Global crisis clips wings of domestic upstarts

With the economic downturn sending the global air cargo industry into a tailspin, India's burgeoning domestic cargo scene has come to a virtual standstill as scores of cargo start-ups have been forced to shelve their plans. But some ambitious players have thrown caution to the wind.

The economic downturn’s vicelike grip may have largely spared India, but it has squeezed the country’s export-import sectors. Air cargo has been feeling the pinch for quite some time now. Gone is the hype and the air of overt optimism that was seen and heard just a few months ago where startup cargo airlines announced grandiose plans and established players went onrecord with grand expansion plans.

For the air cargo business in the country, long content to remain on the sidelines, it was a new era, it was time to rejoice. But this has all quickly become a chapter from the past. The few homegrown air cargo carriers that seemed to have found their wings, thanks largely to the “India story”, have just as quickly lost them again.

It all started with First Flight, one of the country’s well-known express companies. Towards the end of 2007, the company disbanded its air express operations. It had started dedicated freighter operations with three ATP aircraft in June of that year. Strangely, the closure of the air arm happened when a number of start-ups had announced that they were getting into the air cargo business.

Then at the beginning of this year, the Hyderabad-based 3PL service providerGati, which had leased some of Air India’s Boeing aircraft, send a terse message toits investors: The company had incurredlosses of a whopping INR164.2 million(US$3.3 million) between July andDecember last year.