JET Airways, the country’s biggest domestic carrier, will invest as much as $15 million

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in setting up its own air-cargo unit after scrapping plans to form a venture.

The carrier expects to begin flying freighters by the middle of next year, chief commercial officer Sudheer Raghavan said on Monday in Shanghai.

Talks with Deutsche Lufthansa AG, Germany’s biggest carrier, about forming a venture “didn’t work out”, he added without elaboration. Jet Airways also plans to put its international expansion on hold until the end of next year because of soaring oil prices, Raghavan added.

“After this flight, we will probably only launch Dubai when we get the rights,” he said.

“After that we are going to consolidate our international operations until the end of 2009, when we get new aircraft.”

Jet Airways, controlled by billionaire chairman Naresh Goyal, has been expanding its global route network aggressively. It now flies to 62 destinations including 19 cities outside India, up from 11 at the end of last year.

But with crude oil prices topping $130 per barrel, long haul flights now take as much as two-and-a-half years to become profitable compared with 12-18 months when oil prices were at $50-70, Raghavan said.

The price of Indian jet fuel, which accounts for nearly 45 per cent of an Indian carrier’s operating costs, has risen almost 90 per cent since last June.

Jet wants to join government-owned Air India in flying freighters as surging fuel prices and cutthroat competition squeeze margins on passenger flights. The country, home to about a sixth of the world’s population, has less than 10 all-cargo planes at present, according to the Centre for Asia Pacific Aviation.

“That’s a miniscule number” so “there is space for more cargo carriers”, said Binit Somaia, the aviation advisory company’s Sydney-based director for India and the Middle East.

Jet Airways/BSE Rs 534.10 v