In an effort to increase capacity for the booming air cargo business, national carrier Air-India is planning to ink a deal with West Asian freight forwarding company Falcon Group for carrying cargo to destinations in the Gulf and Europe.

This is the first-of-its-kind arrangement between the national carrier and a freight forwarding agency.

‘Cargo movement in the country is growing. However, we have not been able to take benefit of this growing demand due to lack of capacity. In order to offset this, we are in talks with a freight-forwarding company to buy space for 75 tonnes cargo/week on the India-Gulf route and 100 tonnes of cargo/week on the India-Germany route,’’ a senior Air-India official said here today.

The tie-up between Air-India and Falcon Freight Group is likely to be signed in a month’s time. Both the parties had been in negotiations for more than a year as Air-India wanted to start this arrangement in September 2005. Negotiations had, however, broken down on the issue of space-leasing charges.

The move by A-I to use the 737-800 aircraft on the Gulf route instead of the A-310 further compounded A-I’s problems as the new aircraft had considerably less belly space and couldn’t carry much cargo. The airline was also facing the same problem on the Germany route after it deployed a 737 variant after taking off its 747-300 combo aircraft.

The airline presently has a 10-11 per cent share in the cargo movement business, which it plans to take up to 15 per cent in the next few years. In FY 2005, the cargo business generated revenues of Rs 500 crore which translates into 8 per cent of its total revenue.

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