India acts on cargo hub dev’t, Malaysia needs focus

India, largely through private-public partnerships, is taking action to address rapidly growing demand for air cargo infrastructure, while Malaysia on the other hand needs a strategic focus to realise its air cargo potential, say air cargo executives. Wong Joon San reports from Kuala Lumpur.

India’s economy is headed for tremendous economic growth in the next decade, and its air cargo is going to grow even faster than the Asia Pacific regional growth of over 11 per cent and global average growth rate of 6.6 per cent, Vijay Sharma, general manager Commercial (Product Development), GMR Delhi International Airport Ltd, India, said. Speaking at a recent air cargo and logistics conference in Kuala Lumpur, Sharma said India, which is in southwest Asia, recorded a 62.2 per cent air cargo growth last year, although this is from a relatively low base. “Of the figure, 66 per cent is international air cargo and the balance is domestic air cargo,” he said, adding that the country was going to grow exponentially as its air cargo exports are expected to surge by 370 per cent and the value of air exports will rise by 150 per cent compared with the present exports, through the year 2020. He pointed out that his company, the GMR Group, was involved in the construction of five airports and various other infrastructure projects both in India and in other countries. Indira Gandhi Int’l Airport At the Delhi International Airport, GMR Group has a 54 per cent stake in DIAL, a joint venture consortium with Airports Authority of India having a 26 per cent stake, while Fraport and Eraman Malaysia holding a 10 per cent stake each respectively. GMR is the lead member of the consortium while Fraport AG is the airport operator and Eraman Malaysia, the retail advisor. DIAL won the airport’s 30-year concession in 2006, and New Delhi Indira Gandhi International Airport (DEL) is the only airport in India to operate three runways. The airport recorded a 25 per cent growth in air cargo to 450,000 tonnes handled in the first nine months of 2010, compared with 360,000 tonnes in first nine months of 2009. “We are aiming to handle one million tonnes annually in the near future and we have set a target to handle 760,000 tonnes between 2012-13,” Sharma said. “Over the last two years, DEL has been growing at an average rate of 17 per cent and last year, it was estimated to have grown by 20 per cent, and the estimated Compound Annual Growth Rate (CAGR) is 20 per cent,” Sharma said. “Thanks to the strong government support, the basic infrastructure was improving rapidly in the face of the fast changing business landscape,” he said. The group’s approach to meeting India’s air cargo demand growth was to identify the criteria needed for an air cargo hub and working towards meeting those requirements such as airport quality and location, he added. Sharma acknowledged that third party influences such as political risk, environmental restrictions and bilateral deals could impact its plans, however, the group was confident that its efforts to meet the logistical infrastructure needs, capacity expansion, integration and consolidation would compensate the challenges. The group is also focused on providing cost reductions and optimum use of road networks. He explained that the group was still currently expanding the Delhi-Hyderabad airports’ facilities under the first phase to be completed this year, and would start work on phase two and three next year. The facilities will include building an airport logistics park and other supporting facilities such as bonded and non-bonded zones. “Presently, the Delhi airport has six loading bays for freighters, and under its expansion plan, three more bays will be added to boost its capabilities,” Sharma said, adding that the group was also planning to build a cargo village and would continue to build-up the hubs to meet the industry’s air cargo needs, with the government’s support. The group and its partners have been tasked to design, finance, build, operate and maintain a world class greenfield airport at Shamshabad, Hyderabad. The airport project based on the Public Private Partnership (PPP) model was structured on a Build, Own, Operate and Transfer (BOOT) basis. The airport, which was commissioned in a record time of 31 months, has a 100,000 tonnes of cargo handling capacity per annum. Malaysia needs cargo policy push Another speaker, Captain Ab Manan Mansor, CEO of the Aviation Management College in Malaysia, who spoke on, ‘Making Malaysia a Global Aerospace Hub’, said that the country needed a national aerospace policy to achieve this objective, including, among others, guidelines on the improvement of the air cargo sector. To do this, Malaysia Airports Holdings Berhad (MAHB) should take a more prominent role in developing Kuala Lumpur International Airport (KLIA) as a cargo hub, he said, adding that with so much land at KLIA, this could be competitively carried out. “With a well developed cargo hub, KLIA could well become an entrepôt for air cargo for the ASEAN region,” he said, pointing out that in 2010, Hong Kong International Airport (HKIA) handled 4.1 million tonnes while KLIA handled only 670,000 tonnes. HKIA is the number one busiest air cargo airport in the world compared with KLIA which is ranked in 28th busiest. Manan said Maskargo had a 44 hectare complex with 92,900 square metres of processing area, with a capacity to process one million tonnes of cargo presently with provisions to expand to three million tonnes of cargo per year. He pointed out Malaysia had great potential as HKIA, which had only 660,000 square metres of space, was handling the equivalent of 36 per cent of the territory’s external trade. The main difference between KLIA and HKIA was that the Malaysian airport’s airline was focused more on passengers and lacked a master plan to implement air cargo operations by the airport operator. Also, the operator does not realise direct benefits from the operations, he concluded.