The Hindu Business Line : FDI limit in aviation cargo may go up

The civil aviation sector, which is already getting attractive for foreign investors, would have another sector opened up. This time, the Minister for Civil Aviation, Mr Praful Patel, is proposing to increase the FDI limit in cargo from 49 per cent to 74 per cent.

However, the Foreign Investment Promotion Board (FIPB) and the Ministry of Commerce are examining the issue, said Mr Patel, at the flagging off ceremony of Air India’s first freighter aircraft.

The state-owned carrier had earlier said that it plans to convert two of its Airbus 310 passenger aircraft to operate as freighters. The first aircraft has been deployed on the Europe route flying from Mumbai and Bangalore via Damam to Frankfurt. The aircraft with a capacity of 34 tonnes each have been converted at a cost of $7.95 million per aircraft.

Market share

Air India’s current market share in the export segment is in the range of 9 to 11 per cent and between 5 and 7 per cent in the import segment.

Second converted aircraft will be operational in July. While currently, cargo operations will tap the growing European market, plans are to look at countries such as China, Japan and even the US with the induction of more capacity in the long run, said Mr V. Thulasidas, Chairman and Managing Director of Air India.

He also said, “One of the main business components of the merged airline will be cargo.” Mr Thulasidas added that with Indian Airlines also converting its Boeing 737-200 into cargo carriers, the company is looking at the emergence of a cargo airline in the future.

The Minister, Mr Patel further said, “There should be at least 500 cargo planes in India in the next 10 years,” and that the operations remain “high on Government’s agenda”.

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