Air India considers leaving cargo business in place

AIR India is considering holding off on plans to recast its cargo division as a standalone business, saying it would decide soon.

Tax issues and additional accounting requirements were the main drawbacks to the plan to scrap the air cargo division, India's Economic Times reported. Company officials have since indicated that they may consider keeping the business as part of the National Aviation Corporation of India Limited (NACIL), Air India's holding company.

The flag carrier had previously said it would hive off its cargo operations as an independent unit by April of this year to take on the county's burgeoning air cargo market. The decision was largely based on recommendations by Accenture consultants, who suggested NACIL should separate its holdings into strategic business units.

Air India Cargo contributes eight per cent to the national carrier's revenue base. Industry estimates suggest that the country's domestic market for air cargo services would grow as much as 20 per cent by 2012.

Other local operators, such as Kingfisher, which recently started a door-to-door service, has already made moves to tap the expected increase in demand, with Jet Airways also said to be considering an entry.

(Source: www.schednet.com)