AFL, Singapore PE firm tie up for cargo airline
Cardinal Aviation Partners (CAP), a Singapore-based PE firm, has entered into an agreement with AFL Logistics, the logistics & supply chain management subsidiary of the Mumbai-based AFL group, to float a domestic cargo airline venture in India, Quickjet.
According to sources, CAP will hold majority stake in the venture while AFL Logistics will have a 13 pct stake. “We have entered into an agreement with CAP and intend to launch the service by December 2008,” said a top AFL executive, who requested anonymity.
The move is significant for AFL Logistics, as the company makes its entry into the air cargo space with this dedicated freighter service offering. As per the initial plan, Quickjet will flag off services with two Boeing 757s. The fleet will be expanded later, depending on the volumes.
The routes on which the freighters will ply are being worked out. Sources said Quickjet will be headed by Natesan Ramesh, as the CEO, while Captain Benjamin Solace, a Philippines based aviation professional, will take charge as the head of flying operations.
The business plan of Quickjet is expected to be quite similar to existing air cargo players like Blue Dart. While Quickjet will service dedicated AFL Logistics cargo, unutilised space on the freighter will also be leased to retail customers.
AFL has been attempting to strengthen its logistics business in India since 2006. Earlier, the focus was on building warehousing capability. Of late, the logistics division has shifted its attention towards creating a strong road network in India along with the addition of more service offerings, with air cargo being the latest entrant.
AFL’s turnover has increased from Rs 58 crore in 2006 to Rs 120 crore in 2007. “This growth has been achieved through our backward integration strategy and the transportation network has brought in all the volumes,” said an AFL executive.
According to sources close to the development, in a recent move, AFL Wiz has ended its 25 year franchisee alliance with DHL and has tied up with United Parcel service (UPS) as its franchisee in India. Under the arrangement, AFL Wiz will undertake pick up, delivery and offer credit facilities for international shipments of UPS customers in all locations over India.
The agreement was signed late last month, under which AFL Wiz will operate on a commission based revenue from UPS. While a senior AFL executive confirmed the development, an e-mail sent to both the companies did not elicit any response. According to sources, AFL Wiz has a turnover of almost Rs 120 crore which includes Rs 70 crore from DHL’s business.
