IndiGo to scale up cargo business: Willy Boulter, Chief Commercial Officer

We entered the segment some years back; and the pandemic accentuated its potential.

After Covid, we began ‘CarGo’ -- only charters, initially, using just the belly of our passenger aircraft, then expanded into “cargo-on-seat” operations, after receiving the necessary approvals. IndiGo has carried out over 8,400 such flights in the past two years, most recently adding a cargo-on-floor A321, where we actually removed the seats.

These are not freighters and lack the wide freight door, ULD (Unit Load Devices – containers and pallets) capability and floor loading systems in the cabin (thereby), severely limiting the nature of cargo that can be carried. Handling times are long (which means low utilisation). They are designed as passenger aircraft and will return to service as such.

Excluding the all-freight operators, IndiGo’s market share within India is above 40 per cent, well over double its nearest competitor, even without freighters.

We have initiated a proper freighter programme and are in the process of sourcing four A321CEO aircraft for conversion.

The A321P2F (Passenger-to-Freighter conversion) is the most efficient narrow bodied all-cargo aircraft available, offering 24 ULD positions (14PAG on main deck and 10 AKH in lower deck) and supporting a payload of up to 27 tonnes.

We expect our first delivery in June, coming from the conversion shop at Singapore Technologies, and are planning on it entering revenue service by July. We will be able to service markets between China in the east and the Gulf in the west, and the CIS countries to the north.

At its peak, we used up to 10-11 passenger aircraft for cargo-in-cabin tasks, but this has come down as the passenger fleet has been re-employed with the recovery of aviation in India. Now we have one A321 Neo in a “cargo-on-floor” configuration (seats taken out), and an additional “cargo-on-seat” A320. We will retain the flexibility going forward.

We are expecting to receive our freighter aircraft -- A321 P2Fs -- starting in June. The plan is to introduce four units over the period of (approximately) one year. The aircraft will be leased, in common with the vast majority of our passenger fleet.

With the arrival of freighters, the cargo-in-cabin revenue share may increase. But this is also dependent on the trajectory of the passenger business.

For FY21, the cargo revenue increased by around 10 per cent YoY. At present, cargo is a part of our ancillary revenue. The share, currently, is in single digits; although for short periods during Covid it was higher. We have carried over 1 billion vaccines within India.

We are deploying cargo-on-floor and cargo-on-seat capacity to destinations such as Bangkok, Yangon, Singapore and other South-East Asian ports. We have also done much flying towards the Gulf in the recent past and expect that to increase again with the induction of the A321P2F. We have plenty of interest from the large integrators, forwarders and niche shippers.

The increase in oil prices impacts the cost of flying and profitability. In cargo, it is sometimes easier to pass on these costs through fuel surcharges. Together with the rest of the airline industry, IndiGo has been engaging with the Government to bring ATF under GST. This would help provide some respite to airlines.

No. We intend to operate freighters, subject to necessary approvals from the DGCA and other regulatory bodies, under our current Air Operator Permit and within our current structure. The new A321P2Fs will carry the full “IndiGo CarGo” logo in bold.