Blue Dart stays on target

News Clip : Payload Asia, The Trade Magazine For the Asia-Pacific & Middle East Region

01st December, 2008.

"We're a very prudent organisation," explains Tulsi Nowlakha Mirchandaney, Managing Director of Blue Dart Aviation - the group's air express division - in an interview with Payload Asia. "We don't just jump into situations which I think is why we have ensured sustainability over the years."

As India's leading domestic express and air freight company with a 42 per cent market share in India's domestic logistics market, it's easy to understand why it attracted the attention of global heavyweight, DHL, which now holds an 81 per cent stake in the company.

Slow and steady

"It took us 13 years from 1983 to 1996 to build up the ground network to warrant getting into the aviation infrastructure, which you know is a very high cost, high capital asset management area,"Mirchandaney adds.

That network, now extends to over 5,658 vehicles, 282 facilities that enable deliveries to over 21,000 domestic locations spanning the entire country. This is made possible by Blue Dart's aviation arm which operates scheduled night express cargo flights including domestic and regional charters via its main bases at Chennai, Bangalore, Kolkata and New Delhi and hubs at Hyderabad, Ahmedabad and Mumbai.

Blue Dart's fleet now compromises three B737-200 and four B757-200 converted freighters.

Fleet expansion?

As for increasing capacity, prudence, again is the watchword. "The way we've operated its purely driven by customer demand, if we reach a certain load factor than we review it.

"Express is really demand driven so its not something we jump into, we don't create the capacity and hope for shipments," she said. Although Blue Dart had been looking at longer term capacity expansion plans, Mirchandaney said that "considering the environment and the economy the way it is today, I think we need to wait and watch and see how the next year pans out."

"Our aircraft come from the secondary market and generally we acquire the aircraft and then have them converted into freighters and that process generally takes about a 4-6 month time span and we feel there will be sufficient time for us to plan ahead. "The next year especially, we would need to wait and evaluate it," she adds.

Surely a wise move as even the best run, most prudent organisations are not completely immune from the unfolding global economic calamity. While the debt-free Blue Dart posted a 27 per cent rise in sales, to INR 2.63 billion (US$54.9 million) for the second fiscal quarter 2008 ending 30 September, compared with the same period last year, it saw its net profit contract nearly 23 per cent to INR 135.84 million (US$2.8 million).

In the meantime the group will continue with its plans over the next year to invest nearly US$42 million in enhancing its product offering, improving IT and airport infrastructure, according to Blue Dart Express Managing Director Anil Khanna.

Competitors in the wings

But with a surge in domestic-oriented freighter operations either cropping up in the last year or two, or in the planning stage, Blue Dart may soon have company in the Indian air express space. "We were a pioneer in setting up domestic freighter operations in India and after 13 years we are still the only self-operating air express company operating in the country today," Mirchandaney said.

"Our infrastructure design from inception was focused on control, safety, efficiency and scalability. Therefore we set up our own aviation maintenance from the beginning - capable of conducting up to 'D' level checks - along with ground handling and security capabilities.

"We operate at night across the seven major metros of the country to enable morning express deliveries - no one else in the country does that and that together with our fleet of seven freighters, our facilities and our payload of over 300 tonnes every night brings a scale of operations that is unmatched in the country today."

And as Khanna points out, "Aviation is just one part of the entire spectrum of services we provide to the customer." The business also involves retail outlets, pick up, deliveries, track and trace technologies, and so on, "so aviation is just one of the enablers," he adds.

"Yes some players have come into this market but it has not impacted us much because we have always differentiated ourselves through innovation."

To create a network like Blue Dart's and put in the necessary infrastructure within a year or two would be extremely challenging, he adds.

What next?

So with this firm command of the Indian market and a rich and powerful big brother in the form of DHL, would a post-recession future possibly include a regional expansion?

"It's definitely a possibility. I think we are ideally positioned because we have one aircraft based in Chennai which is just a hop away from Colombo. We have another aircraft based in Calcutta, again in very close proximity to Dhaka. "So the possibilities are there and ours has been a situation where we wait and watch - we wait for the express demand to build up and then we operate." For the market it will also be 'wait and watch', to see what Blue Dart's next target will be.