AI may not hive cargo unit into separate biz

Air India may shelve its plans to hive off its cargo business as a seperate entity and is likely to take a final call on the issue shortly, airline sources said today.  

The airline management was considering options that instead of setting up an independent subsidiary business unit and creating seperate book of accounts, cargo should remain a unit within the NACIL, the sources said.  

Besides, there was an entire range of tax issues involved in case NACIL decided to convert its cargo unit into a separate company, the sources said, but added that a final call on the issue was expected to be taken shortly.  

The state-run airline had earlier announced plans to hive off its cargo business into an independent autonomous unit from April 1 this year to cater to the growing cargo market in the country.   

Based on the recommendations by consultancy firm Accenture, NACIL had decided to create six Strategic Business Units (SBUs) for its low-cost operation -- AI Express, the cargo airline, MRO for components and airframe, ground handling and related businesses.   

Air India Cargo currently contributes around 8 per cent to the total revenues of the national carrier.   

NACIL CMD Arvind Jadhav had in January this year said that the airline had decided to hive off its cargo, engineering and MRO businesses into separate entities.  

Air India expected to earn Rs 2,000-2,500 crore a year from its engineering business unit and Rs 1,500 crore from its cargo unit, Jadhav had then estimated.   

Private airline Kingfisher has already ventured into the cargo business by starting a door-to-door cargo operations, while Jet Airways is understood to be negotiating with some overseas players to start a dedicated cargo service.  

According to industry estimates, the domestic air cargo market is expected to touch Rs 13,300 crore by 2011-12, a growth of 20 per cent.