First Flight Couriers has notified the Directorate General of Civil Aviation (DGCA) and the Airports Authority of India (AAI) of its plans to terminate flights and shut down its express air cargo operation. The company has given notices to its crew and pilots as well. The company had started freighter operations with leased three ATP aircraft only four months ago in June.

First Flight was only the second company after Blue Dart Aviation to use dedicated aircraft to service the express air cargo segment. The latter is the only Indian firm that has scripted a success story in the field.

It had a revenue of Rs290 crore ($73 million) in 2006. First Flight''s document business has been growing steadily at 10 to 15 per cent per annum. In June 2007, Singapore''s Temasek Holdings picked up a 27.74 per cent equity stake in the company for Rs107.5 crore ($26.5 million).

But it seems to have been unable to generate the volumes required to economically deploy a dedicated aircraft. Typically, an ATP freighter has a payload of eight tonnes. First Flight was able to fill up only 60 per cent of the available capacity.

The main business of the company is movement of documents and letters, a low-margin segment, First Flight Couriers had positioned the ATP aircraft to make its entry into the logistics segment comprising heavier packages and parcels. But it seems to have failed to bring in enough customers, resulting in increased pressure on revenues.

Two months ago, one of its planes was involved in an incident where the nose was damaged. High oil prices have also led to higher costs. Non-availability of parking space at Mumbai, New Delhi and Chennai airports, which are the major centres of cargo throughput, seem to have hindered effective operations.

Now, the company has invited global tenders to lease two Boeing 737s for its air cargo operations. But bigger aircraft have bigger payloads as well as higher operating costs. How the new venture fares remains to be seen.

Elbee Services had launched its own aviation wing to carry courier material in 1996, with a dedicated fleet of three Fokker F27-200s. In 1997, it shut shop after one of the aircraft crashed into the sea off Mumbai.

Gati, the Hyderabad-based third-party logistics (3PL) service provider, has recently initiated air operations with a fleet of five Boeing 737 freighters leased from Air India.

Another venture, Quickjet, floated by IL&FS Ventures, Mumbai-based 3PL service provider AFL, and Cardinal Aviation Partners, a Singapore-based consultancy firm, expects to be flying by December.