Deccan cargo airline to take off in May

G R Gopinath, founder of budget carrier Air Deccan, is ready to start operations for his cargo airline in May. His company, Deccan Cargo Express Logistics, will take delivery of three Airbus 310 freighters from the first week of April onwards.

The company plans to offer end-to-end logistics solutions where it has custodial charge of the cargo. Till the back-end warehouse infrastructure is ready at the airline's national hub in Nagpur, Gopinath's freighters will fly the Dubai-Mumbai-Delhi-Hong Kong route, offering dedicated cargo space to freight forwarders and serve anyone who wants to move international freight to these cities for time-definite delivery.

This ensures that the planes don't lie idle till the back-end systems are ready, said Gopinath.

Deccan Cargo Express Logistics has signed up with Multimodal International Hub Airport at Nagpur, a complex that is being developed by the Maharashtra government, for a hub in Nagpur.

Gopinath was instrumental in improving air connectivity to smaller towns and plans to replicate the model for his cargo business. "Today, cargo that lands in Mumbai can take a week to get into industrial clusters in the hinterland. With a hub in Nagpur, we will provide connectivity to 60 cities overnight," he said.

The cargo airline will follow a hub-and-spoke model. Turboprops will feed and collect cargo from small towns, while the Airbus 310 freighters will connect metros and fly cargo to international hubs like Dubai and Hong Kong, among others.

Gopinath's cargo airline will be pitching itself against established players like Blue Dart, Gati, TNT Express and First Flight in India's domestic cargo business.

However, the potential for growth is significant since India currently has just six cargo planes (owned by Blue Dart) against 98 in China, 120 in Europe. Only one per cent of India's cargo moves by air against a global average of 2 per cent. Many airlines like Jet Airways were keen to start a cargo airline while international freighters have increased capacity out of India.

Deccan will induct three cargo ATRs in the next three or four months, and will initially have a fleet of three Airbus 310s and six ATRs. It has leased out ATRs and Airbus 310 that were returned by Air Deccan and Air-India and converted them into freighters. The Airbus-310s are being converted at an EADS facility in Dresden.

Gopinath has been trying to rope in investors for this logistics venture, which will invest $166 million (approximately Rs 8.30 billion) in three years. Earlier this month, Business Standard had reported that Gopinath has been in talks with several investors, including IBM Venture Capital, Singapore Cargo and Intel Capital, who may together invest $55 million (Rs 2.75 billion) in the logistics venture. Sources said the talks were in advanced stage and Edelweiss Capital was helping Deccan identify investors.

Gopinath has put in a seed capital of $25 million (Rs 1.25 billion) and already hired 140 people, including CEO Jude Fonseka from FedEx, and other key people like CFO G K Anantha Raman, who helped Cairn Energy go public.

The cargo airline will be Gopinath's third aviation venture after charter aviation and a scheduled airline. Gopinath sold stakes in his airline, Deccan Aviation, to Vijay Mallya's Kingfisher Airlines nearly 20 months ago.