Freighter Conversion Air India s experience Anita Khurana

Freighter Conversion – Air India’s experience Anita Khurana Director Cargo Air India 1

World Freighter Fleet Q Freighter fleets available worldwide Q North America accounts for the largest fleet of freighters with more than 1000 freighters in operations Q Europe & CIS countries come next with close to 300 freighters in operation Q Asia Pacific countries have about 250 freighters currently under operation Q Latin America & Africa have close to 80 & 60 freighters respectively. Q Middle eastern countries have about 30 freighters Q India has only about 20 freighters currently Source: Airbus 2

Freighters Q 50% of active fleet today are controlled by just four integrators Q Currently there are close to 2000 freighters operating around the globe Q World freighter fleet projected to grow to about 4250 units by 2026 Q 70% of it would be converted passenger aircrafts Q As per industry estimates in the next 20 years 63% of the cargo capacity will be offered through dedicated freighters 3

Freighters - India QFor India it is estimated for the growing cargo market, India will requires Q 126 freighter aircrafts in the domestic market Q 90 freighter aircrafts in the international market by 2025 to meet the growing demand 4

Enablers in the new cargo scenario in India Q Open Skies Policy Q Liberalisation of Indian Economy Q Rapid Increase of Manufacturing Q Emergence of Sunrise Industries Q Emergence of New Modern Airports in the hinterland Q Emergence of time definite products

Indian Trade scenario (tonnage) Q Intermediate & consumer goods constitute almost 40% & 25% by volume of exports respectively Q On the import front capital & high tech goods constitute about 25% & 20% respectively, however intermediate goods still constitute the major chunk of imports (35%) 6

Indian Trade scenario (million $) Q Jewellery constitutes the single largest export by value at almost 55% Q On the import front Jewellery & high tech goods constitute about 35% & 30% respectively. Q Capital & intermediate goods constitute about 20% & 15% respectively 7

AI Cargo - USP Q With Merger AI offers a large network & seamless connectivity from interior points within India to abroad Q More than 1500 tons of capacity available per day Q Back up with the reliability of passenger flights unlike freighters Q However cargo market needs different parameters vis-à-vis passenger market Q Immense potential for air cargo growth in the country 8

Freighter conversion - Background Q As per Govt directive, options to convert passenger aircraft to freighters to be explored before phase-out. Q Dept of Post was looking at an option to connect the North. Eastern States faster Q Erstwhile Indian Airlines was in the process of phasing out its B 737 passenger fleet. Q Opportunity was right to convert them to freighters and offer to Dept of Post 9

Freighter conversion - Background Q Wanted to bring in a new era in developing cargo market within the country Q Wanted to replicate set practices in India Q Eg. Fedex or integrator models are most efficient Q DHL tie-up with Deutsche Post Q Satisfy the need to the market Q Late pick-up and first delivery 10

Freighter conversion - Background Q First B 737 converted to freighter in 2007 and offered to Dept of Post. Q Option to cover rest of India explored to tap the immense potential available in the country Q Eventually Nagpur hub concept developed to connect with the 6 metros. Q As a result, another 5 B 737 passenger aircraft also sent for conversion to freighters 11

Freighter conversion - Background Q Extend existing tie-up with Dept of Post to carry their mail on the freighters with Nagpur as hub. Q With more than 150, 000 post offices in India and an extensive surface network, what better reach can one expect Q The air mode was a logical extension to expand distribution chain along with existing rail / road network of India Post Q Operations commenced with effect from 27 July 2009. 12

Freighter Operations – Current Routing Delhi Guwahati Imphal Nagpur Kolkata Agartala Mumbai Bangalore Chennai 13

Win-Win situation Q With the North-east freighter operation, Dept of Post has tremendously reduced the time taken to delivery their mail to the remote corners from weeks to a couple of days. Q There has been a major increase in business and volumes have gone up. Q With Nagpur hub operations in the night, Dept of Post is able to provide overnight delivery to their customers. Q Air India is able to completely utilise their freighters and only needs to look at operational matters 14

Challenges we faced QCrew shortages for B 737 freighters QAirport constraints – Parking Issues QNorth East – tough terrains QA 310 operations – Cultural differences between AI & IC 15

Constraints for freighters operations Q What are the restrictions for freighters operations Q Shortage of Crew (not as attractive as passenger operations) Q Slot availability Q Availability of pallets Q Cargo loads are mostly directional (one-way) Q Seasonality problems Q Route profitability a major deciding factor 16

Future Opportunities Q Freighter to provide domestic feed after DOP operations & connect to international flights Q Offer freighters for charter operations Q Connect Nagpur to the world Q Expand to other markets with potential Q Establish Cool Chains Q Operationalising Cargo SBU to be a profit centre 17

Way Forward - Role of the Airline Q Airlines in the country are primarily passenger airlines and Cargo is a by-product Q Provide Intercity connectivity Q Provide belly space capacity Q Ensure proper transit time for connecting flights Q Reduce Dwell time during transit Q Offer cargo booking facility for the agents over the ‘Net’ Q Offer least time for ‘”Accepting & Delivering” (within regulations) Q Offer Trace & Trace facility for the customers on the Internet Q “Service with a SMILE” Q Position trained / smart staff 18

Way forward – Airlines can induct freighters Q This can effectively contribute by scheduling operations as per QCargo market needs QAs per market timings QOn desired Routes Q Offer palletized cargo Q Can offer competitive rates Q Offer better control over operations & maintain schedule reliability 19

Future Plans for Freighter Operations (2010 – 2016) Seattle Hong Kong Delhi Mumbai Guangzhou Chennai Tokyo Kolkata Seoul Bangalore Bangkok Hyderabad Ahmedabad Singapore Dacca Nagpur Amritsar Melbourne Indore Dubai Srinagar Doha Cochin Frankfurt Coimbatore Trivandrum Paris Liege New York 20

Thank You 21