India cargo company Gati has signed a joint venture pact with Air India Cargo in a move to compete in the domestic aviation cargo business with Blue Dart, owned by DHL, a unit of German postal services giant Deutsche Post.
Gati managing director and chief executive Mahendra Agarwal said Gati will lease up to five freighter aircraft by March 2008 from Air India Cargo, a unit of state-run National Aviation of India, adding the aim was to garner 11 percent market share by December 2008.
Agarwal said the freighters would help the company carry more cargo with no restrictions on timings, quantity or type.
He said earlier the company was hiring limited space in the belly of passenger aircraft and now has the whole plane's capacity.
The increase in capacity will help Gati carry more perishable commodities such as flowers and vegetables and refrigerated products like pharmaceuticals.
India's domestic air cargo industry is dominated by Blue Dart Express and has been growing at a compounded growth rate of over 11 percent during the last five years. Blue Dart operates its own aircraft.
A booming economy is seen driving domestic air cargo growth, currently valued at US$1.8 billion, reaching 500,000 metric tonnes by March 2008 and growing at 20 percent per year for the next five years.
Gati expects the share of its aviation cargo business to double to 20 percent in the fiscal year to June 2009, and the revenue reaching $254 million.
Air India Cargo will continue to also separately run its own logistics business and expects cargo operations to contribute a revenue of $228 million in the fiscal year to March 2008. It plans to have a fleet of 10 freighters by July 2008.
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