Air India, Gati to start cargo services

21 November, 2007:

Air India and distribution and supply chain solution company Gati have entered into a deal to start a dedicated freighter service.

According to a report, Air India has handed over a dedicated Boeing 737 aircraft to Gati that would be used to operate daily cargo flights on the Delhi-Mumbai-Bangalore-Delhi sector. The aircraft is the first of the five aircraft that Air India would be providing to Gati. The remaining four aircraft would be provided to Gati by the middle of 2008.

Though the financials of the deal are yet to be revealed, it is expected to be a win-win proposition for both the players. Significantly, with the launch of the service, Air India has become the first scheduled passenger airline to enter the freighter market. The tie-up is also expected to bring in gains for Gati, which expects its business to shoot up from the current Rs 461 crore to more than Rs 1,000 crore in a matter of two years.

It has earlier been reported that the express distribution and supply chain solution company has already lined up an investment close to US$ 100 million till June 2008 for the setting up of express distribution centres (EDC) and in re-engineering of technology and network.

The current deal is expected to take off with more features as the remaining aircraft too comes into the Gati fold.