Leading players in Indian logistics space see expansion into air cargo as the next rational step. While Safexpress, plans to align with a company planning to start cargo airline, First Flight Couriers Ltd plans to lease out two Boeing 737-300 to increase capacity in this space.

The Safexpress’ Chairman and Managing Director, Mr Pawan Jain, told Business Line, “We are going to be a captive user for the company we plan to align with. We would finalise our association by the first month of next year and everything should be in place by the first quarter of next fiscal.” However, he refused to divulge further details on the same.

Currently, 90 per cent of the company’s business comes from ground transportation (trucks) and 10 per cent from air. The company uses the belly space of airlines like Air India, Jet Airways, Kingfisher Airlines etc. for movement of cargo.

Leasing Boeings

The Deputy Managing Director of First Flight Couriers Ltd and Chairman of Express Industry Council of India, Mr R.K. Saboo said, “Our plans to lease two Boeing 737-300 should come through in the next three to four months, which we would be flying on trunk routes like Mumbai, Delhi, Chennai, Hyderabad etc.” He added that this is purely a “business decision” as it would add significantly to the load carried by the courier company.

As streamlining of back end operations remains a key gap for the booming retail business in India, companies like Safexpress and First Flight are tapping this segment too. Safexpress is looking at logistics parks at 32 locations in India with an investment of Rs 600 to 700 crore for a total of seven million square feet space within next five years. Mr Jain said the parks will come up in all state capitals as well as in Nagpur, Indore, Jamshedpur and Ambala.

Mr Saboo told Business Line that First Flight is looking at starting off in 13 to 14 locations with over Rs 100 crore being invested by Temasek — the investment arm of Singapore Government.

“The warehouses will have multi-user facility for sectors spanning from auto, IT, pharma, engineering equipments, apparels and others. Two to three facilities should be running by April 2008,” he said.

Small share

Meanwhile, according to the latest analysis by KPMG and Express Council of India, the air freight segment holds a small share of India’s freight market. However, it is growing at a fast pace. Currently, India accounts for meagre three per cent of the global air cargo market, however, it is expected that the Indian air cargo industry would double in size by the year 2010.

The analysis suggested that for the year 2006, of the total 1,410 tonnes, domestic cargo contributed 510 tonnes while international was 900 tonnes.