Hyderabad-based Flyington orders 4 Boeing 777s for $1bn

MUMBAI: Unknown Indian cargo carrier Flyington Freighters on Wednesday signed up a $1bn (Rs 4,700 crore) deal with Boeing to purchase four 777 long-range freighter planes. The Hyderabad-based company plans to launch an international cargo carrier, focusing on point-to-point operations to destinations in West Asia, Europe and the US.

The deal was signed by Deepak Parasuraman, managing director of Flyington, at the Farnborough airshow. The aircraft will be delivered by ‘09, though the airline plans to commence operations with leased planes in the interim. Mr Parasuraman said the airline will be launched by the end of the year.

Flyington has several Hyderabad-based promoters led by Venkatram Reddy of Deccan Chronicle, who is also the chairman of the airline. Industry analysts say the freighter market in India is currently under-served and has the potential to outgrow the passenger airline industry.

Flyington will begin operations with three leased aircrafts. These planes, medium-capacity long-range aircraft like the MD-11 or the A300-600 will start with flights to West Asia and China, company sources said. The B777, ordered on Wednesday, is a twin-engined, long-range model which in its cargo version sells for about $240m at list prices.

It has a cargo capacity of 103 tonnes. Citing the advantages for a cargo airline, Mr Parasuraman said the Indian government has an open skies policy for cargo airlines — the carriers also enjoy what are called ‘fifth freedom’ rights into foreign markets.

These rights allow them to fly from one country to land in a second country, and then pick up cargo and fly on to a third country where the cargo is then unloaded. Currently there is a three to four day wait for cargo space, which has driven up rates. Despite the high oil prices, he said margins in the cargo space are strong. Mr Parasuraman was earlier with the Chennai-based cargo carrier Crescent Air, which is now grounded.

Commenting on future investment plans, Mr Parasuraman said, “The promoters will invest about $50m in the first year. He hopes that the airline will be profitable within the first year of operation.”

International express cargo carriers like Fedex and UPS currently operate in India apart from passenger airlines like Lufthansa or Emirates, which also operate ‘Combis’ which are aircraft with larger belly space for cargo.

However, the space in these aircraft is a maximum of about 33 tonnes, compared with a much larger capacity offered by freighters. On the domestic sector, Blue Dart aviation is the only cargo player so far with a fleet of five Boeing aircraft. Flyington plans to carry both bulk and express cargo.

Among the players that are planning to start up are Reliance Cargo, where operations are expected to dovetail with the petrochemical group’s retail foray and the Bangalore-based First Flight Couriers, which will largely cater to the company’s own courier needs.