No-frills carrier AirAsia India has chosen the French ECS Group as GSA for managing the airline’s entire cargo biz. Thanks to the agreement the general sales and service agent sets foot into the air freight market of the Subcontinent.
The slogan on the hull of the start-up airline is program, it reads: “now everyone can fly.” No wonder, with ticket prices being “up to 35 percent lower” than those demanded by competitors, the airline’s boss Mittu Chandilya had announced.
Hence, it’s not a big surprise that interested travelers are flocking the budget carrier trying to get a seat on board one of the two Airbus A320s currently operated by AirAsia India. “Their planes are full, full, full!,” exclaims COO Adrien Thominet of Paris-based ECS Group that is responsible for managing the cargo biz on behalf of the newcomer.
Full with cargo shipments as well, that are literally going through the roof, he says.
No wonder, in view of the often moribund ground infrastructure with roads being in a pitiful status, the vast dimension of the country, and the hopelessly overloaded trains.
The demand for uplift capacity on domestic flights leads to a healthy price situation, despite a 30 percent yield decline within the last couple of years. Reveals Adrien: “In average, local airlines demand paying one dollar per kilogram for transporting goods on their pan-Indian network, that’s more or less the current rate situation.” In comparison, air freight carriage on long-haul routes is cheaper, averaging $1.40 per kilogram, like Delhi-Frankfurt or Mumbai-London.
ECS provides total cargo management
AirAsia India is the second budget airline in Southeast Asia, next to Tiger Airlines, that appointed the ECS Group for managing their cargo biz from A to Z. “Due to its extraordinary rapid growth we consider the regional low cost sector as interesting platform also for cargo transports,” emphasized the GSSA’s Asia-Pacific Ops Manager Mike Hewitt recently at the Air Cargo China trade show.
What’s essential to match the expectation both partners have for establishing a long-lasting relation in cargo is a biz model tailored to the individual needs of the firms. This has to consider, for instance, the fast turnaround times at airports demanded by the carrier with no acceptance of delays cause by unloading and loading of shipments. Seeing it from the GSSA’s side it’s the predictability of the biz and close coordination of processes.
In case of AirAsia India most of these principles still have to be determined, since the maiden flight that took from the airline’s hub Bangalore to Goa happened only a month ago. Since then, services from Bangalore to Chennai and Kochi have been added to the route map.
So what are the next steps?
According to Rajendra Dubey, Indian chief of ECS, AirAsia India will add four more A320s to their two units comprising fleet until year’s end, with four more slated to come during 2015. Within three years the Air Asia offspring intends offering scheduled flights to 20 Indian airports.
When asked what role the no-frills airline will play in his company’s portfolio manager Thominet stated that thanks to AirAsia India the ECS Group can now offer its clients feeding and de-feeding services throughout the subcontinent. This includes Tiger Airways, partially Etihad and Saudia, he says. “Take Saudia our client in the U.S., for instance. Our staff in New York or elsewhere can now offer the market air transports on board of Saudia via Jeddah or Riyadh to Indian airports and onward transportation of their goods to a growing number of domestic destinations there, served by AirAsia India” he illustrates future opportunities. The same accounts for cargo flowing in the opposite direction or brought in/out by ECS partner Tiger Airlines.
From the carrier’s perspective the deal signed with the GSSA is a comprehensive care-free package guaranteed by the ECS Group. This includes establishing own ECS stations with own staff at all airports served by the LCC. “We already have set up offices at seven different locations, including Mumbai and Delhi,” says Adrien. Their number will grow once AirAsia India ups its fleet.
Notable cost benefits
Asked about their estimate, local aviation experts speak of a remarkable cost advantage over direct competitors. This, because AirAsia India is backed by its strong parent Air Asia in the fields of aircraft lease, maintenance and fuel supply, the latter accounting for as much as 45 percent of the operational costs. “The more traffic, the higher the discounts,” told a market analyst CargoForwarder Global.
The start-up is a tri-partite venture between its Malaysian parent Air Asia, India's Tata Group, and local investor Telestra Tradeplace, with 49:30:21 holding. Chairman is Subramanian Ramadorai, a long member of the Tata Group, with Mittu Chandilya acting as CEO. The string puller and secret head however, is Malaysian entrepreneur and founder of Air Asia, Tony Fernandes.
AirAsia India is a big fish on the hook of ECS…
…says Rajendra Dubey, the GSSA’s country manager in this exclusive interview with CargoForwarder Global.
Q: Rajendra, which destinations is AirAsia India serving as of now?
A: They started operating June 12, offering flights between Bangalore, Chennai, Cochin and Goa. Beginning 5 September Jaipur and Chandigarh will be added to the network.
Q: What makes an LCC carrier interesting for cargo transport?
A: The domestic cargo market in India is growing at fast pace as the GDP of India is based on domestic consumption. The growth in air cargo averages 15 percent per annum. Seeing this biz from the LCC’s view point cargo revenue is bonus revenue as they have quick turnaround times of 25 minutes for their aircraft. Therefore, carrying air freight in the holds of their passenger aircraft is icing on the cake.
Q: So far they are allowed to operate only on domestic routes. When are they able to expand their reach by adding international routes to their network?
A: Here it’s the policy of the government that an Indian licensed Airline is only admitted to fly on international routes after having a minimum of five years operational experience on domestic routes and operating a fleet of minimum 20 aircraft. Once permitted, eventually by a change of current laws, AirAsia India will fly to the Middle East and Far East including China and the SARC countries.
In India other than Blue Dart - a DHL subsidiary which is said to be the most profitable airline in the world - all airlines carry cargo in their holds, including LCCs. In order to give you an idea Air India carries 10,000 tons per month, Indigo does the same amount, with Jet Airways coming close to 7,000 tons per month, Spice Jet 6,500 tons and GoAir reports a monthly tonnage of 4,500 tons.
The commodity includes cell phones, garments, pharmaceuticals, courier consolidations, perishables, computers and machinery etc.
Q: Bangalore is India’s third largest city by residents. Could you briefly describe the cargo market situation there?
A: Bangalore together with the surrounding province of Karnatka is a major and very promising location for air freighting goods. The potential of the city and the region is huge. Therefore, we are all convinced at ECS that we can substantially add to the turnover of the airline by providing high loads. The commodities include cell phones, garments, pharmaceuticals, courier consolidations, perishables, computers and machinery etc.