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Tue 1 May 2007 12:52 PM

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Air Deccan to offer low cost cargo service

The airliner is set enter the cargo sector and replicate its ‘no-frills’ air travel concept.

Air Deccan has announced plans to replicate its ‘no-frills' air travel concept with a low cost cargo service.

The Bangalore based airliner entered the market three years ago and has indicated intent to enter the cargo sector within the next month or so. Hoping to take advantage of its growing domestic network, Air Deccan has already approved a new subsidiary that would run the cargo service.

"We are actively strategising to begin low cost cargo operations with the conviction that transporting apples from Kashmir to Chennai at a lowest possible cost will give a much needed boost to our primary economy," according to an Air Deccan company statement.

Jude Fonsecus, formerly of FedEx, has been announced as CEO of the cargo venture, and is currently finalising the business plan and investment. The move comes on the back of encouragement from India's Civil Aviation Ministry towards the cargo business sector, having increased the foreign direct investment from 26% to 74%. The ministry has also estimated the country will need 500 dedicated cargo planes in ten year's time.

The airline is planning to raise between US$50-100 million through private placement of equity capital, with a host of private equity players having submitted their bids. The deal is expected to take place within a month and the resources will be used for both expansion of fleet and enhancing the company's internal infrastructure. The company also plans to open a charter service business through a separate subsidiary.

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