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Jet Airways plans cargo airline

Almost all freight from India is catered to by foreign airlines, and there are only five freighter aircraft in India.

india Updated: May 03, 2006 12:25 IST

When Charles A Adams (an ex-UPS executive who serves on the Jet Airways board) landed in Mumbai last week, he saw five freighter aircraft. What caught his attention was that all of them were owned by foreign airlines like Lufthansa; none of them owned by an Indian freight company.

Almost all freight from India is catered to by foreign airlines, and there are only five freighter aircraft in India, three of which are owned by DHL. No wonder, Jet is planning to set up a cargo airline, which will be steered by Adams.

Jet believes there’s a huge potential in cargo (there are reports that Reliance plans to buy 40 cargo planes to ferry its perishables for its retail stores across the country). ‘‘Ùnlike earlier (when traditional items like garments or jewellery was being exported) you see all kinds of manufactured goods,’’ says Adams.

Jet plans to start with three aircraft and will have a network across the country that will be connected to a hub, which will feed its international freight. Initially, domestic and international operations will contribute equally but progressively Jet expects international freight to contribute two-thirds of the revenues. Jet expects freight, which accounts for barely 2-3 per cent of its revenues, to contribute 15 per cent of its topline. What’s interesting is that freight offers net margins of 15 per cent, and can cushion the impact of declining yields in the core (passenger) airlines business.

First Published: May 03, 2006 12:25 IST