The National Aviation Company of India Limited (Nacil) is all set to make a pretty penny from its old aircraft by converting them into cargo freighters operations.

The carrier, which will have a fleet of eight freighters ready by the end of this month, started converting its old aircraft after they were considered too unsafe or too old to ferry passengers. So far Air India has converted six B737-200 passenger aircraft into freighters and is in the process converting two Airbus A310 passenger aircraft.

?The conversion will be done by the end September,? Air India spokesperson Jitender Bhargava said. The national aviation company will soon invite global bids for leasing out two of its A310 freighters. It already has leasing agreements with the department of post and logistics major Gati for the rest of the aircraft.

?We will soon put out a Request for Proposal (RFP) to lease out the two A310 freighters aircraft,? an official said. Air India had earlier planned to deploy these configured aircaft in its cargo service but it could not find a profitable route for these freighters and therefore decided to lease them out.

The leasing deal is working so well for the carrier that the department of post has requested Air India to give it more aircraft so as to raise the number of freighters to four aircraft. The DoP mainly uses the aircraft for its air mail operations to the northeastern part of the country.

?The decision to lease them out follows the lack of a profitable route where they could be deployed,? the official said. The company is, however, yet to decide on their pricing, the official added. ?The per-hour flying cost of these aircraft is quite high,? he said. The revenues from cargo operations are expected to rise by 10% in this fiscal taking the total revenues from cargo of the carrier to within a earshot of Rs 1,000 crore.

The national carrier made around Rs 412 crore from cargo operations in 2000-01. This has more than doubled to Rs 834 crore for the fiscal year 2007-08.

The revenues from cargo contribute nearly 10% of the total revenues of the carrier. ?At present, the only real problem affecting cargo operations is the manpower problems. That is a problem being faced by the carrier as a whole and is expected to be resolved soon,? an official said. The civil aviation ministry has said the country needs around Rs 700 crore to expand basic network in order to increase air cargo over the next five years.

Air India Cargo (AIC) tied up with express delivery major Gati late last year allowing the latter to charter five or more aircraft over the next five years. AIC is also actively considering bidding for the postal business of the postal departments of many other countries including the US Postal Mail department and some east European countries, sources said.

According to the ministry, total cargo traffic in all airports in the country increased 21.5% in 2006-07 from 15.6% in the year-ago period. In this, air cargo has grown by around 19%, as against 10.3% and 9.2 % growth witnessed by the shipping and railways cargo sectors respectively over the last three years.

Express delivery major Blue Dart has estimated that the total domestic cargo industry in the year 2006 is worth Rs 2,770 crore while the domestic organised cargo was worth around Rs 1,260 crore.

The industry has been growing at a 17.2% CAGR so far and is therefore expected to be worth Rs 5,256 crore by 2015, data from Blue Dart said.

AIC is a strategic business unit (SBU), created after the merger of the erstwhile national carriers Air India and Indian, dedicated to cargo operations of the carrier.

The carrier already has dedicated cargo flights to France, Germany and Saudi Arabia.

Other private airlines like Jet and Spicejet are actively looking at expanding their cargo business in order to increase the share of ancillary revenues to their overall balance sheet. These carriers carry cargo in the aircraft hold during passenger flights and their scale of business is much lower than the national carriers.