As a part of its revival plan, national carrier Air India (AI) is in the process of increasing its cargo capacity multi-fold. Cargo operations currently contribute Rs 800 crore to AI?s topline of Rs 17,000 crore and will be hived off as a subsidiary to churn revenues four times more than it does currently. AI has converted six of its older aircraft B737-200 into freighters and wants to enhance its share in the international cargo market to over 25-30% initially, while more than a dozen airlines from other countries carry the balance of the country?s cargo.
AI?s team of officials is already studying newer markets in South East Asia, Far and Middle East and Europe to increase their capacity from 1,500 tonne to over 5,000 tonne within 36 months. AI currently operates freighter service on 13 domestic and two international routes in the US and Europe and some parts of Middle East. Recently AI?s officials visited an international exhibition on air cargo in Kuala Lumpur and will be visiting other countries to tap newer and unexplored markets to extend mail and courier business and even exports of perishable commodities. The focus, says an official at AI is to offer a seamless connectivity for the carriage of cargo from interior points within India to international destinations.
Despite a decline in global freight traffic and almost 25% drop in Asia Pacific freight movement as per IATA figures for 2008, AI officials without divulging financial details say that the carrier has been able to earn incremental revenue in 2009 over 2008 from its cargo division.
AI?s CMD, Arvind Jadhav recently in a press conference in New Delhi had said, ?Our focus is to generate revenue through allied businesses like cargo, engineering and ground handling.? Jadhav had clearly added that the carrier wants to create new sources of long term revenue generation.
Meanwhile, an analyst adds that renowned carriers like British Airways World cargo amongst others have reported a 28% drop in its cargo operation in the first quarter of its current financial year.
?In the short term, there are no signs of recovery returning to the cargo market because importers are delaying their purchases-they want to hold back on cash and even banks are unwilling to lend. But for AI it is a wait-and watch situation as it has a long term revival plan to boost revenues,? says an industry expert.