Restore Cathay Pacific and Lufthansa Freighter Services in Hyderabad: FTCCI to Centre

Hyderabad: Highlighting the reduction freighter connectivity at Hyderabad airport, the Federation of Telangana Chambers of Commerce and Industry (FTCCI) has made a representation to the Union government to intervene and restore the freighter connectivity to major global hubs with operations by Lufthansa Cargo (to Frankfurt) and Cathay Pacific Cargo (Hong Kong).

In a letter to the Union Civil Aviation Secretary Rajiv Bansal, the FTCCI president Anil Agarwal said Telangana has high dependency on air cargo for exports of finished goods and imports of raw materials. He added operations of freighter airlines were removed post-COVID from the ambit of Open Skies policy and cargo operations instead were brought under the Bilateral Air Services Agreements (BASAs).
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To       

Shri Rajiv Bansal, IAS.

Secretary, Ministry of Civil Aviation

Government of India

Rajiv Gandhi Bhawan, Block B

Safdarjung Airport Area, New Delhi

Respected Sir,

As you are aware Telangana, specifically Hyderabad has a dominant position in the country’s Pharma Sector, it ranks first in manufacturing of bulk drugs and third in formulations in the country. It accounts for 40 per cent of the total Indian bulk drug production and 50 per cent of the bulk drug exports and is considered as the 'Bulk Drug Capital of India'. Hyderabad Region also accounts for over 30% of all the vaccines produced globally.  Hence, to maintain this position and be a leader not only in India but also across the world, the key to success is international connectivity (direct freighters).

Telangana being a landlocked state has high dependency on air cargo for both Exports of finished goods and Imports of raw materials as inputs to production. Prior to the pandemic, Hyderabad Airport enjoyed good freighter connectivity to major global hubs with operations by Lufthansa Cargo (to Frankfurt) and Cathay Pacific Cargo (Hong Kong). These freighter services allowed local industries to seamlessly integrate with the global supply chains at competitive rates and rapid connections.

However, we are given to understand that with the changes to rules enforced via DGCA AIC 41/2020 dated 31st December 2020, the operations of freighter airlines were removed from the ambit of Open Skies policy in vogue and cargo operations were instead brought under Bilateral Air Services Agreements (BASAs) which were designed & intended to manage the operations of passenger services on international routes.

An unintended consequence of the above change was the curtailment of two-port landings by foreign carriers flying a multi-stop circuit route within India, dropping off/picking up international cargo from multiple Indian cities before heading back to overseas base. With the change in rule, such flights were restricted from connecting more than 1 Indian city in the same journey. It is to be noted that with the cabotage restrictions already in place such flights were only carrying international cargo and no transportation of cargo between 2 Indian cities was anyway permitted on such flights.

Crucially for smaller metros such as Hyderabad, such two-port flights reduced the cost of global connectivity by ‘sharing’ a single flight across multiple cities (double-dipping) enabling smaller Indian cities to access global markets in a fast and economical way. Under these new rules, the Cathay Pacific flight previously operating Hong Kong – Delhi – Hyderabad – Hong Kong or the Lufthansa flight operating Frankfurt-Mumbai-Hyderabad-Frankfurt on a single journey is no longer being permitted. As highlighted previously, these were crucial trade links for local industries in Telangana, and these two carriers combined had carried a total of around 15,000 MT of cargo in FY2019-20, accounting for around 17% of the total international air cargo volumes handled at Hyderabad Airport during the period says Mr Anil Agarwal President FTCCI

The curtailment of Open Skies for Cargo is having unintended negative consequences on many industries reliant on export and import of goods by air cargo:

1. Exporters/importers using Hyderabad have suddenly lost these key connectivity options that were previously being provided by hopping/fifth freedom flights, negatively impacting their ability to meet their EXIM requirements.

2. With the curtailing of hopping flights, Hyderabad has seen reduction in freighter connectivity, as many of the aforementioned freighter services connecting the city previously were ‘shared’ with Delhi, Mumbai and Bangalore.

3. Given the global supply chain disruptions, capacity and pricing were already major challenges for Indian exporters who are now facing even higher charges, with freight rates to major markets such as US and EU out of India at all-time highs. The curtailment of Open Skies has further contributed to making air cargo unaffordable and making exports unviable, in particular for perishables viz. agri products, fruits & vegetables.

4. Indian carriers presently operate no wide-body freighter aircraft and even the handful of narrow-body freighters in the fleet presently lack the capacity and range to serve all-important global markets in regions such as North America, Europe and Far East that account for the majority of India’s international trade in goods.

5. Air Transport in general and air cargo in particular are important economic drivers and job generators.

6. Hon’ble Prime Minister has laid out an ambitious and progressive vision for the country’s development in the PM Gati Shakti Master Plan with focus on leveraging multi-modal connectivity incl. Air Cargo to provide integrated and seamless connectivity. In particular, it aims to remove regional/sectoral imbalances in infrastructure and connectivity.

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Given the above facts, the move to restrict air cargo connectivity will be counter-productive to Govt.’s efforts towards broad-based economic development and employment generation.

In view of the above, we request your good offices to intervene and restore the earlier framework of Open Skies, in particular freeing cargo flights from the restrictive passenger BASAs and permitting double-dipping freighters and also permit the restoration of double-dip operations of Lufthansa and Cathay covering HYD as one of the ports. This would help maintain the competitiveness of the exporters and importers of our State says Mr Anil Agarwal President FTCCI

Thanking you,

Yours sincerely,

Anil Agarwal,

President, FTCCI