Logistics

Domestic airlines rely on cargo uptake as passenger traffic dips

Forum Gandhi | Updated on June 24, 2021

With the foreign cargo flight services restricted to just six airports in the country, vegetable and fruit exports from the State have been hit.

 

While passenger airline traffic has fallen, cargo uptake has given a respite to Indian carriers. According to data from the Ministry of Civil Aviation, the total tonnes of freight carried by Indian carriers in April 2021 was 263.01 tonnes compared to a mere 48.23 tonnes of freight at the same time last year thus, registering a 445 per cent growth.

According to data from CAPA, over the five years to FY2020, ancillary revenue earned by low-cost carriers has grown at a CAGR of 15 per cent.

Cargo market

The majority of this is generated from cargo registering a 10 per cent growth in the past five years. During the Covid downturn, several Indian carriers have turned to cargo to shore up revenue as passenger traffic declined.

Carriers such as IndiGo and SpiceJet had even modified passenger aircraft to carry freight. The strength in the cargo market is reflected in the recovery of volumes handled. In December 2020, monthly international freight had returned to 87.3 per cent of its pre-Covid levels.

Between Q3FY20 and Q3FY21, SpiceJet, BlueDart, and IndiGo’s revenue share from cargo grew by 447 per cent, 21 per cent and 38 per cent, according to CAPA’s data.

Indian carriers like IndiGo, and SpiceJet have so far delivered cargo business by carrying medical supplies and oxygen containers. So far, IndiGo has transported a total of 4142 oxygen concentrators weighing about 72461.5 kg, within and across the country, whereas SpiceJet has carried more than 1.6 lakh tonnes of cargo & medical devices since March 25, 2020.

In the earnings call post the Q4FY21 results announcement, IndiGo’s CEO Ronojoy Dutta said that it will induct at least four freighter aircraft in the coming early next year.

 

Revenue generation

Currently, IndiGo has converted 10 of its aircraft cabins to carry cargo. For the fiscal year 2021, its cargo revenue increased by 9.6 per cent compared to the previous year.

For the Q3FY21, SpiceJet’s revenue from cargo increased by 447 per cent compared to the same time last year. SpiceJet’s cargo arm, SpiceXpress operates a fleet of 19 cargo planes.

While cargo can be a part of the revenue model for the Indian carriers, it cannot be the only revenue-generating segment, said Koushik Jagathalaprathaban, Independent Consultant at consultancy AT-TV.

On the other hand, as long as the cargo segment fulfils its own expenses without fund infusions, it a good business call, said experts.carg

Published on June 24, 2021

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