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Freighter Conversion – Air India’s experience

Anita Khurana

Director Cargo

Air India

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World Freighter Fleet

Source: Airbus

Freighter fleets available worldwide North America accounts for the largest fleet of freighters

with more than 1000 freighters in operations

Europe & CIS countries come next with close to 300 freighters in operation

Asia Pacific countries have about 250 freighters currently under operation

Latin America & Africa have close to 80 & 60 freighters respectively.

Middle eastern countries have about 30 freighters

India has only about 20 freighters currently

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Freighters

50% of active fleet today are controlled by just four integrators

Currently there are close to 2000 freighters operating around the globe

World freighter fleet projected to grow to about 4250 units by 2026

70% of it would be converted passenger aircrafts

As per industry estimates in the next 20 years 63% of the cargo capacity will be offered through dedicated freighters

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Freighters - India

For India it is estimated for the growing cargo market, India will requires126 freighter aircrafts in the domestic market

90 freighter aircrafts in the international market by 2025 to meet the growing demand

Enablers in the new cargo scenario in India

Open Skies Policy

Liberalisation of Indian Economy

Rapid Increase of Manufacturing

Emergence of Sunrise Industries

Emergence of New Modern Airports in the hinterland

Emergence of time definite products

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Indian Trade scenario (tonnage)

Intermediate & consumer goods constitute almost 40% & 25% by volume of exports respectively

On the import front capital & high tech goods constitute about 25% & 20% respectively, however intermediate goods still constitute the major chunk of imports (35%)

Carriage

CapitalCapital

Consumer Consumer

Food

Food

High Tech

High Tech

Intermediate

Intermediate

Other

Other

Primary

Primary

0

50

100

150

200

250

300

350

400

450

500

Exports Imports

Thou

sand

Ton

s

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Indian Trade scenario (million $)

Jewellery constitutes the single largest export by value at almost 55%

On the import front Jewellery & high tech goods constitute about 35% & 30% respectively.

Capital & intermediate goods constitute about 20% & 15% respectively

Revenue

CapitalCapitalConsumer

Consumer

JewelleryJewellery

High Tech

High TechIntermediate

Intermediate

Other

Other

0

5000

10000

15000

20000

25000

30000

35000

Exports Imports

Mill

ion

$

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AI Cargo - USP With Merger AI offers a large network & seamless

connectivity from interior points within India to abroad

More than 1500 tons of capacity available per day

Back up with the reliability of passenger flights unlike freighters

However cargo market needs different parameters vis-à-vis passenger market

Immense potential for air cargo growth in the country

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Freighter conversion - Background

As per Govt directive, options to convert passenger aircraft to freighters to be explored before phase-out.

Dept of Post was looking at an option to connect the North-Eastern States faster

Erstwhile Indian Airlines was in the process of phasing out its B737 passenger fleet.

Opportunity was right to convert them to freighters and offer to Dept of Post

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Freighter conversion - Background

Wanted to bring in a new era in developing cargo market within the country

Wanted to replicate set practices in India Eg. Fedex or integrator models are most efficient

DHL tie-up with Deutsche Post

Satisfy the need to the market Late pick-up and first delivery

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Freighter conversion - Background First B737 converted to freighter in 2007 and offered to

Dept of Post.

Option to cover rest of India explored to tap the immense potential available in the country

Eventually Nagpur hub concept developed to connect with the 6 metros.

As a result, another 5 B737 passenger aircraft also sent for conversion to freighters

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Freighter conversion - Background

Extend existing tie-up with Dept of Post to carry their mail on the freighters with Nagpur as hub.

With more than 150,000 post offices in India and an extensive surface network, what better reach can one expect

The air mode was a logical extension to expand distribution chain along with existing rail / road network of India Post

Operations commenced with effect from 27 July 2009.

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Delhi

Mumbai

ChennaiBangalore

NagpurKolkata

Guwahati

Imphal

Agartala

Freighter Operations – Current Routing

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Win-Win situation

With the North-east freighter operation, Dept of Post has tremendously reduced the time taken to delivery their mail to the remote corners from weeks to a couple of days.

There has been a major increase in business and volumes have gone up.

With Nagpur hub operations in the night, Dept of Post is able to provide overnight delivery to their customers.

Air India is able to completely utilise their freighters and only needs to look at operational matters

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Challenges we faced

Crew shortages for B737 freighters

Airport constraints – Parking Issues

North East – tough terrains

A310 operations – Cultural differences between AI & IC

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Constraints for freighters operations What are the restrictions for freighters operations

Shortage of Crew (not as attractive as passenger operations)

Slot availability

Availability of pallets

Cargo loads are mostly directional (one-way)

Seasonality problems

Route profitability a major deciding factor

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Future Opportunities

Freighter to provide domestic feed after DOP operations & connect to international flights

Offer freighters for charter operations

Connect Nagpur to the world

Expand to other markets with potential

Establish Cool Chains

Operationalising Cargo SBU to be a profit centre

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Way Forward - Role of the Airline Airlines in the country are primarily passenger airlines and Cargo is a by-product Provide Intercity connectivity

Provide belly space capacity

Ensure proper transit time for connecting flights Reduce Dwell time during transit

Offer cargo booking facility for the agents over the ‘Net’

Offer least time for ‘”Accepting & Delivering” (within regulations)

Offer Trace & Trace facility for the customers on the Internet

“Service with a SMILE”

Position trained / smart staff

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Way forward – Airlines can induct freighters This can effectively contribute by scheduling

operations as perCargo market needs

As per market timings

On desired Routes

Offer palletized cargo

Can offer competitive rates

Offer better control over operations & maintain schedule reliability

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Future Plans for Freighter Operations (2010 – 2016)

Nagpur

Delhi

Ahmedabad

Mumbai

Srinagar

Trivandrum

Bangalore

Coimbatore

Indore

Kolkata

Hyderabad

Amritsar

Chennai

Cochin

Hong Kong

Melbourne

Dubai

Doha

Frankfurt

Paris

Liege

Guangzhou

Tokyo

Seoul

Bangkok

Singapore

Dacca

Seattle

New York

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Thank You