New Delhi: In a surprise move ensured to delay its air cargo plans for quite a while, Indian flag carrier Air India has decided to exit the cargo space and lease out its freighters. This, even though, cargo is a big revenue earner.
According to reports, Air India is seeking to lease two of its Airbus 310s, which were converted to freighters. The carrier is also converting six Boeing 737-200s into freighters, each with a payload capacity of 12 to 15 tonnes, which will bring its freighter fleet strength to eight.
Freight operations would have commenced under the banner of Air India Cargo (AIC).
Air India Cargo had entered into a leasing agreement for a Boeing 737 with India Post, as well as with domestic logistics major, Gati. India Post intends to lease three more freighters by the end of the year and use them for speed post services to 15 major cities.
Gati plans to charter five or more aircraft from AIC over the next five years.
Reports suggest that AIC could also lease out its freighters to postal services of some East European countries and the US Mail.
Industry observers have expressed surprise over the fact that Air India has failed to capitalise on air cargo operations even though the sector has seen rapid growth in the country in recent times. They point out that growth has slowed down only in recent months.
It is likely that the entry of new operators, as well as plans of legacy carriers to expand operations into the cargo sector may have scared of the national carrier.
According to the government statistics, cargo traffic in the country increased 21.5 per cent in fiscal 2006-07 from 15.6 per cent in 2005-06.
Full service providers, such as Jet Airways, and low-cost carriers, such as Spicejet, have announced their intention of entering the freighter space.
Early in the year, the carrier had announced ambitious plans to commence domestic cargo services from 1 July using the central Indian city of Nagpur as the hub. Nagpur would have connected to six major destinations, Delhi, Kolkata, Chennai, Mumbai, Bangalore and Hyderabad.
According to senior Air India officials handling cargo operations for the carrier, annual international freight movement into and out of India is more than a million tonnes and has grown at a compound annual growth rate of 13.7 per cent in the period 2003-07. According to forecasts, this is expected to grow at a CAGR of over 11.5 per cent in the period 2007-08 to 2011-12.
According to civil aviation ministry sources, Air India is likely to post half the domestic aviation industry's total losses for the fiscal.
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