Air cargo revenues will contribute much more to the airline revenue mix

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The pandemic has in many ways emphasised the importance of the air cargo industry and linked logistics networks that play a critical role in the global aviation value chain. In an exclusive interview, Ramanathan Rajamani, Director and CEO, Air India SATS Airport Services (AISATS) informs Ritika Arora Bhola, how the Indian air cargo industry had been reacting and responding to the current market situation, with highlighting the strong measures adopted by the ground handling company to ensure undisrupted cargo movement.

How is the Indian air cargo industry reacting and responding to the global pandemic?

The world is going through one of the most challenging times since the great recession, with over 90 per cent of industries suffering losses of some kind. In the aviation industry, we have seen a substantial drop in revenues. The cargo business has been the only activity helping airlines and the down line cargo chain globally.

The pandemic has in many ways emphasised the importance of the air cargo industry and all the linked logistics networks that play a critical role in the global aviation value chain. This was made abundantly clear with the movement of essential supplies of food items, face masks, and other medical supplies that needed to be distributed worldwide to/from India during this period.

A shortage in workforce availability, a liquidity crunch and capacity shrinkage resulting in a sharp increase in airfreight rates have been some of the many challenges faced by the Indian air cargo industry. Most of the service providers were forced to suspend credit and seek temporary exemptions from their contractual commitments with customers to overcome cash flow and service-related issues.

Throw light on the measures adopted by AISATS to ensure undisrupted cargo movements during COVID-19 outbreak?

AISATS immediately understood the importance of ensuring seamless service in these unprecedented times where the movement of essentials and medical equipment was critical to the nation and to other countries. COVID-19 affected aviation like never before and while regular commercial passenger operations were suspended, we continued to support our airline customers for a number of approved repatriation flights, MoCA’s Lifeline Udan, and general cargo movement, so as to ensure timely, effective and streamlined services to our customers.

Our teams were at the forefront ensuring support for the continuous air transport of critical medical equipment and supplies at five of our business units- Bengaluru, Delhi, Hyderabad, Mangaluru, and Thiruvanthapuram. While focussing on the efficient transportation of cargo, we also implemented stringent safety measures for our workforce through the rationalised use and distribution of safety and sanitised equipment, especially critical for the handling of cargo to/from countries affected and issuance of the necessary PPE depending on the area of operation. Our on-ground teams continue to diligently follow protective measures in line with guidelines issued by IATA, MoHFW, local state authorities, airline, and airport operators.

Tell us about the cargo quantities and types of essential cargo being transported.

AISATS has been instrumental in contributing to easing the impact of the virus by maintaining global supply chains, thereby supporting companies that depend on imports and exports. We uplifted over 16,000 MT of cargo between March and May in total. Through our ground handling services in the different business units pan-India, we have helped move over 6,299 MT of cargo, including both imports and exports.

We supported the upliftment of COVID-19 kits, pharmaceutical medicinal drugs, and perishable food supplies.

Our dedicated air freight terminal and Coolport in Bengaluru saw movement of over 10,000 MT cargo, handling of 204 freighters and 117 bonded trucks during the same period. The major export commodities from our freight terminal were pharmaceuticals, perishables (baby corn, mixed vegetables, hatching eggs), electronic and engineering goods, and other essential commodities.

How is AISATS managing maximum work productivity with minimum workforce?

During the lockdown period, we deployed about five per cent of our workforce for essential service operations. The initial phase saw a lot of information on the public platform and media. As this was a first for just about every country, the lack of a comprehensive approach to the pandemic resulted in a sense of fear that permeated the industry and the general public.

During this period, our leadership team at each unit ensured there was engagement and ongoing dialogue with the staff at all levels while continuing to stress the importance of creating a safe workplace for everyone. The focus was to primarily safeguard the physical health and mental well-being of our people. At this time, job security was also key and as an organisation that puts staff first, we continued to ensure our people were paid on time. Operations were skeletal, but the staff were deployed carefully to ensure safe handling of operations that was clocked within the stipulated timeframe.

The lack of financial support by the government has compelled the industry to re-evaluate priorities across the board. AISATS continues to assess the short-mid-long-term effect of the downturn and being a manpower intensive industry, we will take the necessary steps to ensure we remain sustainable as a business well past the impact of the pandemic.

Is there any risk management policy that AISATS follows to cope up with a crisis like this?

At AISATS, we have a robust risk management policy that has been developed keeping the dynamic nature of our operations. This spans across multiple situations and scenarios. Talking specifically about our cargo terminal in Bengaluru, we implemented a COVID-19 specific SOP to handle operational risks at the workplace specifically towards managing employee and visitor entry into the terminal and the monitoring of people moving within the terminal while ensuring physical distance. The reporting of any related incident with follow up actions to be taken in the event of any suspicious cases of COVID-19 related symptoms was a key process implemented, and a mandatory checklist was developed for the AISATS terminals specific to the needs on the ground.

With the introduction of touchless sanitising units and measuring guns to carefully execute fumigation and sanitisation at regular intervals, our cargo terminals were secure for operations.

What can governments do to facilitate the smoother flow of cargo amidst the COVID-19 outbreak? Any suggestions you would like to share?

Careful planning and input from key stakeholders are critical at this time. India is at the cusp of change and the aviation industry and cargo sector has a chance to contribute significantly to this change. Each step by the government has been strategic, keeping in mind the human and economic factors, vis-à-vis phased opening of various industries. Many local governments and authorities have also developed protocols and implemented plans that have now required the logistics and supply chain sector to raise efficiencies and be far more effective during the pandemic.

However, the path to recovery is much more complicated. The socioeconomic impact as a result of the growth potential in the cargo business requires the government to provide the necessary stimulus for the industry – airlines, ground and cargo handling agents, and others that can help keep business, and just as importantly, employment sustainable. IATA has declared that the pandemic is expected to potentially impact 2,932,900 jobs in the country’s aviation and its dependent industries. According to CAPA, the airline sector losses are expected to be around USD 1.75 billion, while that of the airports and concessionaires at around USD 1.50-1.75 billion, and another USD 80-90 million losses for the ground handling companies.

The ground handling companies in India (handling both passenger and cargo flights) employ anything between 50,000-65,000 highly skilled people, and collectively these companies have lost close to 90 per cent of their core business but have continued to retain over 70 per cent of their respective workforce. This cannot continue, and if we and others in the industry are to remain sustainable in the long run while maintaining the highest levels of efficiency and capabilities in a fiercely competitive global arena, the government must step in and provide the necessary stimulus package in a proactive manner.

Going forward, we believe air cargo revenues will contribute much more to the airline revenue mix and this in turn will attract high-value cargo which can result in higher margins. Technology will play an important role in streamlining operations. AISATS will stay focussed on the technological front with advanced infrastructure and facilities, automation in all areas, and the development of skilled handling capabilities with end-to-end tracking of cargo, condition monitoring, and other innovative capabilities.

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