AAI getting into air cargo business in Coimbatore

Our Bureau

COIMBATORE, Dec.4

AIRPORTS Authority of India (AAI) in Coimbatore, which has kept delaying a decision on entering into air cargo handling ,has finally taken a plunge by launching its own `interim' air cargo facility at the Peelamedu civil airport here.

But how best the AAI will be able to convert its locational advantage in handling air cargo service into profitable venture depends on how quickly it achieves volume in direct through-put off-Coimbatore airport. AAI will handle only international air cargo from Coimbatore.

Yet this move from AAI, on the cards for quite sometime and known to many in the cargo trade, is expected to force another Central Government agency, Central Warehousing Corporation (CWC) which is presently offering air cargo custodial service here to go out of air cargo business gradually.

CWC has been running the air cargo business since 1995 as a part of its general cargo handling facility under its inland container depot (ICD) services at Singanallur area of the city. With the loss of air cargo business, CWC would have to do good with its ICD custodial service and bonded warehousing business.

Though the AAI in Coimbatore has for a long time been pressing its case for operating the air cargo custodial service in the city on the strength of its own infrastructure available at the Peelamedu airport, an official node from AAI's headquarters kept eluding the local officials eager on launching the commercial venture.

However, when the AAI finally granted permission, the market condition for air cargo appears to have hit a bad patch. The slow-down in industrial/manufacturing activity has cast its shadow on cargo movement to and from Coimbatore.

The data on air cargo handled by the CWC in the last three years is any indication, it showed only the inherent limitation in generating direct air cargo through Coimbatore airport, the nature of the cargo being predominantly export oriented with very low level imports happening through the airport.

The average monthly air cargo handled by the CWC through the airport works out between 45-50 tonnes. The primary contents of air cargo here are garments/textiles/castings and gold.

For example, during 1999-2000, the throughput handled at Coimbatore were 371 tonnes of general cargo and 710 kgs of gold for export and the volume of imports handled by the CWC that year was just 54 tonnes of general cargo and 27 tonnes of gold.

Compared to this the volume of direct air cargo in the subsequent year (2000-01) stood at 328 tonnes of general cargo and 1.61 tonnes of gold for export and as against this, the import of cargo handled was 41.2 tonnes of general goods and 32.10 tonnes of gold. During the current financial year upto Oct.2001, CWC had handled 256 tonnes of air cargo comprising 222 tonnes for export and 34 tonnes of imports.

The limited flights off Coimbatore and the lack of cargo space made available by these passenger flights linked to the Coimbatore sector are major handicaps in generating sufficient volume of throughput . Added to this, the problems of handling transhipment of cargo moved out of Coimbatore in other airports.

This, according to sources in the clearing and forwarding agencies here, acts as deterrant in promoting direct air cargo from Coimbatore. Further, the sector cargo fare structure for the Coimbatore-Chennai sector which works out Rs.8 per kg is also felt as another disincentive for direct cargo from Coimbatore. Many shippers prefer to take their bulk cargo to either Kochi or Chennai to beat the high cost involved.

However, trade sources feel that AAI providing the custodial service would vastly alter the scene in air cargo operation as shippers could bring their cargo to the AAI's cargo complex in Peelamedu airport direct. This would involve no hassles, unlike in the case of the air cargo complex under the CWC which is situated some 8-km away from the airport.

The CWC used to charge Rs.2 per kg for handling air cargo whereas, the AAI due to the advantage of having its cargo complex within the airport itself will have a reduced handling charge of around 60 paise per kg on the cargo booked with it.

More than the rate reduction, the cut-down in lead time gained by the shippers in shifting to AAI custodial services from CWC would generate more volume, they feel.

However, the cautious AAI officials reacting to requests for more ground handling facilities at Peelamedu airport including the demand for exclusive freight aircraft/expanding runway insist that these could be justified if only generation of more cargo business in the airport is achieved in the coming months.