India has the potential to be a global hub for air cargo but it would need to improve upon its infrastructure and cost efficiency for it to make a mark in international market, experts have said.
"Considering its geographical location, India, especially Delhi, has the potential to become a gobal hub for air cargo," Singapore Airlines Cargo Pte Ltd president Hwang Teng Aun said while addressing the 'India Cargo Summit' organised by industry chamber CII in New Delhi.
Not only its geographical location but also the amount of international trade that the country is engaged in now makes India a good location for such a hub, he said.
"Even a place like Dubai, where there is not much of manufacturing or exports, is a successful destination," Aun said, adding that there was no reason why India with all its growth in manufacturing sector and exports and imports could not become another global hub.
Echoing similar sentiments, Mckinsey & Co associate partner Kaushik Das said, "India for most part of the last decade has been building infrastructure and the country has started making big strides."
The experts, however, feel a lot more needed to be done for India to become a truly international hub for air cargo. Issues such as cost of air turbine fuel and infrastructure needed to be addressed.
Highlighting major issues that stood in the way for India to become a preferred destination for international air cargo, Aun said it was not only the infrastructure constraints but the cost of air turbine fuel that hindered progress.
"The cost of ATF in India is almost 15 per cent higher compared to the global price. The ATF accounts for about 35 per cent of the operating cost of air cargo, and in a business such as this where the profit margin is just about 5 per cent, airlines using India as a fuel uptake place will have lesser profit margins," he said.
Das also said improving operating efficiency would go a long way in realising the potential that the country has. "India needs to pick up a few sectors and companies and help them grow," he said. The experts said shortage of slots, limited handling and warehouse facility were also stumbling blocks, which needed to be removed.
David Lim, CEO, Neptune Orient Lines, said there was a need to have a vision beyond the local market for the cargo business. "It is not just the local movement but global delivery that needs to be looked at and the land, sea and air transport have to be integrated," Lim said.
