Air India seeks private partnership in cargo business
With plans of roping in a strategic partner, flag carrier Air-India (A-I) is set to begin discussions with air cargo majors, like Federal Express, DHL and UPS. This is apart from the cargo arms of international carriers, like British Airways, Lufthansa and Air France.
The carrier would be looking at two possible options, where it could either float a JV company with equal public-private equity partnership or sell 50 percent stake after hiving-off its Rs 600-crore cargo business into a separate subsidiary.
Confirming the move, the union minister for civil aviation, Praful Patel said to ToI, “A-I’s cargo business can be turned into a big time revenue earning stream. Along with the growth in passenger traffic, primarily driven by economic growth, the air cargo business is turning out to be a lucrative business proposition.”
The Indian cargo market is at a take-off point with the air freight market aggregating 650,000 tonne and growing at 20 percent a year. Analysts believe that with a population of 1 billion, a middle-class with a rising income level, exceeding 300 million people, and a land mass of 3.2 million sq-kms, India has the potential to emerge as a large domestic air freight market.
The national carrier currently has an export cargo capacity of 50,000 tonne per annum and 20,000 tonne of import cargo capacity, accounting for about 10-12 percent of its total turnover. It currently commands 8 percent and 12 percent of the country’s total import and export market respectively.
