Jet crisis derails cargo industry

With the recent suspension of Jet Airways’ domestic and international operations, the carrier’s cargo service has also been halted. Industry operators connected with the airline voice their concerns as delivery commitments get hampered and freight costs b

Sunil Kohli

Managing Director, Rahat Cargo

With the unfortunate suspension of flights by Jet Airways, we shall now broadly take into consideration the consequential disruption of our international cargo movement (since no domestic cargo was being forwarded by us on the airline) that had been planned on the carrier. The absence of Jet Airways will be felt by all stakeholders, especially freight forwarders who had been patronising the carrier to achieve a smooth execution of their cargo movement.

As per normal practice, we, the freight forwarders, had been booking cargo space in advance as required by the exporters, who in turn conveyed flight details to their respective buyers abroad. Based on this chain of delivery of goods at the foreign stations, the buyers there finalised their marketing strategy. Needless to say, any disruption in such a chain puts the entire planning in disarray and all stakeholders in a fix on how to re-plan the movement of goods to ensure a timely accomplishment of the desired outcome.

It is also pertinent to add that forwarders who had originally planned a load on Jet Airways have been left in a dilemma, struggling to find space on alternate carriers that were already facing the space-crunch and had no option but to enhance their freight rate in conformity with the dynamic sales pricing due to increased demand and limited supply. Also, increased freight is bound to cause a dent in the exporter’s pricing quote which had already been negotiated with the buyer. In other words, emergence of a sudden scarcity of space has pushed us in a difficult situation. Nevertheless, we have been trying our best to overcome the odds by getting the bookings postponed and opting for other carriers at a higher rate and convincing the shipper to face the roadblocks that are expected to be resolved soon with the intervention of statutory bodies and the consortium that is now finding ways to revive Jet Airways.

Jaideep Raha

Managing Director, Jetex Oceanair

The situation is an indication that presently, the Indian aviation market is not geared to handle more than three players. This incident is an eyeopener for all in the aviation industry that price wars, under-cutting for the sake of gaining a competitive edge to be ranked number-one and enjoy a majority market share, is not the answer to survival in business.

Indian Airlines once enjoyed monopoly and from there, the open-sky policy and private players like CityLink, East West Airlines, ModiLuft, Damania, NEPC, Sahara, Deccan, and thereafter Jet Airways, Kingfisher and so on, either shut down or were bought by competition that eventually shut shop itself. This also proves that the Indian domestic market is meant neither for an overcrowded sky with multiple operators nor budget, no-frills, and premium airlines. A live example is that of the collapse of Deccan and Kingfisher, one an absolute budget airline and another an absolute premium carrier. This shows that our country is not ready for anybody and everybody to fly. It is important to be a reasonable operator, choose your route wisely, and operate with the right kind of aircraft without going overboard.

I would urge MoCA, DGCA, and the PMO to take note of the debacle and of the past, and formulate uniform regulations and strict compliance in terms of both security and commercial aspects of carriers. In my opinion, a monitoring cell is needed and regular financial review by an independent body of auditors is required to keep a check on the financial health of operators. Routes and aircraft must not be authorised without a proper feasibility report.

With Jet Airways shutting down, forwarders and shippers have been greatly inconvenienced due to the sudden rescheduling of load to other carriers. Delivery commitments have gone haywire and freight rates have catapulted!

Mahesh P Trikha

Managing Director, Aargus Global Logistics and India Cargo Awards winner 2018

The Jet Airways crisis has disrupted availability of cargo space on both domestic and international levels. Those who had goods to be moved to sectors to which the airline had direct flights, or a reasonable capacity on international routes, are in a fix. Other airlines, taking advantage of the opportunity, have increased rates and we are left with no way out but to accept the increased costs and subsequent delays in shipments. The situation has worsened due to closure of the air space of Pakistan, so airlines have to now take a longer route that requires extra fuel, and hence, the cargo carrying capacity has reduced.

Harpreet Singh Malhotra Managing Director, Tiger Logistics India

Jet Airways was not only the second largest airline of India but also one of the premier ones operating from India to international destinations. Jet operated both domestic and international services from India, including those to London, Brussels, Amsterdam, and Shanghai. It was one of the main airlines that fulfilled our logistics demands for destinations like Dhaka, Colombo, London, Singapore, Bangkok, and Dubai. Though we were proudly associated with Jet, we undoubtedly were employing the services of other carriers as well to fulfil our logistics needs. When we learned about Jet Airways’ crisis, we moved our cargo to other carriers because we couldn’t allow our clients to suffer due to inefficiency or the airline’s inability to operate. That said, it’s definitely a loss for us and those associated with Jet Airways.

In my opinion, it’s a clear case of high costs and low yields that has resulted in Jet’s situation today. As per industry reports, Jet fuel prices constitute about 40 per cent of costs for an Indian carrier and are taxed higher than anywhere else in the world. High taxes on fuel prices are the biggest concern of the aviation industry; SpiceJet and Air India were also victims of the problem but have somehow survived. If you see the correlation between price of fuel and airline profitability, you will be able to understand that higher taxes have plunged airlines into deep losses. The government must support the aviation sector when it comes to taxes on fuel prices.

Amit Tandon

Managing Director, Asia Shipping India and India Cargo Awards winner 2016

The airline, at one time a major Indian private airline operating both domestic and international passenger and freight services, started running into rough weather financially from mid-2018. There were several attempts by all stakeholders to revive the ailing airline, but lenders could not be convinced enough to bail the airline out and ultimately, it succumbed. At Asia Shipping International we were doing a good amount of cargo business with Jet Airways up to November 2018. The major destinations for which the cargo was being exported from India by us through Jet Airways were London and Amsterdam, while imports were majorly from London and Hong Kong. However, based on market reports and our perception of the cargo handling potential of Jet Airways, primarily from November

2018, we started tapering out our export and import activities through Jet Airways, till we stopped doing cargo business with them from March 2019.

With the closing down of Jet Airways, the total available cargo capacity for the destinations to which Jet Airways had been operating has gone down, the impact of which may be felt more during the peak season. As a result, the cost of freight with other airlines that are now picking up cargo from India to these destinations has also gone up, thereby increasing the cost to exporters.

Ashish Mahajan

Managing Director, Landmark Logistics

It is hard to believe the clipping of wings of this professionally-managed first Indian international private carrier. It would have been better if Jet Airways’ management had planned for both employees and customers before taking the harsh step of folding its wings.

The airline was a leader in transporting cargo to various international sectors and a preferred carrier among many IATA agents due to its service consistency and strategic locations. Hence, some customers are bound to suffer for some time before they settle in with replacements, while the rest of the trade accepts the inevitable.

Rahat Sachdeva

Vice President, Rahat Continental and Face of the Future (India Cargo Awards 2017)

Jet Airways’ closure has been very unfortunate. International flights were already in jeopardy due to closure of Pakistan’s air space, and the situation has now worsened with the suspension of Jet’s domestic and international operations. Presently, we are at the centre of a chaotic situation where there is a massive cargo space crunch, especially for the United Kingdom and Europe. Besides delays, regular flight and freight rates have almost jumped by as much as 50 per cent, which, though advantageous for a few airlines, is a major setback for freight forwarders and customers who are paying that high price. Jet Airways’ cargo has always been a great support to the community. At one point, the airline was the largest professional cargo carrier. We have lost a huge capacity due to its closure, which is impacting trade from perishables and apparels to pharma. The only feasible way out, in my opinion, is getting additional cargo capacity from other carriers to meet industry demands, which could be long-term.