cargo player- Blue Dart, which rapidly expanded its operations. The fleet size of Blue Dart increased from three to seven during the same period. Also, domestic air cargo company offered end-to-end delivery of air cargo with high reliability and timely delivery, leading the company to capture a high market share in domestic air cargo segment. 

Market share of Indian carriers in scheduled international air cargo market: Sharp decline due to increased competition

Market share of scheduled commercial Indian carriers for international air cargo market fell from 36 per cent in 2004-05 to 13 per cent in 2006-07 as Indian carriers faced huge competition from foreign airlines/air cargo companies, who increased their frequency of operations during the same period. 

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