Indian summer

Question: How are British Airways World Cargo's operations faring in the Indian markets, especially in the face of rising domestic competition and the current economic situation?


Expert: Mat Burton, Area manager, India and Nepal, British Airways World Cargo

Expanding the network

Although British Airways World Cargo (BAWC) has been established in India for over 60 years, it's really been over the last three years that we've seen significant expansion. It seems only recently that our 19 flights a week expanded to 26 and now we have 52 flights across all of India.

We've seen growth across the metropolitan areas - firstly Kolkata, Mumbai and Delhi - we're now operating in Chennai, Bangalore and Hyderabad from October this year. Our B747-400 freighters drop and pick up cargo in Chennai, Mumbia and Delhi on the way back to London from Shanghai Pudong and Hong Kong International Airport using different combinations on the flights, thus allowing a good mix of weight and distribution across aircraft depending on how the markets are performing.

We have regular schedules and our Indian policy has been entirely consistent, whereas some operators have gone in for short-term gain or pulled out due to the current economic situation.

Production moves southwards

The major development in the market has been a production shift from northern to southern India as the traditional garment manufacturing base in the north has declined. Instead, we've seen production migrating south, where new-generation products like mobile phones, car parts and heavy plant machinery have seen strong growth in the last few years.

Companies like Nokia, Siemens and Sanyo are now all seeing the benefits of setting up big plants, some of which are now ready to export goods. Further more, Hyundai used to manufacture car parts in India and send these for assembly in Europe, the company is now assembling and exporting entire cars.

Increasing drug movements

In central India, we've witnessed a huge pharmaceutical industry developing, due in part to the fact that India has one of the highest levels of US Drug Enforcement Administration approval for drug manufacturing.

The country has more plants approved by the US authorities than any other state in the world. So, we're also freighting a diverse amount of drugs like heart medicines and vaccinations, all of which require a different type of logistical and/or cool chain solution. India as a whole has managed to diversify its manufacturing base significantly.

Middle East relations

The supply chain between India into the Middle East is predominantly one way - so you see a lot of business being distributed from the Gulf to the subcontinent. However, the poor Indian infrastructure is definitely a problem, which is why a sea-air option to the Middle East is looking increasingly attractive and also explains why we are seeing significant investment in ports across India.

It's the internal network that's the real concern - I remember a container that once took five weeks to be transported from Mumbai to Delhi due to monsoon difficulties. The internal infrastructure just doesn't support the seaports.

A need for better infrastructure

There is no doubt that India is a challenging market - there's plenty of capacity out there and a number of quality airlines trying to win it. We now see more smaller domestic carriers fighting for the capacity into the Middle East on what were once traditionally Air India and Jet Airways routes. And of course you have the long-established European and Asian players like Singapore Airlines and Lufthansa.

The domestic market is under significant pressure due to low-cost bases for the smaller airlines, the rise in jet fuel and cuts in schedules, so I wouldn't be surprised to see more consolidation amongst the smaller players.

Mapping out the future

Obviously, all carriers are facing tough times and everyone's schedules are being examined closely, but June was a record month for us and we're doing exceptionally well.

We already feed plenty of business via interline into the Middle Easr and will be looking to exploit that angle more in the future. In the two years since I've been here, we've concentrated on looking at the way we interact with customers and later this year we will be doubling the size of sales force. As a result, we should see better penetration in the markets. Hyderabad will be a big plus for us when it comes online in October as we currently have to truck all business out of the hub.

We've also met with strong success from our move to the new airport at Bangalore, where we've seen increased tonnage from day one. And we will also be looking at closer cooperation with the BAWC freighter team in London to look at our fundamentals. In this business, and in this environment, you have to review all of your options all of the time.

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