SpiceJet to scale up cargo vertical

SpiceJet, is ramping up its logistics platform even as plans are afoot to spin-off the division into a separate entity, outside of the parent company. Talks are on for induction of new freighters too

According to Rajesh H Singh, Assistant Vice President, - Operations Cargo, SpiceJet, the business has expanded in a short period of time and it will be scaled up in the coming days. Services include door-to-door delivery and own technology thereby ensuring that the company is present in both the first-mile and last-mile connectivity verticals.

“We are in talks for induction of new freighters into the fleet. Negotiations are on. And depending on market conditions new ones will come in. In cargo platform has done well and we have been getting good business from the segment during Covid times with us operating a lot of charters into Hong Kong, China, USA and Europe,” he told BusinessLine.

Despite the high ATF prices, the company is getting into “charter agreements” which is “helping out at the moment”.

SpiceXpres operations

SpiceJet’s logistics platform, SpiceXpres - currently has a fleet of 13 airlines. The vertical reported a net profit of ₹67 crore for the quarter ended December 31, 2021 (Q3FY22); while revenues from the vertical increased 17 per cent (over last quarter) to ₹584 crore.

Freighters were brought in 2018. The cargo business operates on Indian and international routes.

In FY21, SpiceJet operated over 10,564 dedicated cargo flights, including 3,622 international flights and transported over 1,39,000 tonnes of cargo. In addition, it developed capabilities to provide door-to-door deliveries to over 87 pin codes across India, the company’s annual report says.

Beginning last fiscal, the company had introduced wide-body cargo planes for long-haul operations to Europe, Africa and the CIS countries, while also launching scheduled freighter services to Bangkok and Singapore.

Separation of Cargo Arm

SpiceJet is also in the process of transferring the cargo business undertaking as it is awaiting approval from its lenders.

In September 2021, shareholders had approved transfer of cargo business undertaking to its subsidiary, SpiceXpress and Logistics Private Limited along with all related assets and liabilities, inter-alia, know-how, trademark, licenses, franchises, customer contracts, distribution etc.

The strong upward trend in air cargo traffic observed in the second half of 2020 has continued through 2021.

Transfer of the cargo business will provide greater and differentiated focus to the segment, while it will allow the “possibility of raising capital” to accelerate its growth, the company’s Annual Report for FY21 says adding that “it will provide greater opportunity and flexibility in pursuing long-term growth plans and strategies for SpiceXpress business”.

Delivery through drones

According to Singh, the company is also experimenting on the drone delivery mechanisms and it is in discussion to carry out pilot projects. Deliveries through drones could be explored in the pharmaceutical sector, deliveries into e-commerce and into the North Eastern region.

Things like route mapping, determining green zones among other factors like drone design need to be put in place for the segment to be commercially viable.

“We have started discussions on obtaining drones and carrying on trials. We will collaborate with drone-makers and look to build on the technology side. The engineering is there. So we will see how the requirements shape up,” he said.

Import of drones have already been banned in India.

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