Lufthansa keen to launch cargo operations in India

By Staff
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Google Oneindia News

Frankfurt, June 7: Lufthansa Cargo (LHC) is in talks with Indian carriers to create a full-fledged cargo airline and also exploring the possibility of cargo ground handling.

''Though tax and legal restrictions remain, we want to be a part of the India development story,'' said LHC's vice-president for Asia Pacific region Martin Schlingensiepen. ''The tonnage capacity is increasing consistently. We'll also be looking at cargo ground handling at six metro and 30 non-metro city airports.'' Mr Schlingensiepen said LHC could also consider operating a dedicated cargo terminal at one of the busy airports. ''There is much scope for transporting perishables and refrigerated goods by air from smaller towns, especially with more airport capacity coming up in second-tier cities.'' LHC will focus on routes like India-Europe-US, India-West Asia-East Africa and India-CIS. The cargo airline has been in talks with Jet Airways but the talks are yet to conclude. Jet has already announced plans for a dedicated cargo airline by this year-end.

Air India (AI) is starting cargo operations from June 15 with initial services on Frankfurt and Paris routes. It will eventually cover more destinations as its freighter fleet increases in size.

According to AI officials, the carrier expects to generate revenues of Rs 800 crore in financial year 2007-08 through these operations. After its merger with Indian (Airlines), the size of its freighter fleet is set to increase.

LHC is the biggest cargo airline flying in and out of India -- carrying 1,500 tonnes of cargo a week in passenger aircraft belly space -- and the second biggest in the world. India's domestic cargo business is currently dominated by DHL subsidiary Blue Dart Aviation Ltd.

Almost all of India's international trade travels on cargo and charter flights such as LHC, Korean Air, Singapore Airlines and Emirates.

The Hyderabad-based Flyington Freighters has ordered six Airbus A330-200Fs to create a fleet of cargo planes that it intends to use both domestically and internationally. Right now, India has just eight cargo freighters. Lufthansa tried to launch a cargo airline in India in the late 1990s in a tie-up with the Hinduja group, but that effort faltered.

The company that Lufthansa incorporated in India still exists on paper and may be used for a future venture.

Officials at the Planning Commission say the country's air cargo movements will grow at over 11.5 per cent from 2007-08 to 2011-12. A report published by Cygnus Business Consulting and Research says air cargo traffic is estimated to be over 1.56 million tonnes during 2006-07 against 1.4 million tonnes in the previous year, marking a growth rate of 14.65 per cent.

Aviation experts say a new story is waiting to be written in the Indian cargo industry and airlines need to concentrate on the retail sector as it offers a massive opportunity. The government has also indicated that foreign direct investment (FDI) cap may soon be raised from 49 to 74 per cent for cargo operations.

With a fleet of 19 owned MD-11F aircraft and several other freighters on charter, LHC commands annual transport volume of 1.76 million tonnes of freight and mail, 8.1 billion revenue tonne kilometres and revenues of 2.84 billion euros. Nearly 15 per cent of Lufthansa Group's revenues come from its cargo operations connecting 500 destination worldwide.

According to the International Air Transport Association (IATA), global freight traffic rose only 2.6 per cent over the first four months of 2007 compared to 2006 with average load factors at 75.4 per cent.

The freight demand is showing much more price sensitivity than in the past and sea shipping is taking a greater proportion of the benefits from economic boom.

UNI

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